A Company Car For Less Than The Cost Of A Cup Of Coffee Per Day?
Tax changes in April 2020 mean you can ...
POSTED BY JONATHAN VOWLES ON 14/05/2019 @ 8:00AM
Can you really have a new company car for less than the cost of a cup of coffee every day? Yes you can! This is because the company car tax changes in April 2020 mean you can. The rules are changing to give much cheaper rates for electric only company cars ...
With the tax changes coming soon, you can have a company car for less than the cup of coffee per day!
copyright: aprior / 123rf
For example, a Tesla S 90D has a list price of £84,500 - and for 2020 the benefit in kind charge would be £1,690; at 40% the company car tax is £1.85 per day. For a Tesla 3 with a list price of £50,550 at 40% tax, it is £1.11/day! Less than the cost of a daily cup of coffee for one of the fastest production cars available.
"WOW! A company car for less than the cost of
a cup of coffee per day!"
For comparison, the Mercedes C350 Hybrid with a list price of £40,990 will have a benefit in kind charge from April 2020 of £5,738, ie company car tax at 40% of £2,295pa, which is actually pretty good. A Ford Mondeo ST Line 2.0 auto with a list price of £29,345 will have a benefit in kind charge from April 2020 of £10,857, with company car tax at 40% of £4,343pa. So, yes, the Tesla is cheapest and the Ford most expensive in company car tax terms.
Who would have thought it? But do remember, the low tax charges come in from April 2020 so start planning now, to make sure your next company car contract isn't more expensive than necessary.
What car to choose? There are many good electric or hybrid cars available than previously, and more are on their way. The issue is, when do you need to change cars? Before or after the new rules come in April 2020? Don't get caught out in the wrong car and on a higher tax charge.
Company car taxation is a percentage of the list price of the car, and from April 2020, how far it will go on battery only. Going for a lower list price and a better range on battery only is therefore hugely important.
What's more, the UK is currently a great place to get either an all-electric or a hybrid car. The cheapest cars in tax terms are the ones that can do more than 129 miles on battery only, which gives you a great choice of Tesla, Jaguar, Kia, Hyundai, Nissan, Audi and Renault. All have big battery range versions.
"What about current company car tax charges?"
If you need to change cars now, then you might have nine months or so of a more significant tax charge, but this is likely to be more than offset by the saving on the rest of the time you drive your company car. Between now and 2020 then, the car tax rates aren't as generous!
Ping me an email with your car model, CO2 emissions, battery only range and list price and I will send back a free calculation of the benefit in kind.
At the moment you can get a grant to go towards the cost of installing an electric car charging point. That won't always be the case! Organise your car charging points now rather than waiting.
If you are worried about the range and finding places to re-charge then maybe go for a hybrid, however, unless you regularly drive for more than 4 hours without stopping, are you being unduly worried?
"Would you like to know more?"
If you are thinking of company cars, whether you are an individual or run a fleet, then get in touch. For any individual, we will give you a free company car tax calculation (and only need you to answer four questions to do so), and I would love to speak to business owners about company car planning for their business as a whole! Call me on 01234 752 566 or click here to ping me an email and let's see how I can help you.
Until next time ...
If you're looking for a new accountant to help grow your business, do visit www.jvca.co.uk and discover how Jonathan Vowles Chartered Accountants can help you!
More about Jonathan Vowles ...
I've been an accountant in and for business since 1987 and have a wide experience of consultancy, audit, accounts, taxation and wealth planning work from individuals and small businesses to multinational corporations and charities.
My eclectic interests in growing and developing business span a number of areas … and can be summarised as strategic business advice and tax saving advice.
I have worked with the Chamber of Commerce to deliver courses for people about starting up in business and have lectured about tax for a major accountancy practice and for Milton Keynes College.
I relax by reading fiction and by getting away from the office in a campervan.
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