Hybrid technology wins

The weekend before last saw the annual 24 hour endurance race at Le Mans, with thousands of car enthusiasts from the UK making the short journey across the Channel for the weekend, myself included.  A great time was no doubt had by all, soaking up the atmosphere of the event as well as the joys of camping!

The race is often used by car manufacturers as a testbed for new technologies that eventually find their way into our more mundane everyday cars.  After covering over 3,000 miles during the 24 hours the race was eventually won by Porsche running a hybrid engine car, indeed the top eight cars all ran with hybrid engines.

That set me thinking about company cars.  Many of our clients choose to run their own personal cars and reclaim business mileage costs rather than run company cars because this is often the most economical and tax efficient basis, with costs of company car benefit in kind charges seen as too expensive.

Company car benefits are calculated by applying a percentage against the list price of the car, and this percentage depends upon the car’s carbon dioxide (CO2) emissions and fuel type.  The Government continues to incentivise the use of low emission vehicles through greater taxation of high emission cars.  Hybrid engines are now available on an increasing range of cars and offer an opportunity of running a low emission car with comparatively low company car benefit charges compared to their conventional petrol or diesel variants.

The table below shows the appropriate percentages for 2015/16 that should be multiplied by the car’s list price to arrive at the taxable benefit.  The table is based on petrol engines, you should add 3% for diesels up to the maximum of 37%:

CO2 Emissions (g/km) Car benefit charge
0 – 50 5%
51 – 75 9%
76 – 94 13%
95 – 99 14%
100 – 209 15% + 1% for every 5g/km in excess of 100g/km
210 and over 37% (max)

For 2016/17 onwards the percentage rates increase by 2% each year across the bands up to the maximum of 37%, although the diesel supplement will be scrapped.

As can be seen vehicles with emissions under 75g/km provide for a much lower car benefit charge (and, yes, Porsche do have low emission cars!).  A switch to such a vehicle could provide a cost saving to the employee and also a class 1A NIC saving to the employer.  Clearly every individual’s circumstances differ meaning a comparison of the relative costs of company or personal ownership should be carried out, and we at Barnes Roffe can assist with that comparison.

This does however show that hybrid engines may be the way forward both in real life and racing!

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