A company car is a great benefit or perk sometime offered to employees, but the amount of company car tax that may have to be paid may out way the benefits of having a company car in the first place. Because of this factor, it may be better to enter into a personal lease to avoid having to pay company car tax.
However, for some people, the concept of a company car is still appealing and there are ways to reduce the an=mount of company tax car to actually make it worthwhile retaining your company car. In this section we look at different ways to reduce the amount of tax on a company car that you need to pay.
There are a number of exemptions to company car tax if any of the following apply:
- The business is a partnership with one or more partners and you are one of the partners.
- Any partner in a limited liability partnership usually know as an LLP.
- You are a sole trader of the business.
- For mobility reasons, the car has been modified or adapted.
- The car is strictly not used for any personal use. The onerous is on the driver to prove this is the case by way of detailed records.
Options to reduce your company car tax:
The first obviously way to reduce your company car tax is look for a low CO2 emissions vehicle. Full electric are the lowest (Zero) working there way up to plug in hybrids, soft hybrids, petrol then diesel as a rule of thumb.
Looking at cars with low CO2 is just the starting point. You then need to be looking at the P11D value of the car. The P11D is based on the manufacturers list price, VAT delivery and any other any options added to the vehicle such as metallic paint.
At this stage you now need to refer to how company car tax is calculated and also use our enhanced online company car tax calculator, but in summary, to reduce your company car tax, you need to be looking at cars with the lowest emissions and the lowest P11D value.