New road tax rules, cheeky caveat for the over 40k gang

[gman]

Unless you can afford a decent accountant. The system is rigged to those that can afford to work around it, which just isn't fair.

To be fair most legal loopholes and tricks have been addressed and closed by HMRC and there's only really scams and abusing limited liability that's left. You have to have serious money to take advantage of the remaining legal loopholes.

 

[Mr Bump]

To be fair most legal loopholes and tricks have been addressed and closed by HMRC and there's only really scams and abusing limited liability that's left. You have to have serious money to take advantage of the remaining legal loopholes.

I would agree as a company director myself who has regular chats with the accountant that is the case.
Dividend payments were the old loophole and they have been reeled in.
In all honestly the only big thing left is pension as the company can contribute up to £40k a year to a directors pension net of any tax.

 

[gman]

Pensions do seem to be the current flavour although compared to not so long ago even these have been considerably hammered with your annual tax free contribution amount. But still better than nothing a perhaps more focused at your middle earners. Of course it's a long term investment but having a good financial advisor can make a huge difference with pension performance.

 

[Mr Bump]

Pensions do seem to be the current flavour although compared to not so long ago even these have been considerably hammered with your annual tax free contribution amount. But still better than nothing a perhaps more focused at your middle earners. Of course it's a long term investment but having a good financial advisor can make a huge difference with pension performance.

For sure and I think that with this minor car tax hit they are sending a polite message.
It is also echoed in the extra VED payed in the first year as well, so potentially a double hit for instance if your vehicle emits 155g/co2 you will pay £500+£340 for year one

 

[Mr Bump]

Prime example
182g/km
£44,980

VED in year one £800+£340

Land Rover 3856961 Discovery Sport SUV 2.0Si4 240 SS €6 HSE Luxury 5Seat Towbar 2 Auto9 18MY 182g/km E1 35.3 31.8

 

[onomatopoeia]

Where does the 340 come from in 500+340? The table you present makes it look like 500+140,

My newest car is 16 years old (diesel Audi estate, sadly too old to have a "defeat device" as those sound awesome) so this is all irrelevant to me, but I'm still curious.

 

[Mr Bump]

Where does the 340 come from in 500+340? The table you present makes it look like 500+140,

My newest car is 16 years old (diesel Audi estate, sadly too old to have a "defeat device" as those sound awesome) so this is all irrelevant to me, but I'm still curious.

if the list price is over £40k then an addition to all VED cost is added at £310 for the first five years.

my mistake not £340 it is £310.

 

[gman]

They attacked company cars with another hit a few years ago also, if the emissions were below 160g/L you could claim back 100% of your leasing costs against the p&l but they reduced it to 130g/l so unless you are below that you can only claim 85% of the leasing costs.

It's fast becoming very expensive to have a company car.

 

[nilagin]

I agree with this. Everybody that uses the roads should pay. It's not just emissions. Any car can damage the road surface and that costs money to repair or resurface.

If only the revenue earned was actually spent on the roads.

Councils are responsible for the roads. They just hope they can get away without doing any repairs or just doing them on the cheap.

 

[Mr Bump]

They attacked company cars with another hit a few years ago also, if the emissions were below 160g/L you could claim back 100% of your leasing costs against the p&l but they reduced it to 130g/l so unless you are below that you can only claim 85% of the leasing costs.

It's fast becoming very expensive to have a company car.

a lot more expensive owning one I would imagine though

 

[nilagin]

It is interesting that the car VED tax has now changed to a personal tax.
If you do earn over say £43k and you do pay more tax then the general rule is that you should pay a bit more in my view or you should contribute more to say a pension.
I for instance have been earning considerably more than £43k for a lot of years and every penny of my money over that threshold and quite a bit below it has gone into my pension.

That just means you avoid paying 40% tax.

 

[Mr Bump]

That just means you avoid paying 40% tax.

No I don't I choose to pay into my pension, very different.

Every person in the UK that makes pension contributions from their company salary is the same, all pension contributions are net of tax.
If you have a pension paid from your Ford salary you are getting the same perk.

 

[nilagin]

not at all I endorsed the car TAX situation because according to research £40k for a car is over the average purchase of about £27k so you makes your choice you pay a bit more tax. I don't have issues with most other things perse.

I define luxury as over and above what an average person would buy/pay/consume.

fir instance I wear a rolex it is a luxury watch it should carry more tax.

