A guide to Business Vehicle Finance and company vehicle taxation 2014 by Ford Motor Company Limited UK

More catalogs by Ford Motor Company Limited UK | A guide to Business Vehicle Finance and company vehicle taxation 2014 | 8 pages | 2014-10-22


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Catalog A guide to Business Vehicle Finance and company vehicle taxation 2014

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Featured catalog pages of A guide to Business Vehicle Finance and company vehicle taxation 2014

important information business vehicle finance from ford this information has been provided as a general guide and should not be relied upon this booklet is intended only to bring customers’ attention to certain product attributes and general features of the uk tax system it is not comprehensive and is not intended to recommend a particular product the corporation tax personal tax and vat treatment associated with the purchase or leasing of a commercial vehicle may vary depending on your precise circumstances relevant tax law and vehicle classification this document cannot and should not be used for tax advice all co2 emissions figures and fuel consumption figures in mpg are from officially approved tests in accordance with 80/1268/eec as amended the co2 emissions and fuel consumption test figures shown in the comparison tables do not express or imply any guarantee of the fuel consumption of a car of the class in question all the figures are based on tests conducted on vehicles

2 3 business vehicle finance from ford vehicle excise duty ved a guide to company vehicle taxation and business finance the latest ved bandings and charges effective from april 1 2014 are shown below this guide has been designed to provide you with all the basic information you need to know when running or driving company vehicles it covers company vehicle taxation vat vehicle excise duty fuel allowances and finance products the current system of taxation gives businesses choice and the way that you fund your company vehicles dictates the amount of taxation you or your business pay over the last few years the government has made substantial changes to the company car taxation system to try to encourage businesses to drive greener vehicles this new system based around co2 emissions has also encouraged car manufacturers to produce greener vehicles ford are committed to reducing their environmental impact through a broad range of measures and actions ford cars and commercial vehicles are

4 5 background calculating benefit in kind costs company car tax the company car tax benefit is calculated using the table shown on page 6 note that all diesel cars are currently subject to a 3 loading up to a maximum of 35 a company car is a car which you do not own but can use by reason of your employment a company car is classed as a non-cash benefit if it is made available to you or a member of your family or household by your employer and is available for private use including commuting you may have to pay tax on this benefit in addition to the tax and national insurance contributions you already pay via pay as you earn paye your company car is valued according to what is a p11d a p11d is a form used by your employer to tell the employee and hmrc about the value of any benefits in kind that they have given you during the tax year the p11d price of your car is calculated as the total of the following • the manufacturer’s list price of the car excluding any vehicle

6 7 class 1a national insurance contributions capital allowances — outright purchase class 1a is an employer-only national insurance contribution and is payable by employers when a company car is made available to the employee or a member of his family or household for private use it is also payable where free private fuel is provided capital allowances is a system used to calculate tax relief for businesses for cars plant and machinery the 2014/2015 class 1a employer’s rate is 13.8 and is payable on the car taxable benefit there is currently no employee nic due on a company car bik companies and businesses that choose to buy their cars outright may be able to claim tax relief against the cost of the car the current scheme was introduced in april 2009 and is based on co2 emissions the level of tax relief or writing down allowance wda which can be claimed against taxable profits in a year is split into three categories example 1 cars with co2 emissions of 95g/km and below

8 9 capital allowances — leasing vat recovery applies to vat registered businesses only companies who choose to lease their business vehicles are usually unable to claim capital allowances however the rentals that the company pays to the leasing company may be offset against its taxable profit outright purchase there are some exceptions where rentals may not be fully offset against profits for example • vehicles with co2 emissions over 130g/km may only offset 85 of the rental amount or where the rentals aren’t evenly spread over the life of the lease vat is not recoverable if the car is available for private use as nearly all vehicles have the potential to be used privately by an employee it makes it very difficult to argue the case for vat recovery on the price of a company car the supply of some specially adapted cars such as for example a vehicle modifed to transport disabled persons may be invoiced vat free when supplied to certain individuals or eligible

10 11 fuel allowances commercial vehicles employer-provided fuel for private mileage in a company car benefit in kind — taxation if an employer provides free or subsidised fuel for the private use of a company car then this is classed as a fuel benefit and the employee is subject to tax on this benefit a light commercial vehicle is classed as a non-cash benefit if it is actually used for private use excluding commuting by an employee or a member of their family or household if the van is only used for business purposes then there is no bik taxation employees with a company van may have to pay tax on this benefit in addition to the tax and national insurance contributions they already pay via pay as you earn paye a fixed sum of £21,700 is used when calculating the annual fuel benefit charge for 2014/15 this may not be the most cost effective way of receiving fuel employees can check their ‘break-even’ position to decide example for vans the bik charges are not

12 13 commercial vehicles buying vs leasing vehicle excise duty the latest ved categories and costs for commercial vehicles including people movers and minibuses are shown below private or light goods vehicles plg below is a summary of the differences between buying and leasing a vehicle for your business you should always seek independent financial advice before making your final decision outright purchase leasing yes no capital allowances – writing down allowances wda up to 100 wda may be claimed in the 1st year dependent on co2 emissions – see page 10 for more details not available with leasing products capital allowances – lease rental restriction not applicable to outright purchase products rentals may be offset against taxable profit – see page 11 for more details benefit in kind – company car tax costs based on the p11d price of the car and its co2 emissions based on the p11d price of the car and its co2 emissions benefit in kind –

14 15 funding your company vehicles funding your company vehicles — leasing outright purchase there are two main types of leasing the vehicle is bought in the company name using cash bank loan or a finance plan such as hire purchase • operating lease contract hire • finance lease hire purchase also known as hp it is considered the traditional way to fund vehicles the customer usually pays a deposit and then the balance plus any charges is split into equal instalments over an agreed contract term the interest rate is normally fixed for the life of the agreement some finance companies offer hire purchase with balloon which enables customers to reduce their monthly payments by paying the balloon amount at the end of their agreement ford acquire from ford credit provides a traditional convenient way to fund your business vehicles contract hire contract hire is a fixed-term operating lease the customer pays a fixed monthly rental and at the end of the agreement the