Are company car drivers taxed unfairly?

I am very concerned about the amount of car tax that company car drivers are having to pay. I have read this tax is to encourage companies to buy cheaper and more fuel-efficient cars but it's not the company who pays this tax, it's the user. I pay tax at 40 per cent and I've got a SAAB 9-5 with 174g/km CO2 emissions. The point is that on my salary I would not usually buy this type of car and certainly not a new one every 3-4 years.

Asked on 18 August 2012 by DH, York

Answered by Honest John

That is a bad choice of car both from your point of view and from the point of view of the company. I have a company and although I was testing enough cars to be mobile most of the time, I thought it better for the company to buy me a 'spare' car, so I got a FIAT 500 1.2 Lounge.

Because it's under 121g/km, at the time, the company was able to claim 100 per cent capital allowance in the first year (the limit is now 100g/km). I pay tax on a BIK of £960 a year (10 per cent of purchase cost) and the extra NIC paid by the company is £134 a year.

You could have a Focus 1.0 Ecoboost 100PS on 100 per cent capital allowance (the hurdle for that has now changed to 101g/km) and then your BIK would be on about £1600 a year. See: www.honestjohn.co.uk/company-car-tax

Tags: company cars road tax

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