At this time of year (P11D season) company car drivers get the bad news about the taxable benefit of having a company car – and employers have to face up to the additional (Class 1A) National Insurance charge of providing this benefit. The tax charge is based on the car’s CO2 emissions and original list price and the percentages creep up every year.
The charge could be much less if you ran a “classic car” with a market value of less than £15,000. Say, for example, a 1963 MRG roadster – it’s list price in 1963 was only £500. What’s more even though it may be heavy on CO2 emissions, most classic cars don’t have an official emissions rating and so engine size is used to calculate the benefit – which is 25% for any car with an engine size between 1,400 cc and 2,000 cc (including the MGB roadster with a 1600cc engine). So the taxable BiK is £125 (£500 x 25%) and the company pays Class 1A NIC of just £17.25 (£125 x 13.8%). Plus the company gets tax relief on picking up the tab for the running and any repair costs.
If you would like any advice on saving tax or any other matters please click here to contact us or call DBA Chartered Accountants on 0113 244 9811.
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