If a Limited company provides a car to a Director or employee and it’s used for private use then it is a taxable benefit on the individual.
If having a company car, the CO2 emissions of the car are very important as they determine how much tax both the individual and the company will pay (the benefit on the individual is determined by the
List price x % based on CO2 emissions).
For example, let’s look at 2 family saloons (a Tesla and Jaguar) that both have a top speed of 155 mph and do 0-60 in 4 seconds – so perfect for the school
There’s a huge difference in tax on both
the individual and the company pays on these cars.
The Tesla benefit in kind on the individual is £4.4k so a 40% tax payer would pay £1,800 in tax per year (at current rates).
The Jaguar benefit in kind on the individual is £18k so a 40% tax payer would pay £7,100 in tax.
That’s £16k more in tax the Jaguar driver pays over 3 years.
The company that provides the Tesla gets to write off 100% of the cost of the vehicle in year 1 against corporation tax.
The company that provides the Jag gets to write off ONLY 8% of the cost of the vehicle in year 1 against corporation tax.
Based on c£60,000 car that’s £11k less corporation tax for the Company providing the Tesla.
Depending on the circumstances, it is often better for the owner manager to extract the cash from the company and then get the car out of their own funds.
There are also ways to reduce the benefit such as the individual making a contribution re private useage.