Money Tips

Company car benefits

The taxable benefit of a company car is reduced by one third if the car is more than four years old at the end of the tax year.

If your company's policy is to change cars at four yearly intervals or more, you can achieve a tax saving by buying the new car just before the end of the tax year. The car will then be four years old at some time during the year it is sold and you will have a tax 'bonus' every four years.

Tax relief on borrowings

Tax relief on mortgages on a home loan is available only on the first œ30,000 of the loan. The rate of relief is only 15% for 1995/6 and in future it may disappear altogether.

In contrast, where money is borrowed to put into a business it is possible to get tax relief at your highest rate of tax on all the money borrowed.

The main conditions to qualify for relief are:

n The money is borrowed to buy a share in a partnership or to lend to the partnership for its business

n The money is used to buy shares in or lend to certain companies. In this case the company must be either:

a) a close company, where either the individual owns at least 5% of the shares or he works full time in a management position in the company, or

b) an employee-controlled company or a co-operative and the individual works full time in any capacity in the company

When considering borrowing money, it is worthwhile trying to make sure that any capital you may have is used to buy the home and the borrowings are used to buy shares in or lend to the business.