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A company vehicle is the gold standard of perks. With a car or a van, your employees don’t have to worry about running costs or insurance policies. Plus, it’s an excellent way to reward the people who deserve it the most, while encouraging the rest of the team to work harder. Still, the decision to buy a company vehicle(s) isn’t a straightforward one. For one thing, they’re expensive. For another, it might cause jealousy in the office. The trick is to weigh up the pros and cons beforehand, and never to assume.
Should you offer your employees a company vehicle? Continue reading to find out.
The first hurdle is to source vehicles that are cheap enough to buy outright. You can lease them, but it might cost the company more in the long-term as rental contracts are fixed. Financing is also an option. Again, you must be careful of the extra costs that it incurs. Usually, it’s better to check the listings of a company such as Eden Commercials. That way, you can locate second-hand or used vehicles that are reliable and affordable in equal measure. Always ask for the vehicle history and check the mileage, too.
An advantage of adding vehicles to your company’s asset list is that you can reclaim Value Added Tax. However, there are rules that you must know before you sign on the dotted line. Firstly, any vehicles owned outright aren’t eligible for a rebate. Therefore, you can only claim VAT if you lease your cars. And the total amount is 50% of the tax paid by the company, according to Accounts and Legal. Legally, the business can ask for 100% of the costs, but you must be able to show that the car is solely used for commercial purposes. If you can’t, you might get fined.
Emissions are a big deal concerning the amount of corporation tax you are liable to pay. It’s worth noting that company vehicles aren’t included on the Annual Investment Allowance list. They can be “written down” though, which is why the vehicle’s carbon footprint is essential. Any motor that gives off 75g/km or less of carbon can be deducted from the business’ profit before you work out corporation tax. This only applies to new cars, however. Therefore, it could be better to pick a small hybrid vehicle rather than one with a medium or large engine.
It’s important to consider the marketing benefits of a company vehicle. Over half of all cars bought in the UK are registered as business vehicles, which shows how effective they can be as advertising platforms. Real estate agents and fast-food companies use them all the time to great effect. Whether you decide to do it is down to the difference between the leads and sales it generates, and the upfront cost. The former has to be greater than the latter for it to be a worthy investment.
A company car will always be appealing to your employees. But, is it worth it for the company’s bottom line?
This is a collaborative post.
Welcome to Birds and Lilies! I'm Lou: mother, blogger and freelance writer. This is my lifestyle blog, where I talk about motherhood, infertility and IVF, beauty, my love for food and wine, as well as my thoughts about stuff, and our real-life and travel adventures.
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