Car leasing specialist Boss Automotive is offering companies the chance to reduce their fleet costs with the onset of a new stealth tax on company cars – and this is likely to hit 45% of new car orders.
It has been predicted by the leasing industry that more than four out of 10 company cars will result in increased fleet and driver costs when the qualifying low emissions car, known as a QUALEC, threshold of 120g/km is abolished in April. A QUALEC is a car first registered on or after 1 January 1998 with a CO2 emissions figure which does not exceed exactly 120 g/km – but this limit will go down to 100g/km from April 2012.
What actually is going to happen with the change? It will cost companies and employees more:
Employers costs will rise; write-down on the cars will be less (10%).
Employers are likely to pay an increase on Class 1a NIC’s (National Insurance contributions at 13.8% of the P11d vehicle cost and CO2).
Employees tax will increase.
The costs is likely to increase 15%-16% more than they are currently.
- The advantage of the Tax Efficient Scheme is that the CO2 rating has no bearing; employees have a greater choice of vehicles to choose from.
The employer has no write-down worries as the scheme is off balance sheet; this also improves the bottom line.
Companies will save around £10,000 to £12,000 per car.
From the employee point of view, they are also better off as they have no Benefit-in-Kind tax to pay on their cars, which gives them an increase in their net salary
Ken Davis, chief executive of Solihull-based Boss Automotive, said: “The abolishment of the qualifying low emissions car (QUALEC) threshold of 120g/km basically represents a stealth tax. In order to offset the extra costs likely to be incurred, we are inviting companies to undergo a review with us to see how we can get their fleet to operate more efficiently and cost effectively.”