But the only tax on a Rolex is a one off and it is vat based on it's cost at point of sale. Cars are also liable for vat based on the price at point of sale so the higher the car price the higher the vat paid. The vehicle licence tax is additional to that so it's hardly the same as a Rolex being a luxury item at all

 

[Mr Bump]

But the only tax on a Rolex is a one off and it is vat based on it's cost at point of sale. Cars are also liable for vat based on the price at point of sale so the higher the car price the higher the vat paid. The vehicle licence tax is additional to that so it's hardly the same as a Rolex being a luxury item at all

it is obvious that you are not interested in the real issue here that as I have said and research indicates £40k is not an average car price it is significantly above average and hence the extra tax.
I am sure there are plenty of other tangents you can explore without facing that fact.

 

[nilagin]

No I don't I choose to pay into my pension, very different.

Every person in the UK that makes pension contributions from their company salary is the same, all pension contributions are net of tax.
If you have a pension paid from your Ford salary you are getting the same perk.

I am in a company pension scheme which is optional as is having the pension payment deducted before tax is deducted. Pension payments were always tax free though and was previously accounted for in how much tax was paid each week.

 

[Mr Bump]

I am in a company pension scheme which is optional as is having the pension payment deducted before tax is deducted. Pension payments were always tax free though and was previously accounted for in how much tax was paid each week.

that is correct however you decided to use the word avoid regarding my pension, bit low and a dig I thought?

 

[nilagin]

it is obvious that you are not interested in the real issue here that as I have said and research indicates £40k is not an average car price it is significantly above average and hence the extra tax.
I am sure there are plenty of other tangents you can explore without facing that fact.

You were the one that mentioned Rolex watches not me. Everything else is just liable for Vat. Cars aren't. If the average car costs £27k, then every car in your view is a luxury item, yet you can spend another £13k on a car and still not pay the extra 310 per year for 5 years. So it can't be because it's a luxury item can it?

 

[Mr Bump]

You were the one that mentioned Rolex watches not me. Everything else is just liable for Vat. Cars aren't. If the average car costs £27k, then every car in your view is a luxury item, yet you can spend another £13k on a car and still not pay the extra 310 per year for 5 years. So it can't be because it's a luxury item can it?

I said it was a luxury item and should attract more tax.
I have to say I don't get your line of reasoning, you seem to basically agree with all that I say but seem upset about it?

 

[nilagin]

that is correct however you decided to use the word avoid regarding my pension, bit low and a dig I thought?

Not low or a dig at all. You are avoiding paying tax just as anyone else can.

 

[Mr Bump]

Not low or a dig at all. You are avoiding paying tax just as anyone else can.

no you are wrong paying into a pension is prudent forward thinking for your retirement and the gov approves and encourages it.
it is not avoiiding tax at all.

 

[nilagin]

I said it was a luxury item and should attract more tax.
I have to say I don't get your line of reasoning, you seem to basically agree with all that I say but seem upset about it?

I'm not agreeing at all. It only needs to be liable for more tax through the vat it incurs through it's cost. The additional £310 has nothing to do with it being a luxury item. When it costs £25k to buy 2nd hand at 2yrs old, it is below the average £27k for a new car so no longer a luxury item yet still has another 3yrs of extra tax to pay.

 

[nilagin]

no you are wrong paying into a pension is prudent forward thinking for your retirement and the gov approves and encourages it.
it is not avoiiding tax at all.

If it wasn't avoiding paying tax, legal or not you wouldn't be moaning about me pointing it out. I can only pay so much into my company pension as it is dependant on my basic salary. So if I earn over £45k a year I am liable for 40% tax on the excess. By your paying everything above £45k into your pension you are avoiding having to pay the higher rate tax. It really is that simple. Myself I am just piling the excess into Isas. That way if after I retire I should die before my wife she gets half my monthly pension plus whatever money we have in the Isas.

 

[Mozthecat]

Assuming of course you then keep the annual income from the pension pot below the personal allowance/higher rate when you retire.

 

[gman]

a lot more expensive owning one I would imagine though

I guess it depends on the car and other factors such as your tax bracket and the residual value of the car at the end of the lease term which is being compared to.

It would be interesting to compare business leasing against a car allowance and private leasing and also business leasing against a car allowance and hp to buy the car.

I did do an analysis recently for the 330d for the total costs involved and I'm sure it worked out that the total costs were almost the list price of the car. But this is total costs to all parties and not just the employee costs.

I've also noticed that the bik rates for emissions higher up the scale are increasing by 2% each year whereas lower emissions where the PHEVs sit are going up by as much as 4% each year. Looks like they are starting to go after the new technology but it makes me wonder how they are going to deal with 100% electric cars which produce no emissions? I suspect we may see some changes in how Vehicle Tax is based the more EVs take off and the tax revenues fall.

