Posted by admin - July 28, 2015 12:21 pm Should Hybrid Cars be the Company Car of Choice?

Cars with CO2 emissions of less than 50g/km currently have significant tax advantages over conventional cars. New technology has addressed issues of performance and now there is a wider choice of hybrid cars, from both standard and more prestigious marques, which offer the most benefit to company car drivers. Whilst initial capital outlay of these is often more expensive the ultimate savings in car and fuel benefits in kind are often making hybrids more cost effective in the long run (pardon the pun).

On the current scheme conventional car rates can be as high as 37% of its value when first registered but more typically tend to fall in the 17-25% range. However, employees who select a greener vehicle could have a car and fuel benefit as low as 5% in the current tax year, rising to 9% in 2017/2018, giving a significant saving in personal tax.

In addition, the employer may also be able to claim 100% allowance against taxable profits in the year of purchase and will also have a lower Class 1a liability because the employee’s taxable benefit is lower.

Example details taken from a search on next greencar.

VW Golf Plug in Petrol Hybrid GTE DSG

OTR Price £28,755

Similar performance statistics to VW Golf 2.0 TDI GTD (£29,005) but benefits from a significantly reduced Benefits in Kind (BIK) of 5% compared with 22% in the current tax year.

Therefore anyone considering a new company car whether employee or employer should do some research and consider all the tax implications beforehand.