Close form

Fancy a Classic Car as Your Company Car?

23 October 2018
Jan Friend
Reducing Tax, Accounting & Compliance, Payroll

Will your next company car be a classic?

How would you like to drive an MGB GT or a Triumph Spitfire?

This is a serious question for car enthusiasts and one several of our clients have said a big YES to!

Surprisingly, classic cars can be quite tax efficient if you pick the right one.

In simple terms a “classic” car is one which has an age at the end of the year of assessment of 15 years or more. Next you need to find the list price of the vehicle when it was new and also the current market value of the vehicle.

If we ignore any capital contribution then the benefit in kind is always assessed on the original list price unless the car is over 15 years old and has a market value of £15,000 or more when you take the greater of the market value of the car or the list price.

For cars with no emission details (which will be most of the cars over 15 years old) you then multiply this sum by the appropriate percentage based on the engine size.

Engine Size (cc) Appropriate Percentage

1 to 1400 15%
1401 to 2000 22%
2001 and more 32%

 

So, let’s look at a Triumph Spitfire Mark II which was introduced in 1965 for just £550. The above restored Triumph Spitfire Mark II was being sold recently for £9,950.  As this value is under £15,000 and the vehicle is less than 1400cc the benefit in kind would be £550 (the list price) x 15% or £82. The tax payable on the benefit would be just £16 for a 20% tax payer!

If the market value rose to say £20,000 the benefit in kind would change as the car would be deemed a classic car (over 15 years old and market value over £15,000). The benefit in kind is then based, not on the list price, but the market value so the benefit in kind would now be £20,000 x 15% or £3000. This would then give rise to tax liability of £600 for a 20% tax payer, which is still pretty low

One final point; don’t forget that currently, cars manufactured before 1 January 1978 will be entitled to a free tax disc; no car tax either for the Triumph Spitfire!

If a classic car appeals to you, then why not look at the company car route and speak to Jan Friend who can check the value of the car benefit in kind and notify HMRC accordingly.

The content in this blog is correct as at 23 October 2018. See terms and conditions.

Similar articles

21 October 2020

Support for businesses placed into lockdown

The Local Restrictions Support Grant will apply if your business is placed into lockdown, but there may also be some discretionary grants available from your local council.

Joint hands at wooden desk
19 October 2020

What is the Job Support Scheme?

With the Job Retention Scheme set to finish by the end of October, what support is there for employers?

Man at desk
6 October 2020

The pitfalls of engaging consultants and contractors

There are important changes being introduced in April 2021 to combat companies employing individuals through their own personal services companies. In our blog we highlight the dangers to business owners and how over the years the rules have changed and the net tightened leading to the new off payroll rules which come in to play on 6th April 2021.

Our 3 step risk-free guarantee puts your mind at rest and keeps us on our toes!

FIND OUT MORE
Bryant House - Friend and Grant Chartered Acocuntants and Tax Advisors

Book Your Discovery Meeting

Are you hungry for success? If you run a small to medium size business and you want to grow your sales, increase profitability and pay less tax then you have come to the right place.