LLP changes may affect 250,000 company cars

Tax changes proposed by the Government to close a ‘disguised employment’ loophole by the creation of some Limited Liability Partnerships (LLPs) are set to impact ‘perks’ including company cars and fuel. Alastair Kendrick, tax director at chartered accountants MacIntyre Hudson, estimates that the tax change could involve at least 250,000 company vehicles. Meanwhile, a First-Tier Tribunal, which hears appeals against decisions relating to tax made by HM Revenue and Customs (HMRC), ruled that four members of the same family circumvented tax rules relating to cars and fuel by running parallel company and partnership structures. LLPs have become increasingly popular as a method for carrying on a wide variety of businesses since they were introduced by the LLP Act 2000. According to Companies House, there are more than 50,000 LLPs which give the benefit of limited liability for members with the tax treatment and flexibility…

Whole life costs are critical basis for company car selection

Vehicle whole life costs should be the critical basis on which businesses select which company cars to operate, yet evidence suggests as few as one-in-five organisations use that strategy. Vehicle whole life costs are critical because they highlight that cars which may cost the same in terms of list price or monthly lease rental actually do not in terms of cost per mile to operate. The cost difference can build up over the lifecycle of a car. The principle of basing choice lists on whole life costs can help both employers and employees. For employers it can save money, and for employees, even if the whole life cost figures on two models are identical a different CO2 emissions figure will influence the level of benefit-in-kind tax due. GE’s Company Car Trends report has tracked fleet industry developments for almost a decade via quarterly research…

Company car drivers hit by tax errors

Fleets have been urged to get employees to double-check their payslips after warnings that a radical shake-up of the tax payment system has left tens of thousands paying the wrong amount of company car tax. More than 40,000 workers are thought to have been hit by problems with HMRC’s new real-time information PAYE system, which was introduced in April. The aim of the system was to slash red tape, as businesses can now report pay details to HMRC in real-time. However, the launch has been hampered by issues, including the latest in which, in some cases, the computer system is incorrectly assuming workers have ceased employment and has stripped taxable benefits such as company cars and private healthcare from their PAYE code. As a result, thousands are underpaying tax and will face potentially hefty bills when the system error is corrected. A spokesman for…

European company cars reduce CO2 emissions by 15%

New company cars across Europe’s major markets reduced their CO2 emissions by 15.2% between 2008 and 2012, according to the Key Solutions CO2 assessment published by GE Capital. The report analysed the reduction in CO2 emissions from new company cars in 11 European countries between 2008 and 2012. Extrapolating the figures out, the report estimates that the cumulative reduction achieved between 2010 and 2012 is in excess of 13,143,000 tonnes – more than the CO2 produced by a coal-fired power plant over three years. The Key Solutions team – the specialist fleet consultancy unit of GE Capital – estimates that had fuel efficiency remained at 2009 levels, the fleet sector would have incurred an additional fuel cost of more than 6.2 billion Euros between 2010 and 2012. Alex Barbereau, EU accounts and consultancy director, GE Capital, said: “Our research shows a continued reduction in…

EST launches free online carbon footprint tool

Energy Saving Trust (EST) has developed a new online service which provides organisations with an accurate business transport carbon footprint, as well as recommendations for next steps to help reduce costs and emissions. ‘Fleet Health Check Online’ is straightforward to use. Organisations simply need to answer a few questions about their fleet. The service is free and EST’s advice is completely impartial. Funded by the Department for Transport, EST has worked with hundreds of organisations of all sizes to help them reduce their carbon footprint and save money. David Watts, fleet partnership manager at Energy Saving Trust, said: “Organisations are under increasing pressure to reduce fleet emissions and operating costs. “Our new carbon footprinting service has been developed to help employers understand the impact of their transport operations and take steps towards reducing emissions. “It costs approximately £600 to create a tonne of CO2…

Budget extends tax appeal of ultra-low emission cars

Manufacturers have welcomed the Government’s announcement in the Budget to extend the tax appeal of sub-76g/km models for fleets. The introduction of two new bands from 2015, which reverses a 2012 Budget decision to remove tax exemptions, will cut benefit-in-kind tax by hundreds of pounds a year. However, ultra-low emission vehicles have not yet caught the imagination of the majority of fleets, despite the lure of Government incentives, such as the plug-in car grant which offers up to £5,000 off the price of vehicles up to 75g/km. In 2012, 1,262 pure electric cars were sold, with the Nissan Leaf accounting for 55% of registrations. Range extended vehicles, such as the Vauxhall Ampera and Chevrolet Volt, which emit 27g/km, accounted for 522 registrations and plug-in hybrids, like the Toyota Prius at 49g/km, were responsible for 470 registrations. Combined they accounted for 2,254 units out of…

Company car news – The Budget

BVRLA chief executive John Lewis shares his comments on the Budget: New thresholds for company car Benefit-in-Kind tax: “This decision to rethink the benefit-in-kind thresholds on low-emission company cars will ensure they remain an attractive proposition for drivers. “The market for plug-in vehicles is growing but confidence in this new technology, particularly the costs involved, remains fragile. This move will reassure thousands of potential drivers.” On 100% FYA’s for ultra-low emission lease cars: “Thousands of businesses, particularly SME’s, rely on leasing to acquire their cars, in many cases because they can’t raise the finance elsewhere. “This decision to remove 100% First-Year Allowances won’t stop them leasing, but it will result in them choosing cheaper cars with higher CO2 emissions. “In effect, the government is hindering the momentum towards greener motoring. We think overall car emissions in the UK could rise as a result over…

Choices made now can save fleets cash when new measures are introduced

Keeping abreast of Government policy and running a low carbon fleet are the top priorities for maintaining a tax-efficient fleet. That sounds simple enough, but fleet managers need to take into account corporation tax, VAT and National Insurance Contributions, and it’s not enough just to understand current legislation. With many companies operating a fleet replacement cycle of three or four years, changes announced several years in advance need to be taken into consideration by companies and their employees to help avoid unpleasant surprises. Companies are eligible for tax relief on certain costs, such as vehicle leasing, which reduces the corporation tax they have to pay. To maximise the level of tax relief, choosing low emission vehicles is key. Based on current legislation, if a car has CO2 emissions of 160g/km or below, then the full cost of the lease rental will attract tax relief….

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