Which cars are exempt from company car tax?
[vc_single_image image=”47929″ img_size=”article-image”]If you have a company car, the chances are you will be paying company car tax. It’s a tax that you have to pay to enjoy a benefit such as a company car, and how much you pay depends on a variety of factors.
However, is there any way you can be exempt from tax on company cars?
We’re going to look at how tax on company cars is calculated if there are exemptions, and how to lower your company car tax bill.
How is company car tax calculated?
Firstly, how is company car tax calculated?
The amount of tax you will have to pay depends on the following
- The type of car
- CO2 Emissions
- The P11d value
The P11D value is how much your car is worth including the RRP, VAT, delivery and any extras that come with the car (for example, if you opted for a satnav). The amount you have to pay in tax will also depend on which tax bracket you are in, as you will either be taxed 20% or 40%. And, how much CO2 your car emits also plays a big part in it. To calculate your company car tax you do the following; [vc_single_image image=”47926″ img_size=”article-image”]
- Take your car’s ‘P11d value’
- Multiply the P11d value by the company car tax rate – this total will be your benefit-in-kind amount
- Multiply your benefit-in-kind amount by your personal tax rate.
This is how much tax you will pay annually.
Alternatively, you can use a car tax calculator, such as the one on parkers. This will do it all for you.
Are there exemptions from tax on company cars?
So you know how company car tax is calculated, is there any way around it? There are some legal ways around paying company car tax, but these might not apply to you, nor may they be viable for your situation. According to Gov.uk, you are exempt from company car tax if;
- The car is for business journeys only
- So if employees are using the car purely for business reasons such as travelling to meetings
- OR, if they are using the car to travel to a temporary workplace
- The car has been adapted for an employee with a disability
- However, these cars are only exempt if they are used for travelling to and from work and for business purposes.
- If it is a ‘pool’ car
- These cars are usually kept on site premises and are shared by employees to travel for businesses purposes.
[vc_single_image image=”47927″ img_size=”article-image”]You also do not have to pay tax on company cars if;
- You are a Partner of a Partnership or a Member of a Limited Liability Partnership (LLP) or if you a proprietor of your own business
So there are some exemptions. However, as I said, these may not apply to you nor may they be viable for your situation. For example, you may need to use the car for personal use, and therefore cannot leave it on company premises. Therefore, you will still have to pay company car tax.
Are electric cars exempt from company car tax?
In the not so distant past, electric cars were in fact exempt from company car tax. However, times have changed, and electric cars are now a familiar sight on British roads, therefore they are now being taxed like the rest of them.
Of course, they won’t be taxed half as much, neither will other ultra-low emission vehicles. If you have one of these cars then you will be eligible for 7% tax as of April 2017. There is also no limit on the amount taxable anymore, but that’s an article for another day.
Which cars are the lowest for company car tax?
The cars that will, as of April 2017, cost you less in company car tax are the ones that will emit the least amount of CO2. This means electric cars and ultra-low emission vehicles (ULEV’s) will be taxed the least. These include cars such as;[vc_single_image image=”47928″ img_size=”article-image”]
If you’re looking at vans, then you might want to have a look at;
- Nissan e-NV200
- Nissan e-NV200 Combi
- Renault Kangoo Electric
- Citroen Berlingo Electric
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I have been offered a car for work purposes.
I would not use this car for personal use as I have my own car. The business car that I would be offered to do business mileage would be left on my drive overnight as the company I work for is French and only have a postbox registered office in the UK which my salary is paid through. I work from home and journeys to customers would always start from my home address.
Can this be exempt from company car tax, as I would only be using the car for business mileage?
We would recommend contacting your accountant. However, the GOV.uk website states:
You must report the car or fuel to HM Revenue and Customs (HMRC) if they are provided as part of a salary sacrifice arrangement.
If you provide the car and fuel in another way, you might not have to report or pay anything. To be exempt, your employees must use the car or fuel in one of the following ways.
Privately owned cars – You don’t have to pay anything on cars that directors or employees own privately.
Cars available for business journeys only
Business journeys are either:
– journeys that are part of your employee’s duties, eg a service engineer travelling to an appointment
– journeys an employee has to make to get to a temporary workplace”
We hope this helps.
I have the possibility of working from home for a new employer. My job will involve travelling to numerous construction sites and client offices. I am likely to receive a company vehicle sign written with company logo etc. I would not be using the vehicle for personal use.
Will I be charged for company car tax?
As per these two statements in the ‘which cars are exempt’:
The car is for business journeys only
So if employees are using the car purely for business reasons such as travelling to meetings
OR, if they are using the car to travel to a temporary workplace
It sounds as though your company vehicle would qualify.
Do you pay tax on company vans?
It is used to go home in so then I can travel back direct to on site jobs or go to the office.
I have my own car for private use.
The travelling to sites would possibly be considered a work journey, however the ‘travelling to the office’ if it is classed as your daily commute is still considered personal use under Company Car tax rules.