There are quite a few types of car which have CO2 emissions of no more than 110g/km; including certain models of the Mini Cooper, Toyota Prius, Smart, and Fiat 500. If your company buys one of these low emissions cars new (not second hand), it can claim a tax deduction for the full cost in the year of purchase and for all its running costs.
Where the car is provided to a director or employee of the company for their own private use, or for the use of a member of their family (perhaps for son or daughter), the director/ employee will be taxed on 10% of the list price of the car for petrol cars and 13% for diesels.
For example a Mini Cooper 1.6D has CO2 emissions of 104g/km and a list price of £15,730. The director/employee will be taxed on £2,045 per year, and if their top tax rate is 40% this will give in an annual tax bill of £818. The company will also have to pay class 1A NICs of £282 per year, but that cost is tax allowable for the company. The company can also pick up the full cost of all servicing and insurance for the car with no extra tax charges.
If you would like any advice on tax efficient cars or any other matters please click here to contact us or call DBA Chartered Accountants on 0113 244 9811.
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