Company Car Tax Q&A

Am I going to have to pay more tax for my company car?

Put simply, if you have an existing company car, salary sacrifice car, or have chosen a car rather than cash, nothing will change until 5 April 2021 or until you order a new car under the scheme. The rules are also unchanged if you order a new car before 6 April 2017.

If you do order a new car on or after 6 April 2017 the new rules will apply.

Read our guide to determine if and how you will be affected. If you are still unsure, you should seek professional tax advice or contact HMRC to discuss your specific situation.

 

Is a company car the right choice for me?

If the changes to the tax rules mean you are reassessing whether taking a company car is right for you, it’s worth considering the options.

Once you’ve experienced the hassle-free nature of running a company car it’s very difficult to think about private ownership. Luckily, today there are personal leasing options that provide many of the benefits of a company car such as fixed price motoring and inclusive maintenance.

If you’d like to know more about personal leasing options, please click here.

 

What car should I choose?

Only you can determine that but our guide to Choosing a New Car will help. This contains a handy checklist of the key areas to consider when making a selection.

To understand the tax implications of your choice, read our guide to company car tax and the recent changes.

 

I’ve recently ordered a new company car but it’s not yet been delivered. Will I be affected?

No. The new rules apply to cars orders on or after 6 April 2017. If your new car has already been ordered then you will not be affected by the change in rules around company car tax.

 

I take a cash allowance from my employer and have taken a PCP through a local dealer. Will I be affected?

No. From 6 April 2017 the rules change for drivers who have the choice of a company car or a cash alternative. Moving forwards, drivers will be taxed either on the BiK value of their car or on the value of their cash alternative, whichever is higher.

This means that drivers who select a car with a low P11D value and/or a car with low CO2emissions may no longer benefit from a reduced tax bill. They will pay income tax on the full amount of their cash alternative.

Because you have taken the cash alternative rather than a company car, you will have already paid income tax on this allowance and will not be affected by the change.

 

How can I work out how much tax I will pay?

Read our guide here to help you calculate your company car tax. Bear in mind that if you take a salary sacrifice car or have the option of taking a cash alternative to a car, you may be affected by new rules – read more here.