Will Buying a Company Car Ever Result in a Tax Advantage?
Most company cars can be a rather expensive luxury for a director/employee. However, CO2 low emission cars provide an interesting alternative to company owners who are also directors of their own business.
You may be interested in the car benefit calculator which you will find on our website:
As you can see with a low CO2 emission there is a small amount of tax payable on the benefit in kind. However, the company will be able to claim 100% First Year Allowance on the cost of the car. This means the company can claim the full expenditure on this asset as a deduction when calculating the company taxable profit or loss for the accounting period, if all the conditions are met. The key types of assets that qualify for first-year allowances are new, unused cars with CO2 emissions of not more than 95 grams per kilometre driven.
Therefore, in the first year there are tax advantages if the company car has a low CO2 emission. After the first year the tax on the relatively small car benefit will continue to apply.
There are some additional considerations, which we are happy to discuss in more details.