Company Car Tax
Horribly complicated taxation related matters can be one of the certain things in life. This also includes company car taxation, and annual changes made to the system will add even more complication.This is due to HMRC seeing the company car being as a benefit, and it is called as ‘Benefit in kind’, hence its taxable. This term is applied to any perk or incentive which are taxable and are not basic salary.
The calculation of the car tax is fairly straight forward. It takes into account such factors as value of the car, the employee’s salary, emissions of CO2 and the type of fuel used. Main factor in the formula is the CO2 emission, which is derived to with the motive of encouraging people to drive cleaner (less CO2 emission) cars.
Recent year tax changes included company car tax restructuring. Cars which run on diesel are to pay 4% surcharge due to the harmful emission it outputs. This will discourage people from buying and driving diesel cars. On the other hand are the hydrogen and electric cars which don’t have as much emission as the diesel ones. These usually taxed at a much lower rate.
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