Year End Tax Review 2009/2010 Contents Lead articles The year ahead... This year, next year Pension hit Employees Too much NIC NIC and pensions Company cars Tax-free benefits Business - General Time to incorporate? His and hers Family bonus Profit and loss Show me the money Can't pay, won't pay? Turning back the clock Business - VAT Standard VAT or flat VAT? VAT goes down - must come up? European revolution A good start for VAT Happy returns? Investments Top-up savings Rainy day money Capital Gains Gains favoured Splitting gains A place in the country Holiday lets end Families Family fortunes Where there's a Will Credits and debits Piggy banks Still trustworthy? Administration Penalty shoot-out Paperwork, paperwork Pay tax later Opportunity knocks again Charity Give and save Non-Domiciled People Home and away Interest Interesting times

Company cars Company cars are taxed on a percentage of their original list price, based on the CO2 emissions rating of the vehicle. The benefit has been rising recently to raise the tax on "gas guzzlers", and it's going to increase again over the next few years. The lowest rate of tax is on a car rated up to 120g/km, taxed on only 10% of the list price. Above that, 15% of list price applies on ratings up to 139g/km, and above that the charges go up by a percentage point at 140g, 145g etc. The percentage for diesel cars is 3% higher, but the maximum for either type is 35%. The main planning point arises if you are due for a change of company car. You may consider a lower-rated car because of the lower tax charges. You may also think about owning the car yourself and claiming a mileage allowance for business use - the employer can pay 40p a mile tax-free for up to 10,000 miles in a year. The first 1% addition will bite at 135g/km in 2011/12, and the present limit on list prices of £80,000 will be removed - so the new car decision you take now may have a further impact down the road. There'll be another rate increase a year after that. On the other hand, the rules are quite favourable for those with a "pure perk" car - minimal business mileage - as long as it has a low CO2 rating. The benefit of an employer providing free fuel for private use in a company car uses the same percentages as the car benefit, applied to a fixed figure. It's worth checking that the tax you pay to the Revenue isn't more than what you are saving in not paying for petrol. If you pay tax at 40% and have a car rated at 170g/km, the tax on a petrol benefit in 2009/10 would be £1,487, and your employer will pay NIC of £475. If your private petrol would cost less than £1,962 altogether, it could be cheaper to pay for it yourself than to have it free (hard though that is to understand!). Recent fluctuations in the cost of fuel make the sums complicated again. The Revenue's fixed figure doesn't change as quickly, but it's going up by 6.5% in 2010/11. It's possible that "free fuel" is not as good an idea as it sounds. Action Point! Are you paying more tax than your benefits are worth?