Used Supercar Taxes Set To Rocket
Will values take a hit as company car tax changes bite?
What price a used Scaglietti?
It's all down to one of Labour's final flings against wealthy car enthusiasts introduced quietly in 2009 by then Chancellor Alistair Darling, but only taking effect now.
Under the present system company owner directors, and top execs in generous company car schemes pay a maximum income tax of £14,000 a year plus their companies national insurance of £3,584.
But from the new tax year the £80,000 maximum list price used to assess the tax will be replaced by a car's actual list price when new, even if the car is now three or four years old. An added sting is that it will include accessories also at list price. Suddenly that £4,000 transparent engine cover doesn't seem such a good idea if it alone will cost you £700 a year in tax.
For some drivers it will be a severe test of their commitment to prestige motoring and some dealers expect a definite dip in used car prices if enough people bail out, even in the short term.
Ferrari 612 Scagliettis, rightly some would say, are a rare sight on the road. But take the list price of about £222,000 and Mr or Mrs Successful Business Person would now pay income tax of almost £39,000 per year and the employer a charge of more than £10,000 for Class 1A National Insurance.
How about £39k pa plus NI?
David Heaton, Employer Consulting Partner at accountancy and business advisors Baker Tilly, says: "Drivers rewarding themselves with second hand supercars need to be particularly careful because HMRC will charge car benefits on the list price.
"Removing the £80,000 maximum list price is an easy hit as it affects a select group of wealthy drivers.
"The tax hike was described by Alistair Darling as ensuring drivers of expensive cars paid a 'fair level of tax', but the result is more likely to be the disappearance of the supercar from companies.
"The super-rich won't worry but drivers of older company-owned supercars could be caught out. You can pick up a 2005 model Ferrari Scaglietti for about £65,000. But the company car tax bill of £39,500 of tax and NICs per year to drive a car worth £65,000 is not very attractive."
A random £5k Rangie in our classifieds
"The problem is its list price of £51,000. It would be cheaper to give the man the car and pay less tax."
It's impossible to know how many people will have to take their cars into personal ownership to avoid the tax but several top end car dealers confirmed that many of their clients bought their cars on their companies.
"People love their cars. Owning them outright might take a bit of getting used to but I don't think they will give them up," said one.
(Words: Russell Bray)
Unsurprisingly the idea of heavy taxes for the rich and companies always raise less tax as the wealthy and their companies (as W00DY says) move abroad. Genius.
The question is: will the coalition change this idiotic measure?
But this surely will mean that older versions of the same cars e.g. E36 M3s, 996 Carreras etc. will also come down by a bit? As someone off to look at a 996 Carrera 4 this weekend, I like that idea a lot!
d.How is basing tax on the original value, not what you pay for something, fair?
What is new is the removal of a cap. Which seems entirely reasonable as basically it meant that people who have cars worth more than £80k pay less tax relative to someone driving, say, a £40k car.
I do believe that you should pay for what you have, therefore tax should be calculated on vehicle value, (i.e my company car is 2 years old so shouldn't be taxed as if it's new) but that would cost HMRC £Millions so it just isn't going to happen. Unfortunately.
Crack on I say.
And no I am not a troll before you ask, just a bloody hard working Engineering manager trying to run an 18 year old Audi S2 and support a family and a mortgage.
d.How is basing tax on the original value, not what you pay for something, fair?
What is new is the removal of a cap. Which seems entirely reasonable as basically it meant that people who have cars worth more than £80k pay less tax relative to someone driving, say, a £40k car.
I do believe that you should pay for what you have, therefore tax should be calculated on vehicle value, (i.e my company car is 2 years old so shouldn't be taxed as if it's new) but that would cost HMRC £Millions so it just isn't going to happen. Unfortunately.
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