A common question both from owner managers asking about a car for them and their employees – should the company purchase the car or should the user purchase it personally and receive additional salary to cover the running costs?

The answer is a complex one as it must incorporate all aspects of car ownership including the running costs (depreciation, finance, tax, repairs and fuel) and the tax implications (P11D value, emissions, fuel benefit, VAT, Income tax and NIC and capital allowances).

The total cost of running the car and settling relevant tax liabilities can differ by several thousand pounds between personal and business ownership depending on the car and split between personal and business mileage.

General rules would be to go green – low emission cars have low taxable benefits.

For most cases high performance, high price and high emission vehicles should be owned personally as they can generate huge tax charges, with a benefit based on 35% per annum of their list price.

Remove the provision for private fuel in company cars as the tax on the fuel benefit can often outweigh the costs if employees reimburse the company for private fuel.

You can always use HMRC's online calculator to give an idea of the best option, or speak to your tax adviser.

• Burgess Hodgson Chartered Accountants are based at Camburgh House, 27 New Dover Road, Canterbury, CT1 3DN. Phone 01227 454627, email or visit the website.