As many of you may have read in recent
months, there is a major change taking place in the method of
calculating the taxable benefit-in-kind of the use of a Company Car.
This will take effect from the 6th April 2002 and the change moves
away from the historical method of taxing company cars on the quantity
of business miles performed in the year. No longer will there be any
advantage for a taxpayer who is driving more than 18000 business miles
in any tax year, nor for anyone driving an older car.
From 2002/03 onwards, the vast
majority of company cars will be taxed on a percentage of their list
price. This percentage will vary according to the level of their
carbon dioxide emissions but there will be discounts for cars
registered on or after the 1st January 1998 which run on alternative
fuels and technologies i.e. 'cleaner' cars. From that same date, those
company car drivers whose vehicles use diesel fuel, their new car
benefit will attract a 3% supplement.
With major changes taking place it is
inevitable that there will be teething problems and experience is
already showing that many new PAYE Coding Notices being issued by the
Inland Revenue, for 2002/03, are inaccurate. If these are not quickly
corrected, taxpayers could find that the tax deductions being made
from their salaries are inappropriate and, in some instances, could
face an increased tax bill at the end of the tax year.
To avoid any surprises, whether
welcome or not, our taxation advisors will be happy to check that your
PAYE Coding Notices are correct.
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