Tax expenditure on Company Cars

Cars used for business purposes have to combine comfort and efficiency. A balance has to be found between both these equally important requirements. New green taxes have ensured that low carbon-di-oxide emissions are the first on the checklist when companies go about getting a fleet. A fuel economy that is above 70 mpg on a combined basis would be ideal for fleets.

If the car is used by the employee only for work and related travel, the vehicle does not feature bad credit car finance in the income tax of the employee. This can be proved by showing the mileage accumulated by the car or having a contract with respect to usage of the car. When an employee uses the car of the employer for private use, it is termed as Benefit in Kind or BIK. This is taxed based on the cost of the car, the emissions and the type of fuel used. Cars used by family members of the employee are also included in this charge.

The best option in this scenario is to go in for a car that uses electricity. For petrol cars in 2012-2013, the BIK rate was 35 percent for CO2 emissions of 220 grams per kilogram.This is going to increase to 37 percent from 2015-2016. From 1 to 75 g/kg, the rate is currently 5 percent. From 2015-2016, the rates for 1 to 75 g/kg are split into two. From 1 to 50 g/kg, the rate is 5 percent and from 51 to 75 g/kg, the rate is 9 percent. From 76 to 94 g/kg, the rate is 13 percent and from 95 to 99 g/kg it will be 14 percent. This percentage has to be multiplied by the price of the car and accessories to arrive at the charge for the full year.

Any contributions made by the employer towards Personal contract purchase the cost of the vehicle and accessories are reduced from the calculation. Fuel bills for personal use are included for income tax.

For older cars which do not have the emission data, the capacity of the engine is used to arrive at the charge. From 0 to 1400 cc, the rate for petrol vehicles is 15 percent. For petrol vehicles with engine capacity of 1401 to 2000 cc, the rate is 25 percent. The corresponding rate for diesel vehicles is 18 and 28 percent. Over 200 cc, the rate is 35 percent for both petrol and diesel vehicles.

For fuel conservation, it is advised that a speed of 50 miles per kilometre can yield savings in double-digit percentages over higher speeds. When a vehicle has to stop for more than 60 seconds, the engine should be switched off to limit CO2 emissions. The other steps for fuel efficiency are having the required pressure in tyres and removing unwanted stuff from the boot.

When a person accesses Cheap Company Cars through a Personal contract Vehicle finance purchase, the payment of BIK taxation is eliminated. In this contract, a limit is set on the number of miles that can be used up in the period of the contract.

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