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Three scenarios that can change the value of your company car if you leased it before you bought it

by , 03 July 2014
When you get a company car, you need to be able to work out the tax on it. To do this, there's one thing you need to know: It's determined value. Without this value, you can't calculate the 3.5% fringe benefit tax on the car.

But here's the thing, that determined value won't always be the same. This is especially if you leased the car before you bought it.

In fact, there are three different scenarios when you'll have to calculate determined value differently...

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Here are three scenarios that can change your company car's determined value

 
According to the Practical Tax Loose Leaf Service, a determined value is:
 
'The original cash cost of the car. This includes Vat but not finance changes or interest. It also includes the cost of the car's maintenance plan if it had one when you bought it.
 
But if you leased the car from someone before you bought it, different scenarios can change it's determined value. These different scenarios are:
 
1. If the employer owned the car:
This scenario follows the normal determined value rules as stated above.
 
2. If you leased the car from someone before you bought it:
Here the value is the retail market value including Vat from when you first got the car. OR, the cash trade value of the car if you leased it under a financial lease.
 
3. Any other case excluding the two above:
In this scenario, the determined value is the market value of the car from when you first got it.
 
So there you have it: Ensure you workout the determined value of your company car correctly depending on which scenario you're in.
 
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