Contrary to the doom-ridden economic news, many small businesses are actually doing well and want to reward their employees. A company car has long been a perk, but it is sometimes beneficial for an employer to provide their employees with a Light Commercial Vehicle rather than the traditional hatchback. VAT-registered businesses can reclaim up to 100% of the VAT when they buy a commercial vehicle and unlike cars, tax on use of commercial vehicles provided by an employer is levied at a flat rate, meaning a win-win situation for employer and employee alike. The pick-up is not just a work-horse, a twin-cab pickup seats five, so it doubles as a family car during the weekend and a working vehicle during the week. What’s more, modern pickups are by no-means boneshakers, many have car-like refinement inside, with leather seats and a good ride-quality – so they are a viable option for many families. The key benefit of providing a LCV rather than a traditional company car has got to be the tax benefit though. If your employee is a taxpayer in the 40% tax bracket, driving a Mitsubishi Animal or Nissan Navara for example, they could save in the region of £4,000 every year on benefit-in-kind tax payments compared with a similarly priced passenger car. Any pick-up is a commercial vehicle if it has a payload of one tonne or more. While it’s easy to tell the difference between a car and a commercial vehicle like a van, lorry or tractor, there are some vehicles where it's harder to be sure whether they're a car or a commercial vehicle. These vehicles are car-derived vans and vans with rear seats - combination vans, or combi vans. It is therefore advisable for employers to check the HMRC technical requirements for commercial vehicles or simply liaise with their leasing company before making their choice of vehicle. Tax benefits of LCV • Light commercial vehicles, including double-cab pick-up trucks with payloads in excess of 1000kg, are classed as a benefit in kind if they are also provided for private use. • Unlike cars, tax on use of commercial vehicles provided by an employer is levied at a flat rate. • Currently this is £3000 if the van is less than four years old at the end of the tax year. Therefore a basic rate taxpayer would owe the treasury £600 a year, while a higher rate taxpayer would have an annual bill of £1200. • If fuel is also provided by the employer for private use, the tax payable on this is £700 for a 20% taxpayer, and £1400 for a 40% taxpayer. About the Author Robert Dadzie is the business manager at Vanarama Manchester West. Vanarama Manchester West part of the Autorama Group, is a leading provider of commercial vehicle leasing in the Greater Manchester Region. For further information on leasing or to obtain a quote, please visit www.vanaramamanchesterwest.co.uk Alternatively you can contact Robert Dadzie on 0161 401 0541 or email robert.dadzie@vanarama.co.uk
Contact Number: 0161 401 0541. Email: robert.dadzie@vanarama.co.uk
I am the Business Manager for Vanarama Manchester West. I am a commercial vehicle leasing expert…
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