According to the Accounttax, having a company car or not is the question which can be answered with varied outcomes depending on the business structure, nature of use and the user.
Over decades this area of taxation has undergone significant changes resulting in some conceived tax benefit being switched with rather unattractive perk.
So what are the available options to make it most tax efficient as possible. Accountants Windsor list a few below:
- Continue using the company car under old system
- New company car with lower CO2 emissions
- Private car with mileage allowance claim
- 100% capital write off car
Each option above is now evaluated by the accountants in Slough to make it easier to compare merits and demerits respectively.
- Under the old system, car benefit in kind and resulting tax was determined by multiplying a factor of 35% to the list price when the car was first registered. It was then tapered down depending on the age of the car, employee’s contribution towards the purchase price and fuel costs along with the proportion of private to business mileage. Higher the private mileage element – higher the taxable BIK. Under this, Windsor accountants emphasize that now a day any car irrespective of its price or engine size with higher Co2 emissions would be extremely tax inefficient even with really low private usage.
- Since the dawn of green revolution and environmental awareness, almost every walk of life has seen adaptive changes and so has HMRC approach towards taxing the car benefits and treatment of motoring expenses as per Slough accountants.Gone are the days when HMRC use to probe vehicle’s engine capacity, type of fuel used, age of car etc. Now it all depends on how environmental friendly car is. Greener the car, more cash can end up in your and employers pocket in terms of lesser BIK and tax payable.This effectively makes the private usage percentage almost irrelevant as any old car with higher emissions and lower private mileage will still prove to be tax costly to a greener car with significant private usage. See Co2 table.
- An alternative approach as per accountants in Ascot, to having a company car is to encourage employees to use their own vehicle for business trips, whereby the car owner is fully and exclusively responsible for the maintenance and up-keeping costs as if it was for their 100% private use.Employer is then charged at varied rate each business mile employee travel provided a full log of journeys and mileage covered are kept.
This scheme may prove somewhat tax efficient where employer is not in a position to provide low emission car.
Currently for the first 10,000 business miles employees are reimbursed at a flat rate of 45 pence per mile with any higher mileage compensated at 25 pence each.
- One of the most attractive option for company directors would be to opt for the top of the range energy saving/fuel efficient cars, recommended by accountants in Marlow. All such cars falling in this category are eligible to claim 100% of cost in capital allowances against taxable profit of the company.Such cars must have a Co2 emission under 75g/km or it can have an electrically propelled engine with zero emission. 100% input vat reclaim may be another attraction if the car is for 100% business use.In nutshell all of the above options may still put us off when compared with much simpler and fairer car tax treatment available to sole proprietors/partnerships/self employed group of people. Accountants in maidenhead observes that at present UK tax system seems to be rather favourable there, in terms of allowable expenses, private use element and capital allowances claims.
How Can Accounttax Help You?
Helping business and professionals, accountants in slough as small business accountants and tax advisors have a strong idea of the needs and services you require. With our experience and the insight, which accountants in Windsor have gained over the years ensures professionalism with your best interests in mind.
Accountants Windsor can also stay on top of any legislation changes that may happen throughout the year. Ultimately, this will help accountants slough to understand your specific area weather it’s IT Contractors or CIS Contractors, Property landlords or Property developers, Doctors or solicitors, Small business or a limited company, which will then let accountants in Marlow to give you the best possible service that is tailored to you and your business’ needs.
We offer a range of accountancy services local to Windsor, Ascot and maidenhead can help you keep your business successful. Some of these services include:
- Managing your accounts
- Offering advice on tax planning and reducing your tax bill
- Providing payroll and bookkeeping services
- Helping you with VAT and Digital tax (MTD).
- Completing and submitting your tax returns on your behalf
Accountants in maidenhead will support you and your business, by doing so you can rest and stop worrying about the business. You can trust our professionals to take care of your business for you. Now you can focus on being exceptional entrepreneur.
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We pride ourselves on providing excellent services in Thames valley including slough, Marlow and Bracknell areas to businesses and professional clients who are keen to improve their business model. Working with us can ensure that you are well prepared for the future of your business with full control and confidence.
For more information on how we can support you and your practice, call us today on 01753 299 993.
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The above information is provided for general guidance only without the taking any liability, written or implied, on the part of this firm, its officers and staff. It may not cover your specific business or personal situations, so you should avoid relying on it. It is important that you seek appropriate professional advice where you can provide the full facts of the case and all related documents. This firm or its officers cannot be held responsible for the consequences of any action or the consequences of determining not to act.