Question – when does two per cent equal 50%? Answer – when it applies to Company Car Tax, read on… In previous columns I have talked about the upward creep in the company car Benefit in Kind Tax (BIK) and the Government’s increase of the tax take by stealth, slowly but surely increasing by two per cent per annum, and three per cent in 2020, the charge they levy on those drivers lucky enough to drive a company car.
However, in the Autumn Statement at the end of November last year the Government once again attacked the soft target that is the company car driver.
Question – when does two per cent equal 50%? Answer – when it applies to Company Car Tax, read on… In previous columns I have talked about the upward creep in the company car Benefit in Kind Tax (BIK) and the Government’s increase of the tax take by stealth, slowly but surely increasing by two per cent per annum, and three per cent in 2020, the charge they levy on those drivers lucky enough to drive a company car.
However, in the Autumn Statement at the end of November last year the Government once again attacked the soft target that is the company car driver. The Government had previously made a big announcement about removing the three per cent diesel surcharge on the BIK rates, which they did for tax year 2016/17. However, this has now been reversed and the surcharge is back on.
This is certainly as a result of the reduced tax take from company car drivers as the car manufacturers produce lower and lower CO2s but possibly also a knee jerk reaction to the recent VW emissions scandal. If you think that two per cent per annum doesn’t sound very much then consider an example provided for a current client. They were looking for a Ford Focus 1.5tdci Titanium, not an expensive car and certainly not luxury. With a list price of £22,000 and a CO2 of 98 gm/km it fits the profile of an efficient green car. In the current year 2015/16 a 20 per cent tax payer will pay £64 per month in tax, but by 2019/20 the tax payer will be paying £95 per month. An increase of nearly 50 per cent! We think that careful consideration should be given when choosing your next car, it isn’t possible to future proof the cost, but at the very least you should be aware of the cost to the driver going forward.
For an analysis of a driver’s tax position, why not ask a member of the Alpha Contract sales team and when they provide a quotation they can also include an example of the effect the choice of car will have on a driver’s tax position and we can help you choose the most tax efficient car for your budget.
For any other car or van related enquiry speak to one of the team at Alpha Contracts Leasing Limited on 01604 756620.