Company and business car tax has become incredibly complicated in recent years and the complexity is set to increase even further as the Government looks to help businesses make the transition to zero emission fleets.
The objective of this spreadsheet app is to provide users with a comprehensive but easy to use tool that can be relied on to guide the business decisions involving the provision of company and business cars.
Changes to how company car BIK is calculated
HM Treasury has created two new benefit in kind (BIK) tables for company car drivers, based on whether the car was first registered before or after 6 April 2020. The main change is that from April 2020 there was a significant reduction in company car tax on electric vehicles.
The lower benefit in kind rates were also extended to pure electric vehicles which were registered before 6 April 2020 and to company cars registered after this date that have emissions from 1-50g/km and a pure electric range of 130 miles or more.
The rate for zero emission cars will rise to 1% and then 2% in 2021-22 and 2022-23 respectively.
Changes to Vehicle Excise Duty
In addition to the changes in BIK taxes, the Government has also introduced new rates of Vehicle Excise Duty (car tax). From 1 April 2020, the cost of VED on individual cars will range from £nil to £2,245. This is due to a new method of testing called the Worldwide Harmonised Light Vehicles Test Procedure (WLTP) which more accurately evaluates a vehicle’s fuel consumption (mpg), driving range and CO2 emissions.
An example of how this could affect cars with a list price of £140,000 is shown below:
- Tesla Model X, registered January 2017 = £nil VED
- BMW i8, registered March 2018 = £480 VED
- Bentley GTC, registered in April 2020 = £2,135 VED
The Taxpert Company Car Planner does it all for you!
Our Company Car Planner App is the ONLY app on the market that covers all the business car tax changes. It is a simple but effective tool that demonstrates the options available to your clients depending on their personal or business circumstances. In particular it can help with decision making for:
- Sole traders
- What can you claim?
- What are the tax implications of different cars?
- Company director shareholders
- Which is better, a company car or personal car?
- Should use choose an electric, hybrid or ICE vehicle?
- Employee cars?
- Is it better to opt for the benefit in kind or car allowance?
- What are the tax implications for employee and employer?
The Company Car Planner now includes the 2021 and 2020 changes, which cover:
- the 2021-22 changes to car benefit percentages;
- the significant increases in (some) vehicle excise duty rates; and
- the capital allowances changes.
As you would expect from any of the Absolute products, the Taxpert Company Car Planner:
- is simple to use;
- has an easy input screen for the basic data;
- provides a clear comparison of the different options;
- produces a simple client report to show the client; and
- creates detailed workings sheets to support the calculations.
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