One thing we all know for sure is that it doesn't matter how good technology becomes at becoming more environmentally friendly (in any field) , the Government will simply shift the goalposts to ensure they get their money.

 

[gman]

Assuming of course you then keep the annual income from the pension pot below the personal allowance/higher rate when you retire.

You would need almost a million pounds pot to get about £45k per year pension and you also get 25% of your pension draw down tax free, combined with the ever increasing personal allowance it is very tax efficient to invest in your pension. It is also tax efficient for passing onto your children should you croak it and I believe the increased tax for death after 75 is now scrapped also, but not sure on this part.

My main concern with pensions, however, is the exposure you have with your locked in money to rule changes which can supersede the rules that were in place when you committed so much to your pension. I personally believe that rule changes shouldn't be allowed to be retrospective but that will never happen. But in the flip side it's also unlikely that there would any major changes because the public backlash would make it suicide for any Government.

 

[neil_g]

no you are wrong paying into a pension is prudent forward thinking for your retirement

Buying the right "luxury" car in some cases can also be a prudent investment for your later years. No?

 

[gman]

Buying the right "luxury" car in some cases can also be a prudent investment for your later years. No?

If you can afford to pay for it over the same time frame as putting money into a pension and if it's a car that can increase in value at the same rate as a pension being managed by a good financial advisor. I would say a pension is a better investment for the not so wealthy especially due to the limited annual tax free investment rate, but if you've got the money the right car can also be a good investment.

 

[neil_g]

I'm just trying to work out the lines of the argument, seem very blurry to me

 

[Nawty]

Buying the right "luxury" car in some cases can also be a prudent investment for your later years. No?

I guess those are few and far between and require a crystal ball to foresee?

From what I can tell investing in your pension is a good option as you get it tax free so you are already saving at least 20% on it. That said, there don't seem to be any good saving options at the moment.

 

[gman]

I'm just trying to work out the lines of the argument, seem very blurry to me

Lol can't argue with that, we've gone from vehicle tax to income tax to pensions and also company cars!

 

[ecoleman]

Lol can't argue with that, we've gone from vehicle tax to income tax to pensions and also company cars!

Don't forget tampons

 

[gman]

Don't forget tampons

I was trying to forget

 

[Mr Bump]

Buying the right "luxury" car in some cases can also be a prudent investment for your later years. No?

Not really as remember to buy that car you speak off you have to use money you have already paid tax and ni on so it has cost you 35% before you even buy anything. Pension money is tax free so that's that

 

[BBR]

Makes me laugh when people think electric cars are 'green'. There is around 595 gm of CO2 for every kilowatt of grid electric used.

How far would an electric car get on 1 kWh?

 

[rick448]

Makes me laugh when people think electric cars are 'green'. There is around 595 gm of CO2 for every kilowatt of grid electric used.

How far would an electric car get on 1 kWh?

No to mention what happens with the batteries once they are finished with, and the mining of the raw materials to make them. Much like wind energy, but why let facts get in the way of a good story.

 

[neil_g]

Not really as remember to buy that car you speak off you have to use money you have already paid tax and ni on so it has cost you 35% before you even buy anything. Pension money is tax free so that's that

Right but some higher end cars have been known to increase in value. A profit is still a profit?

Anyway I'm sticking to my 2x 20k cars idea, a nice derv commuter and a thirsty petrol toy for weekends.

 

[nilagin]

Not really as remember to buy that car you speak off you have to use money you have already paid tax and ni on so it has cost you 35% before you even buy anything. Pension money is tax free so that's that

Pension money above your tax allowance isn't tax free when you start receiving it as an income.

 

[gman]

It would need to be a very high appreciating car because you can draw down a pretty decent pension with minimal subsequent tax implications. How many of these cars can you afford because as suggested any appreciation has to offset the initial tax hit first?

It would be an interesting exercise to look at though, what cars would be suitable for investment?

 

[Nod]

You just need to be lucky with cars. An E-Type could be had for very little money in the late '70s but could now be worth plenty. Similarly, pre-war Bentleys were left to rot during and after the war so could be picked up for next to nothing.

IIRC there's no CGT on vehicles either. Now, where did I leave my old Gullwing???

 

[gman]

What kind of maintenance would they need? I'm guessing very little if not used, perhaps fluids and some lube. Although storage space and theft could be an issue if you've got a few, but then pensions can be 'stolen' as well lol