Client wants a BMW i8
Am I right, if he has as a company car the company can get 100% first year allowance as CO2's only 49g/km (@ £100,000)
Tax on him would be £2250 (£100,000 @ 5% @ 45%) and £690 Class 1A NIC on company?
Replies (4)
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Figures look OK for 2014/15
Assuming that the car has a list price plus accessories before deduction of the £_5,000 grant of £_100,000 and is to be acquired brand new in 2014/15 tax year and the driver has a marginal tax rate of 45% then the figures look OK to me.
I have seen concerns expressed that the current 5% BIK rate will be increasing in future years - I have seen predicted rates as follows:
5% 2015/16
7% 2016/17
9% 2017/18
13% 2018/19
One point worth looking at is the car fuel mileage rate.
If the employee / driver bears the cost of electric charging and petrol fuel then a very low fuel cost per mile will arise, especially beneficial from a tax viewpoint. My own PHEV (*) varies between 3p and 11p per mile, averaging out at something like 5 or 6 pence per mile according to electric/petrol mileage mix. Now, approved car fuel mileage rates payable tax-free to an employee published by HMRC state "include hybrids as petrol or diesel" so if the engine size were to be say petrol 1400cc or less then 14p per mile could be paid tax-free so quite a nice tax-free profit here! I don't think that HMRC have yet caught up with the PHEV concept so would not be surprised if this changes both for employee mileage rates and VAT recovery in the future. The current car fuel mileage rates are quite profitable from a VAT recovery viewpoint, bearing in mind 5% VAT on electricity but recover 20% VAT on the car fuel mileage rate.
(*) PHEV = Plug in Hybrid Electric Vehicle.
Accessories
In computing the figure liable to the 5% BIK look carefully at "accessories" to be included eg. spare or extra charging cable and any special charger.
@ DMGBus
The predicted rates you refer to were set out in HMRC;s 2014 Budget OOTLAR document (page B4 of Annexe B on the 147th page of the document).
Thanks guys ...
... really appreciate the input, especially the predicted BIK rates (but I suppose they depend on next years general election results!).