Fringe benefits tax calculator employees
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Tax Implications and Benefits of Company Cars for Employees
Company cars are a popular perk for employees, offering convenience and potential cost savings. However, they come with complex tax implications that both employers and employees must navigate.
Understanding these tax aspects is key to maximizing benefits while minimizing financial burdens.
Tax Implications
Company cars are considered a taxable benefit, and employees who use them for personal purposes are subject to the Benefit-in-Kind (BIK) tax.
This tax is based on the car’s list price, its CO2 emissions, and the employee’s income tax bracket.
Fbt car calculator
Vehicles with lower emissions typically incur a reduced BIK rate, reflecting government incentives to encourage environmentally friendly transportation.
For employers, company cars increase Class 1A National Insurance (NI) contributions, calculated as a percentage of the BIK value.
This additional expense can influence decisions about including company cars in employee compensation packages.
Fuel benefits add another layer of complexity. When employers provide fue
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