Company car tax changes every year and is quite the minefield. Here at Red Kite Leasing, we have put together a quick guide to explain all of the changes that will be taking place.
First of all, what are the current tax rules?
At present, we all benefit from a personal income tax allowance of £11,850 per year. This means that we can earn that amount before having to pay any income tax and will be illustrated on our pay slip as tax code L1185. This will change if you benefit from the use of a company asset, eg: a company car.
What will change and when will it take place?
The tax new tax year starts from the 6th April and the new company car tax rules will be in place from then. The new rules will be applied to your company car and will affect your personal income tax code accordingly.
The great news is that our personal income tax allowance is increasing to £12,500. An increase of £650 tax free earning for everyone to enjoy. Hooray!
Unfortunately, there has been an increase in the percentage charged against CO2 emmissions from vehicles. The majority of the bands have increased by 3%. We have placed a table below of all the new percentages charged against CO2 emmisions.
How to reduce your tax
So a 3% increase is not very friendly to the pocket. The good news is there are some things you can do to reduce the amount of company car tax that you pay.
First of all, run a vehicle with a lower CO2 banding. This will mean that the percentage paid per month will be reduced and you get to keep more of your hard earned money. Typically vehicles with lower CO2 emmissions have either a smaller petrol engine or are electric in someway.
Secondly, withdraw from your company car scheme in favour of a monthly allowance. A monthly allowance will be subject to your income tax, but typically, this can be less than the amount you could pay in company car tax each month. This can also free up your company or personal vehicle choice giving you the chance to lease a vehicle through Red Kite Leasing.
Here at Red Kite Leasing we have put together the best lease deals, whether you need personal car leasing or business car leasing. We supply any make and model and will deliver it straight to your door. To search either by CO2 band or by vehicle make, please use the tools on the left hand side of the screen.
When you find the right deal for you or would like to discuss what we can do to help, please do not hesitate to get in touch.
* All vehicle images and car descriptions on this site are for illustration and reference purposes only and are not necessarily an accurate representation of the vehicle on offer.
T: 01993 773514
Red Kite Leasing
Registered Office : 73 Newland, Witney, Oxfordshire, OX28 3JW
Red Kite Leasing are a credit broker and not a lender, we are authorised and regulated by the Financial Conduct Authority. Registered No : 820084
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