Where do you stand as a business owner regarding your company car? So often, once a business has started, and usually before the company has even made a hint of a sale let alone profit, clients ask us, “When can I buy my company car?”. We understand, the right car often gives a company the professional image required, but where would these clients stand with the tax man?
Well, for the last decade or two HMRC appear to like you having the very best, shiniest (least efficient) car you can afford, paid for by the business and using it for personal mileage. This is because they receive a royalty, otherwise known as tax on a Benefit in Kind (BIK) for you having made that choice. The higher your emissions, the more the tax man will come knocking for. The higher the BIK, the more tax will be due. Not only that, but the company will pay more National Insurance too.
The solution to avoiding large tax bills really is as simple as this: get a car with the lowest emissions you can find and your taxes are lower. We know the draw that ‘all singing all dancing’ top of the range drive has, we have been there ourselves, but, it is important to remember if you want to pay less then choose less emissions.
We are an open communication business and judging just isn’t in our nature. Just because you are reading this and still have your sights on your dream car which might not be so great on the petrol front, we will of course help you prepare for the inevitable tax bill. We understand that the bike to work zero emission option might not be right for you!
To find out more about BIKs, company cars or any other perk you’re considering, give us a call and let us help you assess the damage first.
mneaccounting.co.uk 0116 255 2422