It has recently been announced that there will be a shake up of the company car tax rules which could leave many people paying thousands more in company car tax.
It was announced in the Government’s autumn statement that the Government may scrap low tax rates for those who choose to use a company vehicle, which could affect 300,000 in the country.
The worst hit drivers would be those who drive low emission cars, who would see tax rates jump to the marginal rate of 20, 40 or 45% from a mere 7 to 11% under the salary sacrifice scheme.
It is believed that the reason for the hike is that the Treasury is losing out on revenue as companies cut the salaries of staff that choose to opt into company car schemes.
It is also concerning that this change is the taxing of company vehicles may push individuals to choose less ‘green’ cars that in turn contribute to more pollution in cities all over the country.
Under the Salary Sacrifice Scheme an employee surrenders part of his salary in return for a non-cash benefit, such as a leased company car.
The cost of leasing the car is deducted from an employee’s gross salary, reducing the amount on which income tax and National Insurance has to be paid. The employee will still have to pay tax and National Insurance on the car’s value for tax purposes however but this is often much less than the salary sacrificed.
If you’re interested in leasing a car either personally or through a salary sacrifice scheme why not get in touch? We can help with short and longer term leasing as well as vehicle sourcing nationwide. You can call us on 01332 290173 or alternatively complete the form below and we’ll be in touch as soon as we can.