Lower Emissions Company Cars

If you have the option of a company car, or are about to change your current company car, think about the CO2 emissions of any vehicle you are considering.

Choosing a car with lower emissions can save considerably on the amount of the taxable benefit in kind, and consequently decrease your tax liability.

The taxable benefit is calculated as a percentage of the list price of the car, and the higher the emissions, the higher the percentage applied.

Please see here for a full list of current and proposed rates.

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Company Cars: Tax Increase!

From 6th April 2015, all company cars are liable to benefit in kind charges, including electric cars.

Zero-emission cars now incur a benefit of 5% of their list price, whilst low emission cars (those between 51-75g/km) give rise to a benefit of 9%, an increase of 4% from last year.

All other company cars have seen an increase in the taxable benefit of up to 2%, with the maximum rate being 37% of the list price.

Although this maximum rate is set to stay at 37%, more cars will be brought into that band over the next four years – currently it applies to cars with emissions of 210g/km and above, but by 2019-20 it will include cars with emissions of 165g/km and above.

Think about Mileage

If you are self-employed, or run your own limited company, in some cases it may be more beneficial for you to pay the purchase and running costs of your own vehicle personally, and just claim the business mileage through your business, instead of the running costs.

If you trade through a limited company, this could save you large tax charges which may arise on the P11D benefit for the use of a company car.

Talk to your accountant about which would benefit you most!