THE simple answer to whether you need to pay company car tax is ‘no’ – as long as you don’t have a company-provided vehicle, that is!
But if you are an employee of a company and you are fortunate to qualify for a company car, then you will have to pay benefit in kind car tax on it – or company car tax.
That’s because the taxman reckons you receive some private benefit from the car – such as being able to commute to home, use it at the weekends, and so on. And benefits such as this are seen as taxable.
However, there is a case for not paying company car tax. And it is this.
If you only use your car for work purposes – then no tax is payable. But you will have to prove this. In other words, you get to work by your own transport (your own car, public transport, bike, walking and so on) and then only use the company-provided vehicle on business-use trips.
So even if you have a late meeting away from the office you will need to bring the car back to the office and leave it there to ensure no tax is liable.
It’s also important to make sure that the car has no provision for the private use – otherwise you could still get snagged for tax.
If the above sounds too difficult, then there are ways to minimise your company car tax such as:
- Choosing an ultra low emission car
- Choosing a double cab pick up as a company car (if available to you)
- Choosing a motorbike as a company vehicle (if available to you) – which is calculated at 20% of the cost of the motorbike; if running costs are paid too, these are also calculated at 20% of the costs.
Do you have a car leasing question?