Many Small and medium sized enterprises don’t employ a specialist fleet manager – often this forms part of someone else’s role. This is usually more of a pain than a pleasure which comes around as and when. Why not let us look at your situation and help you to improve your current fleet situation?
We have help numerous Cumbrian businesses save £££’s.
We can help you make the most of your budget, help avoid excess mileage charges and make sure you make the most of your current fleet. We are truly independent and hold no loyalty to any brand or funder – we look for the best deal, the best specification and the best rate for your company.
Often vehicles come to end of contract or end of life and put companies under pressure to buy the first deal they see – we can help you plan your changes and make sure you get the vehicle YOU need to do the job YOU need it to do at a price to suit YOU.
Should I have a company car or a car allowance?
Many companies provide employees with both options of a Company Car or Car Allowance. Which one would suit you? Let us help you to make the best decision based on your individual circumstances.
Is the company car scheme the right choice for me?
There are many reasons that this may be suitable for you. For example, the company will pay for the majority of repairs and pay the majority of the day to day motoring costs, often offering fuel benefits also.
However, one of the most attractive features of a company car scheme are that you will not own the car and will therefore not suffer any depreciation costs (a new car that is well maintained will lose up to 50% of its value in the first three years) and because of this, you will not have to pay out a large amount of money to purchase a car. The car will be likely to be replaced every few years by a newer one, which will allow the driver to avoid costs as the car begins to show ‘wear and tear’.
However, the main disadvantage of this scheme is that the employee will be taxed on this as a taxable benefit. In previous years, the company car owners paid tax depending on the number of business miles driven each year. However, since 2002, the criterion that has decided the tax rate depends on the quantity of carbon dioxide emissions from the car. The greener the car, the less tax you pay!
Liquid Associates can help you source your company cars, from a single car to a whole fleet.
Contact us for help or advice on your Company Car Allowance.
If your company provides you with free fuel in your company car, you may still be liable for a tax charge and possibly NI contributions. The tax rate depends on various different factors such as the rate of income tax, which depends on your earnings. In addition, the retail price of the car plus any extras (up to the total value of £80,000) will affect the rate of tax payable. If you have contributed personal money towards the car, it will be taken into consideration.
The CO2 rate of the vehicle will also be relevant. This information can be found in the car’s V5 document. There is a 15% charge on cars with emissions of less than 145 g/km and a 1% increase for every 5g/km after this (up to a maximum of 35% for those with emissions of more than 240 g/km). The fuel type will also have a bearing with regards to how much company car tax will be payable. Whilst diesel has lower levels of CO2 emissions than a petrol equivalent, the driver of a diesel company car will pay a higher level of company car tax due to its toxic emissions.
In order to reduce the level of company car tax you pay, it may be worth fitting an LPG converter to your company car (only if your company owns the car though). Alternatively, there is the option of considering a hybrid or electrical car. The most environmentally friendly of these do not attract any company car tax. Refer to the Inland Revenue for further information on the level of car tax attached to each type of vehicle.
An alternative is to use an LPG converter on your vehicle to reduce emissions – of course this can only be carried out if your company owns the vehicle, and not if they are leasing a car.
The car allowance involves driving your own car for work purposes instead of a company car and receiving a mileage rate from your employer. This mileage rate is obtained from the Inland Revenue and is known as the Inland Revenue Authorised Mileage Rate (IRAMR). This allowance is tax free and is 45p/mile for the first 10,000 miles and 25p/mile thereafter, irrespective of the type of vehicle you are driving.
So then – a company car or a car allowance?
This decision will be based on your own personal circumstances. In order to decide on the best option for you, consider the monthly car allowance being provided to you by your employer. From this, take off any NI contributions and tax and add on the tax saving from not having a company car. Also consider the cost of the company car, including costs such as insurance, repairs and depreciation and the fuel benefit offered by your employer on your company car.
Whilst saving money is obviously an important factor, it is perhaps worth considering whether you wish to own your own car, in which case, the company car allowance would be the preferred route or whether you prefer to drive a company car in order to avoid the depreciation costs.
Whichever option you decide on, Liquid Associates can assist you with your choice and finding a vehicle that suits your requirements.
Contact us at Liquid Associates today for more help or advice on your Company Car Allowance.
If you are a new “start up” company or are self-employed, finding a funder for a vehicle for your business vehicles can be near impossible. Most of the mainstream Contract Hire Lenders are looking for a minimum of two years audited trading accounts- at least, if you don’t have them (no matter how successful the business has been in its first 12-18 months) the computer will say NO…
It’s a similar story if you are in an industry which is deemed “High Risk” or your vehicle is being used for Hire and Reward EG as a Taxi- the Contract Hire Funders will come back as a decline. This can leave a business in the position of either running old vehicles on their fleet- which doesn’t always have the desired appearance to your potential clients- or leaves the business owner to try and self fund- again with self employment and generally (for taxation purposes) low incomes, this can be problematical.
