If you are thinking about a business lease on a new vehicle, you do need to consider the BiK (Benefit in Kind) which is payable on a vehicle. Leasing a luxury car through your business is one way to procure a vehicle. However, as you are an employee enjoying a benefit on that vehicle, you do have to pay tax based on the P11d and CO2 value of the vehicle.
From the company’s perspective, it can reclaim 100% of rentals on the vehicle for a vehicle which is 130g/km or less. In April 2018, this will change to 110g/km or less. Higher CO2 vehicles mean that the company can only reclaim 85% of the rentals against tax. However, the tax benefit for the company is irrelevant to the individual driver.
What the driver must ask the supplier (or credit broker), is for the P11d value. The P11d value allows the accountant or the HR officer to complete a form, which is actually called the P11d form, to calculate the expenses and benefits a employee/director has within the business. For more information on P11d forms check out this resource.
The P11d should include the list price (plus Vat) plus any additional options or extras (manufacturer or dealer fit) and any delivery charges. The first registration fee and annual road fund licence (RFL) are not included within this figure.
Before proceeding with any business contract hire deal, do ensure you have an accurate P11d value. You really do have to consider that even if the monthly rental on the vehicle is affordable to the company, the P11d may not be overly-respectful to your BiK requirements. Company car drivers do therefore need to ensure any options which are added onto the car are definitely required if they are operating to a budget.
For more information on P11d values and how they may apply to your new lease car, simply get in touch with the help team here at CarLease UK. You can also read more about business car leasing in our help and advice section or check out some of the latest reviews and news for business leasing in our blog and news pages.
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