Is Company Car Taxation Really That Bad?
Being the proud owner of a company vehicle was once the ultimate luxury. You got a car that you could drive when and where you liked and you didn’t have to worry about any of the costs that were involved. You got a fuel card to cover personal miles as well as business ones and another card to sort out any mechanical faults or replacement tires. It was trouble free motoring and the only downside was the small amount of extra tax that you had to pay. Unfortunately, times have changed and it seems that the company car owner is these days responsible for all that is wrong in the world. Pollution, congestion and noise problems are all down to us, as is the wear on the road surface and the failure of the economy. Okay, the last one might not be our fault, but the others are. It is for all of these reasons that owning a company vehicle is not nearly as much fun as it used to be, company car taxation (or as the Danes say “beskatning firmabil”) has put an end to all of that.
These days a company vehicle is only good for company work, if you want to use it for personal fun then you are going to be hit in the pocket when the company car taxation people work out what you owe. So the company car is now a bad thing rather than a benefit, it is something that we are all best to avoid.
Hold on though, let’s take a breath and think about this. Owning a car has become more expensive across the board, whether you buy it yourself or receive it as part of your remuneration at work. So has company car taxation really made us any worse off than we would have been anyway? We still get to drive a car without worrying about any of the upkeep costs. We don’t need to concern ourselves with things like depreciation or insurance. All that we have to do is pay for our own personal fuel use and be deducted the company car taxation. When you look at it like this then it really isn’t so bad. Especially if you are clever about which car you decide to drive.
We live in a world where green is good and we are encouraged to drive efficient cars (or as the Danes say “økonomiske biler”) that don’t do too much damage to the planet that we inhabit. Therefore, if we drive a more economical and less polluting vehicle we are rewarded with a lower level of company car taxation. So hybrids and electrics would seem like the obvious choice. Although, these aren’t perhaps the most fun vehicles to drive and we might still feel like we are being punished because of our jobs.
So for a little bit higher company car taxation we could drive something that is much more fun, but still won’t break the bank when the wages come round. We could drive something with a particularly economical engine, but something that isn’t an obvious eco warrior go cart. Something like the VW Golf 1.6Tdi Bluemotion Tech S, because it isn’t just the name that has gotten bigger. The car has too, but strangely it weighs less and the all new 1.6 diesel engine is super efficient and very low on emissions, which keeps the company car taxation people happy and your deductions low.
So it isn’t all doom and gloom and we can still enjoy a company car, we just have to be more careful about what we choose.