Car taxation has always been a controversial debate, with supporters of car tax often citing the fact that the government is funding the roads that they and others use. For the British government, this is where the debate begins to become muddy. The government’s view is that the roads should be funded by the people who use them, much like a library or public park.
Many people do not know the importance of car tax. Yet, car tax is a significant burden that affects you. Not only that, but it also represents a major source of income for the government. In 2013, the government earned around $1.6 billion in car tax. So, if you have a car, you are paying for it. That’s a lot of money, so you must pay the right car tax.
Shocking, right? Maybe not, but it is shocking to discover that some people will pay over $1000 to lease a new vehicle rather than buy one outright. So, what is the solution? And should you be thinking about purchasing an older, used vehicle? So here are the Three Ways You Can Reduce Your Car Tax.
- Unreimbursed Business Expenses
Rewarding yourself means double-dipping into your account every time you make a purchase. You don’t earn income from your car, so you don’t have to pay tax on it. But, you do use it to go to work, shop, visit family and friends and take your children to school. You don’t see the money you spend on your car every day-it’s just there, and you don’t even think about it. With the car tax rates going up, this is a great time to consider ways to lower your tax bill.
- Deduct the Business Use
You may have heard of tax-deductible business expenses. These are legitimate tax deductions that businesses can use to reduce the amount of taxes they pay. Of course, you’re probably not a business, but that doesn’t mean these expenses are inherently bad. On the contrary, many of these expenses are things you’d likely do outside of work, whether that’s a trip to Costco or a Saturday kayaking trip. The taxman cometh, and it’s not your favorite taxman! Instead, it’s the taxman who loves you the most, the one who is going to send you a letter saying that you can’t claim all the business use of your vehicle as a tax deduction. It is unfair that car tax for business use can be more expensive than for personal use, and more unfair when some businesses that use their cars for business can be taxed more than other businesses. To solve such problems, businesses that have a fleet of cars tend to opt for vehicle insurance (click here to get a traders insurance policy). As these companies tend to pay monthly insurance premiums for their cars, they may pay less tax than companies that don’t subscribe to vehicle insurance.
- Go for Charitable Contributions
The government and businesses both want to increase the amount of money that is donated to charity. However, both groups have a lot to learn about charitable giving. They pay for most of the research about charitable giving. For example, the government and businesses fund most of the research about charitable giving by the Charitable Giving Foundation. I wanted to get a different view of charitable giving and the research that goes on behind the scenes.
A large portion of my income comes from my car. I make more money than I do at work, and if I didn’t have it, I’d be making even more. So it is important to reduce the burden that a car can put on your finances. Luckily, there are ways to do this. One of the easiest ways to reduce your car tax is to sell the vehicle. But what if you don’t want to sell? There are other ways to reduce your car tax, such as donating it to charity.
After reading this, you will now know how to reduce your car tax. First, you should know that there are many ways to reduce your tax, and the most obvious way is to sell the car. However, you should know that you will have to pay capital gains tax on the sale of the car, which is a very hefty amount, especially if you sold the car within the last five years. Secondly, you can also opt to keep your car for a longer time, for example, leasing the car for a longer time. Know, however, that you will have to pay interest on the total amount of the lease. Lastly, you can also opt to trade in your car for another car.