GTE MK8 due

[Guzzle]

If i'm reading the info on gov.uk and the back of the brochure correctly, then BIK for the current tax year for hybrids is based on its zero emissions range as long as its combined emissions are below 50g/km. For the Mk8 GTE this is approximately 38 miles and 38g/km, resulting in a BIK charge of 12%.

The Mk8 GTi has an emissions output of 149 g/km, making the BIK charge 34%.

Based on that i'd say you're going to be paying far less tax on a GTE than a GTi, even with a big difference in list price. If you're in the 40% tax band then the difference is even bigger.

That's before tax on fuel is taken into account.

No idea what it'll be in future years.

[fredgroves]

But the HMRC scheme is BIK on emissions or tax rate.... whichever is the higher....

So 20% or 40% minimum...

[Guzzle]

I'm not sure if we're at crossed purposes here. The tax you pay is calculated from the cars emissions and your tax rate.

Work out the Benefit in Kind from the list price of the vehicle including options, multiplied by the relevant %age based on its emissions. For the GTE it's 12%, for the GTi it's 34%.

Then, take the BIK figure and multiply it by your tax rate, be it 20% or 40%.

It doesn't matter which tax band you're in, a lower BIK figure will always result in paying less tax than a higher BIK figure. 

[fredgroves]

It's if there is a cash alternative...

https://www.activacontracts.co.uk/news/new-company-car-tax-explained.html

[AndyGTI]

I know this is still slightly off topic, but as a point of order I wanted to mention:

Golf Mk8 GTI emissions are:

NEDC 149 CO2 g/km
WLTP 167 CO2 g/km

Not sure if this affects BIK % but thought I’d mention it (as per figures on VW German configurator, Technical Data)

Anyway back on topic, will be interested to see GTE if it appears in October. Not sure the wheel options are to my liking, but equivalent of 245ps is impressive. It will be a chance to get some idea of the look of GTI.

[Guzzle]

I know this is still slightly off topic, but as a point of order I wanted to mention:

Golf Mk8 GTI emissions are:

NEDC 149 CO2 g/km
WLTP 167 CO2 g/km

Not sure if this affects BIK % but thought I’d mention it (as per figures on VW German configurator, Technical Data)

Anyway back on topic, will be interested to see GTE if it appears in October. Not sure the wheel options are to my liking, but equivalent of 245ps is impressive. It will be a chance to get some idea of the look of GTI.

You're quite right, and it does affect BIK, my mistake. If the car was registered before the start of the current tax year then CO2 g/km is as per NEDC. For cars registered from 6th April 2020 onwards WLTP applies.

As no MK8 GTE's or GTi's will have been registered before the current tax year then the only figures that matter for UK company car tax are the WLTP measurements. In which case;-

MK8 GTi = 167g/km to 174g/km (36% BIK for TY 2020/21)
MK8 GTE = 36g/km (10% BIK for TY 2020/21)

[Guzzle]

It's if there is a cash alternative...

https://www.activacontracts.co.uk/news/new-company-car-tax-explained.html

That does not apply to cars with a CO2 output of 75g/km or less. Since the MK8 GTE is only 36/g/km it is exempt.

https://www.gov.uk/calculate-tax-on-company-cars

Example (using German configurator prices converted into £ at current exchange rate);-

MK8 GTE = £37,153
As it has an electric only range of 38 miles, BIK %age based on 36g/km for 2020/21 = 10%
BIK = £3,715.30
Tax at 20% = £743.06
Tax at 40% = £1,486.12

MK8 GTi = £33,533
BIK %age based on 167g/km for 2020/21 = 36%
BIK = £12,071.92
Tax at 20% = £2,414.38
Tax at 40% = £4,828.77

https://www.nextgreencar.com/company-car-tax/bik-rates/

The GTi is not exempt from the 'company car in lieu of remuneration', but it makes no difference anyway unless you would have received a car allowance of over £12k per year, which is going to exclude most people.

[fredgroves]

I've never seen a company car allowance based on bik.... It doesn't work like that anywhere I've worked. It's normally x amount a month for the lease etc and you pick up the tax implications.

A gte and a gte will be roughly the same in terms of car allowance, just one will be murder on your tax bill.

I didn't know any hybrids were exempt of the daft company car killer nonsense they changed it too though.

Hmrc made no secret that they wanted company cars wiped out and they pretty much succeeded.

[mcmaddy]

I've never seen a company car allowance based on bik.... It doesn't work like that anywhere I've worked. It's normally x amount a month for the lease etc and you pick up the tax implications.

A gte and a gte will be roughly the same in terms of car allowance, just one will be murder on your tax bill.

I didn't know any hybrids were exempt of the daft company car killer nonsense they changed it too though.

Hmrc made no secret that they wanted company cars wiped out and they pretty much succeeded.

different car schemes will produce different results. For example in local government where I do the company cars we don't have any contribution towards the car so it's worked on how guzzle first said, list price and co2s etc.

[Guzzle]

Agreed, car allowance and company car BIK are separate.

Car allowance will be set by your employer. Usually on the basis of some kind of salary band or grading system.

BIK is dictated by HMRC as a consequence of whatever company car one chooses.

If you have no cash alternative to the company car, you are taxed on the BIK at the applicable income tax rate.

If you take a cash allowance you pay income tax and NI on it at the applicable rate.

If you have a choice of a cash allowance or a company car, and you choose the car, you will pay tax on the higher figure of the cash allowance or the BIK, unless you choose a company car with emissions of no more than 75g/km.

Which brings me back to my original point. As a company car driver, there is a clear financial benefit to choosing the GTE over the GTi. There is a lot less tax to pay.

If you are a private buyer, the GTE is unlikely to ever save you any money, as the savings in fuel are potentially going to be eaten up by the significantly higher initial outlay. This would be compounded by the GTE also being much closer to the £40k luxury vehicle tax rate, potentially meaning an extra £325 per year in tax if you tick a few options.