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Drivers of supercars set to pay more income tax

Drivers of supercars set to pay more income tax

HMRC is going to start targeting supercars in April and executive high flying accountants for contractors will feel the pinch as benefit in kind payments on company cars will increase significantly.

New regulations coming into force on April 6th will see the maximum list price of £80,000 abolished. This will affect the P11D tax which is paid on company cars such as Bentleys, Ferraris, Lamborghinis and top of the range BMWs and Mercedes.

Under the current system, the maximum income tax paid on a company car is £14,000 pa and the maximum national insurance contribution is £3,584.

The increase in tax will mean that an executive with a 199mph company Ferrari 612, which has a list price of about £222,000, will have to pay income tax of nearly £39,000 a year and the employer will pay more than £10,000 a year in Class 1A National Insurance.

And drivers shouldn’t think they can get out of paying this increase by buying a used car. HMRC will charge them on the list price of a new vehicle.

David Heaton from Baker Tilly, said that when Alistair Darling introduced the legislation in 2009 it was to ensure drivers paid fair levels of tax, but as a result companies will probably stop buying supercars.

Very rich executives may not be too concerned about paying the additional tax but drivers of older company cars could get caught out. For example, a 2005 Ferrari 612 Scaglietti can be got for around £65,000, but if it’s used as company car, the tax will be worked out on the list price of £177,000, giving a tax and NIC of £39,500 a year.

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Image: Mind The Cyclist by Nanagyei – Still has some catching up to do..

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