Beware of triggering hidden taxes

Company Cars and The NHS Fleet Scheme

Many doctors will have heard of company cars or the NHS fleet scheme. Both are very similar.

The difference is that company car costs are a deduction against your company profits, whereas the NHS fleet scheme costs are a deduction against your pensionable and taxable income from your NHS employment income.

To cover the personal use of the vehicles, the taxpayer with use of the vehicle is required to pay tax on the benefit-in-kind value of using the car.

This is calculated by taking the list price of the vehicle multiplied by a percentage which is based on the CO2 emissions of a vehicle and the fuel the vehicles use.

These schemes became popular when HM Revenue and Customs (HMRC) reduced the benefit-in-kind rates on fully electric vehicles to 0% in April 2020. They are currently 2% of the list price of the car.

This results in very minimal tax being due on the benefit in kind but significant tax savings for the deduction of the costs of the car.  More...