This week’s episode of, I hate numbers is talking about Buying your car through your business. Check out last week’s episode where we talked about saving tax with company benefits. tax-free and trivial benefits
What is a company car?
This is a car bought by your company, you use it for business and personal use. By the way, driving between home and work is normally considered personal use.
Working out the benefit value
There are three key numbers that we consider when looking at Buying your car through your business
- How the car is powered
- The list price of that vehicle
- CO2 emissions of that car.
Listen to find out more
CO2 emissions and tax
The lower, the CO2 emissions of the car, then the lower, the resulting tax charge will be.
An electric vehicle has no emissions, that means a tax-free benefit. Now when it comes to hybrid cars, these also have a favourable tax treatment.
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Contributing towards the car
There could be a number of reasons for this. It could be that you decide to go through it, another vehicle, which your employer can’t afford. And you may be that employer if it’s your company. The advantage of making a capital contribution is tax savings for both you and the company.
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An alternative
It may not be to not bother buying the car and for you as the individual to purchase the car in your personal capacity. If you do that, then you have the option of charging your business, charging the company, 45 Pence per mile for each business model that you travel. Once you go over the 10,000 miles, then you can charge 25p. That can be claimed tax-free it counts as a deduction for the company. And, therefore it may be worthwhile to consider that option as well.
Listen to find out more
Conclusion
In conclusion, providing a company car, especially an electric or hybrid car can save a lot of tax, personally and for your business. It can even be cheaper than having higher salary.
Your business needs to grow, serve and make money. Buying your car through your business can be a great pay you and your staff efficiently. Contact us to talk about this or other ways where we can help your business.
Numbers
What would a I Hate Numbers podcast be like without some Numbers !
Tax Savings by Providing Employee Benefits: 2021-22
| Marginal Rate: Basic | Marginal Rate: Higher | Marginal Rate: Additional | |
|---|---|---|---|
| Annual | < £50,000 | £50,000 + | £150,000 + |
| Tax Savings per £1,000 | Tax Savings per £1,000 | Tax Savings per £1,000 | |
| Personal savings | £271 | £324 | £437 |
| Company savings | £277 | £511 | £661 |
Hybrid cars registered after 06-April-20 - tax benefit percentage 2020-21
| Cars electric range | Percentage |
|---|---|
| 130 miles + | 0% |
| 70-129 miles | 3% |
| 40-69 miles | 6% |
| 30-39 miles | 10% |
| Less than 30 miles | 12% |
What Next
Make yourself comfortable. Sit back and listen.
Even better subscribe so you do not miss an episode.
In this episode
- Understanding how we work out the benefit value of accompany car
- Appreciate why buying an electric or hybrid car is good for your pocket, as well as the environment
- Why you might be better off buying your own car
- Developing your own Numbers confidence and decisions
- Take more control of your numbers to help make you money, survive and thrive
Links
https://podcasts.apple.com/podcast/proactiveresolutionss-podcast/id1500471288
https://play.google.com/music/m/I3pvpztpjvjw6yrw2kctmtyckam?t=I_Hate_Numbers
https://open.spotify.com/show/5lKjqgbYaxnIAoTeK0zins
https://www.stitcher.com/podcast/proactiveresolutionss-podcast
https://tunein.com/podcasts/Business–Economics-Podcasts/I-Hate-Numbers-p1298505/