Company Car Tax – Micra Mania!

Regular readers will know my beloved Audi A5 is currently being repaired. Because Audi parts are as fragile and expensive as a faberge egg the insurance company are dragging their heels. In the meantime I have been supplied with a Nissan Micra which is erm different.

The Micra does 0-60 in 4 Seconds

The Micra does 0-60 in 4 Seconds

Obviously I’m not expecting the A5 and the Micra to be comparable but MRS TTF has a Ford Fiesta which is allegedly in the same class. I was therefore expecting them to be similar. This would not be a bad thing as the Fiesta is well built and a good drive.

The Nissan Micra is…..What’s the old saying? If you can’t say something nice, don’t say it at all….so here goes.

The Micra comes with a raft of safety features including a gearbox that does not engage on the first attempt. This is great for those who accidentally leave the car in gear. Although admittedly this can be frustrating for those who actually want to pull away first time.

The drive system has also been designed to save money by replacing the need to attend the gym. Myself and DB found ourselves leaning backwards and forwards (imagine a homage to the bohemian rhapsody scene from Wayne’s World) in the vain attempt to accelerate faster than a tortoise with a broken leg.

Those of you who are vegans will also be pleased. The interior has been constructed from man made fibres and plastics. In fact Nissan appear to have used the minimum amount of fittings possible. I assume this is to improve the power to rate ratio much like an Aston Martin DBS (but using silver spray painted plastic instead of carbon fibre). I think I read somewhere that the Micra is made from recycled bake bean cans.  This would not only keep the environmentalists happy but would explain the strange noises coming from the exhaust.

When you drive the Micra you have a sense of euphoria. This is probably due to the aircon blowing the exhaust fumes into the cabin. To avoid carbon monoxide poisoning the designers ensured the rear window slips open slightly for ventilation. The attention to detail is amazing!

Lots of unique features to be had in the Micra, but can the tax treatment convince me to trade in the A5?

The Tax Bit

If my employer were to provide me with a car in exchange for a salary sacrifice then there maybe a tax saving depending on the vehicle.  This is due to the benefit being calculated on the CO2 emmissions

Benefit in Kind

If an employer supplies you with a company car the benefit value is included to your taxable pay. The taxable value is taken as a percentage of the list price of the car based on its CO2 emissions.  The lower the CO2 the lower the percentage of the list price (0% to 35%)

On review of Parkers Guide I see that the Micra 1.2 DiG-S Visia (AC) 5d has co2 emissions of just 95 g/km and the list price (you must use this not the amount you paid) of the vehicle is £11,350.

As the C02 emmissions are below 99g/km the percentage will be 11%.  This would mean a taxable benefit of £1,248 for the tax year 2013/14. Resulting in an amazingly low annual income tax cost of £249.60 for a basic rate tax payer. Whilst a higher rate tax payer would pay £499.20 in tax.

Salary Sacrifice

To put your employer in a neutral position you would have to give up (or sacrifice) the equivalent salary that it costs to supply the car.

The leasing costs of a Micra 1.2 DiG-S Visia (AC) 5d are £109.50 (from a quick google). An employee would therefore have to sacrifice £1,394 in salary per annum. This is £762 net for a higher rate tax payer and £933.98 net for a basic rate tax payer.

Company Car Comparison

The following costs would arise for car ownership compared with personal ownership.

Personal Company Car Saving
Basic Rate
Net Salary £1,394
Tax onCar Benefit £249.60
Net Salary Sacrificed £947.92
 
Basic Rate Total £1,394 £1,197.52 £196.48
Higher Rate
Net Salary £1,394
Tax onCar Benefit £499.20
Net Salary Sacrificed £762.00
Basic Rate Total £1,394.00 £1,261.2 £132.80

This is a simplistic approach and ignores the effect on the employer which maybe beneficial depending on the VAT treatment.

You could therefore save a couple of hundred pounds a year by asking your employer to provide a car in exchange for salary. A Micra may not be everyones cup of tea but if you are a two car family and just want a run about this method could save you pounds due to the Micra’s low CO2 emissions.

In fact I think I’m developing a crush on the Micra….. much like the victims of Stockholm syndrome.

By Peter Cross

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