Contents
Don't leave it to chance
Family tax planning
Tax payback - tax credits
Pay rise for the other half?
Jam today, or jam tomorrow?
Pension payments and tax relief
Employee pensions
Children's pensions?
Borrowings and tax
Investment limits
Employee cars and fuel
Give generously and save tax
Capital gains
Capital losses
Second homes
Company or trade?
Inheritance tax
Children's savings?
Business tax
Two jobs = too much NIC?
Should VAT be flat?
Mutiny and bounty
One careful owner
A matter of trust
|
Employees usually depend on their employers to come up with a tax-efficient pay package. But there are some points which employees should watch out for, in case the employer hasn't noticed. Company cars themselves are taxed on a percentage of their original list price, based on the carbon dioxide emissions rating of the vehicle. The calculation of the benefit has been changing each year to increase the tax on "gas guzzlers" progressively - in 2004/05, the minimum 15% benefit is available on ratings up to 149g/km; in 2005/06, this drops to 144g/km. The main planning point arises if you are due for a change of company car. You may consider whether a lower-rated car would be attractive because of the lower tax charges. You may also think about owning the car yourself and claiming a mileage allowance for business use - the employer can pay 40p a mile tax-free for up to 10,000 miles in a year. On the other hand, the rules are now quite favourable for those with a "pure perk" car - minimal business mileage - as long as it has a low CO2 rating. The benefit of having the employer provide free fuel for private motoring in a company car is now heavily taxed, and is now based on the same percentages as the car benefit, so it will go up in line with the increase described above. It is worth checking that the tax you pay to the Revenue doesn't outweigh the benefit of not having to pay the garage for petrol. For example, if you have a salary of £40,000 and a company car with a CO2 rating of 170g/km, the tax on a petrol benefit in 2004/05 would be £1,152, and your employer will pay NIC of £369. In 2005/06, these figures will go up to £1,210 and £387, even if there are no other increases in tax rates or the cost of fuel. If your private petrol would cost less than that altogether, it would be cheaper to pay for it than to have it free (hard though that is to understand!).
| ||||
© Bayar Hughes & Co., 2010.