Company car tax rises take effect
The company car has continued to be an important benefit for many employees, despite the many increases in the taxable benefit rates in recent years.
However, substantial impact on your business motoring costs could result from changes to company car tax that took place in April 2018.
Benefit-in-kind rates
Company cars are essentially taxed as a benefit-in-kind (BiK) by multiplying the list price of the car (including most accessories) by the ‘appropriate percentage’. This is set by reference to the car’s fuel type and level of CO2 emissions.
In 2017/18, a reduced BiK rate of 9% applied for vehicles emitting no more than 50 g/km of CO2, but from April 2018 there has been a substantial increase in the rates.
Cars with CO2 emissions of 0-50 g/km are now liable to a rate of 13%, with similar rises applying to cars with higher levels of emissions.
Diesel cars
There was also an increase in the additional diesel car supplement, which has risen from 3% to 4%. Unless the car is registered on or after 1 September 2017 and meets the Euro 6d emissions standard, the maximum cap of 37% still applies.
Capital allowances
The 100% first year allowance for expenditure on cars now applies where emissions are less than 50 g/km, reduced from the previous level of 75 g/km. In addition, the limit for attracting an 18% writing down allowance has fallen from 130 g/km to 110 g/km.
Electric charging points
HMRC intends to exempt employer-provided electricity from being taxed as a BiK, to apply retrospectively from 6 April 2018, for those employers providing charging points for electric or hybrid cars.
Further changes to company cars are due to take effect in 2019 and beyond, including additional increases in the BiK rates and the introduction of a new range of bands for ultra-low emission vehicles (ULEVs).
For further information and assistance with tax planning contact Avanti Here
Disclaimer:- The information contained herein is given by way of general guidance only and no action should be taken solely on the basis of the information contained herein. The Avanti Group (UK) Ltd will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any action taken without seeking appropriate professional advice