Company cars and fuel

Company car benefits are calculated by reference to the

CO2 emissions. The level of business mileage is not relevant. The greener (environmentally!) the car, the lower the charge.

Businesses currently purchasing ‘green’ cars with CO2 emissions not exceeding 120 gm/km can generally write off the full cost of the car in the year of purchase. This 100% relief is due to come to an end on 31 March 2008 but may be extended. If the car is used by the proprietor of an unincorporated business the allowances will be restricted to take account of the proportion of private use.

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Check your position to confirm that the company car is still a worthwhile benefit. It may be better to receive a tax-free mileage allowance that could be up to 40p per mile for business travel in your own vehicle.

Where private fuel is provided, the charge is also based on CO2 emissions. You should review the arrangements to ensure no unnecessary tax charge arises. If you have opted out of free fuel during the year, the charge will be proportionally reduced. However where you opted in during the year a full charge is applied.

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Company cars and fuel

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