Q&A: Taxable benefit for a company car

Q. I’m in the fortunate position of being promoted this year, despite the effects of COVID-19 on our company's trade. Now that we are starting to recover from the lockdown restrictions, I’ve been told that I can choose a company car, subject to an overall spending threshold (including optional extras). Am I right in thinking that as long as the emissions don’t exceed a certain threshold, there won’t be any taxable benefit?

A:  Whilst low emission vehicles have always attracted relatively favourable tax treatment for income tax purposes, I'm afraid there is no longer any possibility of a zero benefit in kind treatment for any vehicle provided by an employer available for private use. The most tax-efficient option is to choose a wholly electric vehicle, but even this will attract a charge of at least 1% of the list price.

About the Author

Beverley Howells

Partner

Beverley is a partner with Torgersens, specialising in tax. Her role covers all aspects of taxation, from managing compliance to providing business advice. Her main areas of expertise are in business tax and corporation matters and in particular, acting for owner-managed businesses. Having joined the firm as a graduate trainee, Beverley qualified as a Chartered Accountant in 2000.   Outside of work, Beverley’s favourite place is the beach, enjoying a walk along our beautiful North East coastline. Ideally, she would be joined by a canine companion and has recently started a campaign for her own office dog! 

To get in touch please e-mail beverley.howells@torgersens.com.