It’s that time of year when P11d forms are being completed and many people think about benefits in kind. Company cars have diminished in popularity in recent years as the tax on a company car benefit and particularly the tax on a company car fuel benefit is very expensive.
Lindsay Farrer, partner at Saint & Co in our Carlisle office, says “For many it is only worthwhile considering having a company car benefit if the employee has a very low emissions car and does considerable private mileage.”
The tax on a company van is considerably lower. The benefit in kind on a van for 2015/16 is £3,150. However it is the van fuel benefit in kind which is very cheap compared to a car. The company van fuel benefit charge is £594! And remember you don’t pay £594, you pay tax at the relevant rate on this figure. This is compared to a company car where the multiplier for a fuel benefit uses a multiplier of £22,100. For a diesel car with CO2 emissions of 109g/km the percentage applied to the fuel multiplier would be 19% giving a fuel benefit of £4,199!
What are the tax advantages of a company van (rather than a car)?
- Much lower personal taxable benefit in kind on the employees
- Much lower taxable fuel benefit £594, rather than using a multiplier of £22,100 for 2015/16
- Far less class 1A national insurance
- Recovery of VAT (which you do not get on a car)
- 100% capital allowances (not 8% for a gas guzzling car)
- Other advantages such as road tax
When is a van a van?
You would be surprised at the vehicles HM Revenue and Customs class as a van. Many working vehicles such as 4x4s are actually classed as a van. You can use this link to see the latest government issued list. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/428510/Car_derived_Van_updateMay2015.pdf
It’s worth thinking about for many businesses. If you wish to explore this further please contact your partner.