When this car is registered will affect the rate paid after If registered after 6 April Previously salary sacrifice schemes could be quite beneficial for company car drivers; the cost of the car could be deducted from the salary pre-tax to pay for a vehicle on the scheme, with the employee effectively paying tax only on the BIK charge. Existing salary sacrifice schemes taken before April will be allowed to continue until You can use the Parkers company car tax calculator to quickly work out how much you'll be liable to pay for a given make and model.
From January to January , it's possible for cars to get Euro 6d type approval before it's mandatory. All cars sold from January must comply with RDE2, but for , there will be a mix of diesels on offer with different costs. To compensate for 'emissions inflation' as a result of WLTP testing, different rates are now applicable for cars registered berfore April , and after April , reflecting the shift in CO2 figures.
Another coveted remuneration method is to grant an employee or a director the free use of a house or a flat under the terms or on the occasion of exercising professional activities. This free use or use against a too low rent price is regarded as a taxable benefit in kind. An employee or director is allowed to use an unfurnished house for free. The index coefficient for the year is 1. If, in the case at hand, the house would be furnished, the benefit in kind would result in a taxable amount of:.
The free use or use against preferential criteria of a house or a flat is often accompanied by the provision of heating and electricity.
As illustrated above, these are just some of the most frequently granted benefits in kind. It needs no further clarification that most of these benefits in kind are often used to offer a tax-efficient remuneration. Facebook Twitter Linkedin Send to a friend Share this page. We explain these below. Neither the employee nor the employer is required to pay additional tax as a result of these benefits.
A comprehensive list of tax-free employment benefits can be found here. Other benefits which do not make up part of your taxable earnings may still however be of generous value. Again, the below is not a complete list but some of the most common BIKs and an explanation of when they will attract tax:. As an employee who receives a BIK, you will be charged income tax.
Throw in low prices and this is a very savvy low-tax choice. Going for a used car would seem like an excellent way to cut BiK tax bills as used cars are much cheaper to purchase.
Maintenance bills are likely to be higher on used cars than new cars, so do bear that in mind if you're considering spending the same amount you would have done on a new car with a used car.
Since even one-year-old used cars are typically many thousands of pounds cheaper than new versions, however, you're still likely to be far better off overall with a used car compared with a new one. Some companies offer cash allowances to employees rather than a company car scheme. Tax for such arrangements is a little different to regular company car schemes. The reason being is that the government will charge whichever is higher out of BiK tax or income tax. It is a similar story with salary sacrifice schemes.
The tax that you have to pay is whichever is higher out of BiK or income tax, based on the amount of salary sacrificed to get the benefit. Home cars economical cars What is Benefit-in-Kind tax and how is it calculated? James Wilson Sep 21, Search cars with low emissions.
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