Role of an Accountant in Helping Clients Reduce HMRC Tax on Company Car

Business runners are often in a dilemma about using their company cars. They are often concerned about the HMRC tax payable on the use of the company car. However, there are clauses that will help them get some exception. And it is the responsibility of the professional tax advisors and accountants to guide their clients in this issue. 

The Tax Exemptions on Company Car

Company tax does not apply on every company car. There are exceptions and when you hire us our accountants in Reading would guide you in this. As per HMRC rules, businesses enjoy exemption, if and when:

  • They are one of the partners in  a partnership venture 
  • They are a partner of any Limited Liability Partnership (LLP)
  • They are the proprietor of their own business 
  • The car has been adapted for mobility purpose 
  • The car is NOT used for any personal purpose that has nothing to do with the business. 

In fact, when the company car is used exclusively for the purpose of business, the companies enjoy exemption from HMRC tax. In other words, if the car is left at the business premise overnight or during the weekends and is solely used for commuting for the purpose of meetings, business activities etc. tax is exempted. However, commuting for personal reasons is NOT exempted by the HMRC. 

Again, if the vehicle is a pool car, tax is exempted. Our tax advisor in Reading will explain that since such a pool car is shared by the employees for business purpose, and is retained at the business premise, tax is exempted.

The Clauses in regards to Vans

The HMRC tax exemption rules regarding vans are pretty much the same.. Tax is exempted if the van is used as a pool van and solely for business purposes. The use of the van for business purposes includes travelling to appointments and to temporary workplaces. However, the professional accounts in Wokingham have to notify their clients about a few more exemptions. In case of vans, tax is exempted in case of insignificant private journeys. In other words, minor detours for picking up a newspaper on the way to the business or a short stopover for a cup of coffee are exempted from the HMRC tax. 

How to minimise the tax on shared company cars? 

The HMRC tax rules for a company car, which is meant for more than a single employee for private use, are definitive. However, in case the business involves members of the same family, for example two siblings or husband and wife, things can get a bit tricky. Again, it is the responsibility of the professional accountants in Wokingham to guide their clients through these confusions. 

It is advisable that the car is made ‘available’ to both the partners in these cases, as it will reduce the tax to some extent and keep away from the attention of HMRC. 

Thus, when a company car is being ‘shared’ between two, the taxable amount will be divided in a reasonable and justified proportion between the two. 

Reducing the company car tax

As per the professional accountants in Woosehill, the easiest way of reducing company car tax is getting a low emission vehicle. The tax is calculated on the basis of the following: 

  • The amount of CO2 emitted by the car 
  • The P11d value
  • The tax bracket

Thus, one has to get the P11 value as low as it can be and a low CO2  emission to reduce the tax. For those who are wondering what the P11 value is, it is: 

  • The list price of the manufacturer including the factory option 
  • VAT and delivery 
  • Number plates and other options of expenses

Therefore you see, there are so many clauses in regards to HMRC company car tax and so many ways to reduce it. It is the responsibility of the professional accountants in Hurst to guide their clients all the way through. 

This is where we at Biz Accounting Solutions Ltd make the difference. Our expert accounts and tax advisors are there to guide you through. So dial 44 07877 224964 or 01183 671854 to fix an appointment.