Sometimes shortened to BIK, this is the tax figure that the government feel your company car  allowance should be set at. In better words in if the car you drive is paid for by your company, the government see this as personal benefit and will tax you for that privilege. This is still applicable if your company leases its vehicles instead of buying. This can also be applicable if you are the business owner as well as the driver of the car.

The actual BIK figure is based on the specific car you are driving and is now calculated by the CO2 emission figure and the retail price of the vehicle and not the business miles driven as in previous years.

Each vehicle is put into bands from 10% upwards (based on the vehicles CO2 emission) and that percentage is than multiplied by the new  retail price of  that vehicle.

So for example.

If the vehicle you choose falls within the 10% bracket and has a retail price of £10,000 then the benefit in kind is 10% of £10,000 = £1000.

The actual cost to you is then based on your tax rate, either 20% or 40%.

If you are on the 20% rate, ten you will pay £200 tax on this car per year.

If you are on the 40% rate, then you will pay £400 personal tax on this vehicle each year.

It is worth while noting, that buying the car at a cheaper price than the retail index price, will not reduce your tax liability. Many car manufactures put the “Benefit In Kind Figure” with their price lists now to keep things a bit simpler for you.

You can use the official Government Benefit In Kind calculator for company cars here

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It shouldn’t be a surprise that taking out a leasing contract is in fact a finacial tansaction that is then regulated by the Financial Services Authority. All transactions you undertake will be underwritten by a finance company that should be a member of the FSA. However many brokers who sell lease cars, do not provide thye finance solutions but work as an introducer to them. This should mean brokers can shop around for the best finance deal for you, but it also means that you as a consumer should be fully aware of you rights and the FSA is the regulatory body that can help you with that.

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Although there are no dealer who sell cars on Leasebam, buying a car over leasing one is probably one of the main considerations. Money made Clear the official website form the FSA has clear advice about buying cars with some of the information being relevant to leasing also. It seemed appropriate to include a link to this information, to get a transparent view of the reponsabilities of running a car but also the commitment and jargon used.

MoneyMadeClear buying a car

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The BVRLA ia the official association for those business who choose the lease or rent vehicles as a going concern. It has many roles from helping consumers find approved vehicle leasing companies to giving businesses confordence to buy with their manditory code of conduct that all members and certain lobbying they do to support the whole industry as a whole.It is the place to find information on corporation tax for vehilces as well as a host of other information that helps those in the business and the consumers thinking trade with the industry.

There are clear help and advice pages that covers everything from the DVLA to health and Safety to the latest budget, In short there is clear official advice for all thos wishing to purchase car lease or those who trade within it.

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It is a debate to whether Wikipedia can be deemed as an offical source of what vehcile lease is and many believe the information can at times be inaccurate because it is an open souced information patform for people to get to provide current information as well as to read it. But wikipedia has been incliuded here because of its popularity and anyone who feel the information on vehicle leasing is incorrect can in fact, join and update wiki to be accurate.

You can visit Wikipedia information on vehicle leasing

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