A company car is widely considered to be one of the biggest perks that a job can offer, but leading independent car specialists, OSV, have discovered that around half of all company car drivers don’t really understand what their vehicle means for their tax status.
While 27% of company car drivers did not realise that there had been changes made to the way in which company cars impact upon taxes (with the April 6th 2017 implementation of the Benefit in Kind (BiK) system,) of those who did know that changes had been made, almost half (46%) had no idea what those changes were, over four months after the changes came into effect.
BiK represents any benefits which employees or Directors receive from their employment but which are not included in their salary or wages, and the company car is potentially the greatest of these assets. Unfortunately, OSV’s research has revealed that 47% of company drivers do not even know what BiK stands for, let alone how it impacts upon them, or how to calculate it.
|Calculating BiK can, however, be a worthwhile exercise, allowing you to enjoy the perk of a company car without incurring unnecessary expenses.
Should this sum prove too ‘taxing’ there are calculators that will do this for you including OSV’s Unique Company Car Tax Tool.
|There is a formula which can help:
As a caveat to that, making financial contributions to your company car scheme will lower your BiK rate – something which came as a revelation to 54% of interviewees – and part time use can also lower company car tax.
As a general rule however, it can be assumed that high earners, driving expensive cars that have high CO2 emissions, will pay more company tax. Despite this new information, 22% of drivers said that they would not be changing their choice of company car because of the new BiK scheme.