With the rising cost of car fuel, any way
of saving on motoring costs is welcome.
One way of doing this is to make use
of the generous tax reliefs available on
environmentally friendly cars. Fortunately,
there is a growing range of cars with
carbon dioxide (CO2) emissions low
enough to qualify for tax benefits.
If your business is buying a car, choose a new
car with CO2 emissions of 110g/km or less.
That will enable you to write off the whole
cost against tax in the year of purchase by
claiming a 100% first-year capital allowance.
For cars with higher emissions, andallusedcars,
tax relief is limited to a writing down allowance
of 20% of the cost, with an upper limit of
£3,000 where the car costs more than £15,000.
Directors and employees can be taxed
heavily on the benefit of a company car,
but much less so on a low emission
model. Since April 2008, an employee
who drives a petrol-fuelled car with CO2
emissions of 120g/km or less is taxed on
only 10% of the list price. For a diesel car,
tax is charged on 13% of the list price.
These lower percentages can make a
low emission company car a worthwhile
benefit for an employee.
However, it is still worth making a detailed
calculation of costs and benefits for the
employee and the business, because there
are so many variables to consider with
company cars. We can help you with this.
You will also pay little or no vehicle
excise duty on cars with CO2 emissions
up to 120g/km. On top of all these tax
savings, running environmentally friendly
cars will also boost your business’s green
credentials.
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