Company car allowance
Taking Benefits of Company Car Allowance
Nowadays driving plays a very important part in your job. Each company and organization has framed their own sets of rules for the car allowance. It depends upon you whether to take car or cash as a car allowance. The five thousand ponds per year is a typical car allowance given by the different companies to their employees though it varies extremely. Due to the drop in the tax on vehicles youd be pushed to buy a sensible car. You can have a car with a standard bank loan that can be paid back up to three years with a minimal interest. The expense that is being done in the business mile will be reimbursed to you by the company. You can also claim it back, if they do not reimbursed the amount direct from HM revenue and customs. The charges allowed are 40p a mile up to 10,000 business miles and 25p a mile after business miles.
The government has introduced a new CO2 based taxation on fuel to fill the treasury and to minimize the carbon dioxide emissions. That means a monthly free-fuel tax of 96 pound will be drawn. The employee car ownership (ECO) involves that your employer giving you a car allowance and thus by doing this they can avoid the burden of tax paying. The company maintains the company car delusion by taking care of the servicing and setting the financial deal and insurance. Due to its benefit more and more companies are deploying the employee car ownership schemes.
The only problem is that the government claims that the car chosen in the employee car ownership scheme emit more CO2. There is another scheme called as affinity scheme, wherein you get the better car deal for the employee the company acts as a negotiator. They are offered by the company as a part of an employees incentive package. The advantage of an affinity scheme taken by the companies depends on the flamboyance of the loan and the strength of the discount.
The calculation for the government taxes for taking advantage of company car depends on three factors: list price of the car, your tax bracket and the quantity of carbon dioxide emitted by your vehicle. The least emitting carbon dioxide petrol car is 15% and diesels car is 18% that is 145 g/km of CO2 as the carbon dioxide banding is expressed in percentage. And the option is that you can go for the free fuel option though it is actually very expensive. For instance; if your new car priced twenty thousand pounds and emits 144g/km, then the tax is calculated at 15% of the list price. Again if it asked that which one is better, the car provided by the company or the car allowance, it will be difficult to say the answer. In a tax view point the car allowance is better option if you have to travel more than 23,000 km.
Other Articles
