Company car for employee

[k100danny]

I wonder if someone could give me a rough idea of the implications of a company car. I don't personally have one as i do not drive but my dad works for me and with him discussing recently about buying a new car i wondered if it was cost effective to do it through the business?

I have heard of people trying to kind of play the system and say their wife works there and not get a salary just an expensive car etc but this isn't the case here, my dad is already paid a good salary with us so well above the tax threshold. I had read someone where you should be able to prove the company car is needed for the role is this correct? I'm thinking of supplying the car as sort of part of his salary if that makes sense.

lets say for instance my father is paid 24k per year, if i got him a car that was roughly £200 per month plus vat what would the tax be to have this either for him or for me?

any help much appreciated. I would contact my accountant about this but as it's just a passing thought i thought it best just to ask here first.

 

[James MIller]

HMRC have a calculator car tax calculator http://cccfcalculator.hmrc.gov.uk/CCF0.aspx if you speak to your accountant it maybe more tax effective to deal with it in different ways. You could look at salary sacrifice schemes which for low emissions cars could work. Paying a mileage allowance may also be an option, depending on how many miles he will do. If you are VAT registered then there could be implications on personal use, you can also claim VAT back on mileage claims but it is complicated a simple calculator is available from http://www.kitepayroll.co.uk/calculator.html

 

[Jackie0802]

There is no requirement for a company car to be a necessity for the business. There will be tax implications for your father, but it's my experience that this usually works out cheaper than forking out for a new car. Alternatively you might want to increase his salary to allow for him buying a car for himself, but of course he will still pay tax and NI on the car allowance. The taxable benefit has nothing to do with the monthly payment, it is based on the value of the car when new. If you buy the car you would have to report it using form P46 Car, and your fathers tax code would be adjusted. At the end of the tax year you would have to issue a P11D. You would also have to pay class 1A NI on the benefit.

 

[MyAccountantOnline]

I wonder if someone could give me a rough idea of the implications of a company car.

You pay tax on what's called a benefit in kind which is based on the list price of the car when new and its emissions. The benefit in kind is like having additional salary.

The tax due very much depends on the car you have. The percentages range from 5% of the list price for a petrol car with Co2 emissions of 50g/km to 37% for a petrol car with Co2 emissions of 210g/km.

 

[cory beevers]

Wow!!! really useful. Hopefully i can get a company car but i have to wait until i am 18 next year for the insurance or something well upset no merc yet

 

[MyAccountantOnline]

Wow!!! really useful. Hopefully i can get a company car but i have to wait until i am 18 next year for the insurance or something well upset no merc yet

You may not be quite so excited when you see how much tax you'll pay on a company car but that said if your company are insuring it that may be a big saving.

Sadly at my age car insurance is one thing which doesnt factor into the cars I choose to drive any more.