Benefit-in-kind?

BBC News helpfully reports on Buying a car with the taxman's help

Buying a car for a family member is often a necessity, and with recent rises in VAT an expensive one.

There are however several little known options that can ease the pain on your pocket (and the environment), with the help of none other than the taxman.
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There are hundreds of thousands of privately-owned companies in the UK.

If you own one of them, you can use the current tax rules to your advantage perfectly legitimately.

Consider the following scenario. Your 18-year-old daughter is off to university, and you want to get her a £10,000 car so that she can visit home.

You have two options: pay for it personally or get your company to buy it.

If it is bought via the company, then in the normal course of events you will be taxed on what is called the benefit-in-kind that you are receiving.

A company car with no CO2 emissions - such as an electric car - accrues no benefit-in-kind tax charge at all.

Am I the only one who thinks this is absolutely barking mad, and an outrageous abuse of the tax system?

The main thing that winds me up is the pretence of "benefit-in-kind". It's obvious to anyone that the per-mile CO2 emissions of your car are in no way proportional to the benefit you derive from it (for which you are ostensibly being taxed).

But setting that aside, and accepting for the sake of argument that CO2 really is the greatest threat facing humanity, we must question whether buying a new low-emission car actually cuts overall carbon output.

Even The Guardian admits the question,

it tends to largely boil down to how far you typically drive your car each year and which models you are comparing. As "Livelight" points out:

I drive my old classic car only about 500 miles per year, so if I swapped it for a new Prius, both I and the car would be dead long before there was any carbon benefit!

The other big, and often controversial, question that hangs over this debate is the issue of "embodied energy": how much energy is required – and CO2 emissions generated – to transform a heap of raw materials, some of which are buried under the ground, into a brand new car parked up in the showroom ready for sale?

This article ends by suggesting we all buy a new Prius, but a more recent Guardian article concludes:

despite common claims to contrary – the embodied emissions of a car typically rival the exhaust pipe emissions over its entire lifetime. Indeed, for each mile driven, the emissions from the manufacture of a top-of-the-range Land Rover Discovery that ends up being scrapped after 100,000 miles may be as much as four times higher than the tailpipe emissions of a Citroen C1.

With this in mind, unless you do very high mileage or have a real gas-guzzler, it generally makes sense to keep your old car for as long as it is reliable – and to look after it carefully to extend its life as long as possible. If you make a car last to 200,000 miles rather than 100,000, then the emissions for each mile the car does in its lifetime may drop by as much as 50%, as a result of getting more distance out of the initial manufacturing emissions.

It is far from clear that the government should be encouraging the scrapping of old carbon-spewing cars in favour of new "green" models.

Various lobby groups have benefited from our government's road tax policy, but don't for one minute be fooled into thinking it is for the 'greater good'.