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Company Car

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Company Car

Postby Joseph Vincent » Fri Dec 21, 2012 12:52 am

I run a small limited company and now consider to employ my friend's daughter as a part-time clerk to help out admin work and filing etc.

I'm going to pay her £100 per week (2 days) and provide her with a low CO2 emission company car (150 CO2 with list price £12,000) so that she can collect samples etc from our suppliers. Do I have to account for any benefits in kind for car and fuel???

Also, can I claim the VAT on the purchase of the car? Any other tax / national insurance issues I have to look out for?

Many thanks
Joseph Vincent
Posts: 1
Joined: Thu Dec 20, 2012 9:54 pm

Re: Company Car

Postby Justin Bailey » Thu Jan 17, 2013 1:23 am

The basic rule is that if the salary plus all expenses & benefits totals less than £8500, the benefit is not taxable. In this case the car benefit would be calculated as 20% of the list price, ie £2400, and the fuel benefit would be £3760 (!) so if you were to provide a car and fuel the total benefit of £5760 would be subject to tax on the employee and class 1A NIC on the employer. However if you were to provide a car only, with no fuel, the car benefit would not be taxable as the total remuneration would be less than £8500. In this case you would not be able to re-imburse fuel for business travel of more than ££900, as even tax allowable expenses are taken into account for the £8500 threshold.
You might want to consider supplying a lower emissions car to keep the benefit rate down.

As the car will be a business purchase, you can reclaim the VAT
Justin Bailey
Posts: 2
Joined: Thu Jan 17, 2013 1:18 am

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