Car allowances have been pretty fashionable over the past few years – employees who qualify for a company vehicle are offered a ‘cash’ alternative with which they can buy or lease their own car. It’s been an attractive option for people who perhaps don’t like the tax implications of cars with highish emissions. However, we are seeing more and more people getting back to the comfort of a company car. Here we outline some of the benefits.
Driving a company car means you’ll save on the cost of the vehicle itself as well as running costs and your driving will be hassle free – you don’t have to search for the perfect car, the best deal and if you go down the purchase route, you won’t have the headache of selling the vehicle or worrying about the dreaded depreciation!
Insurance and breakdown cover are often covered by company car agreements so you will likely make savings here too and you’ll benefit from a brand new car every 3-4 years – with technology changing so quickly these days this guaranteed changeover is attractive!
What about tax?
Company car drivers are of course subject to tax on their car – BIK or ‘Benefit In Kind’. This is because your company car is considered a ‘perk’ on top of your annual salary so it’s seen as an indirect financial incentive.
The BIK tax rate calculations are based on:
- The age of the car
- The fuel type
- The CO2 emissions
- The list price of the car
The amount of company car tax you’ll pay also depends on your personal income tax bracket so if you’re a 20% tax payer, you’ll pay 20% of the taxable portion of the car’s P11D value and if you’re a 40% tax payer, you’ll pay 40% on the taxable portion of the P11D value. This amount is usually deducted from your monthly pay. A handy calculator is available here
Lack of choice in the alternative fuel sector has been a bug-bear of company car drivers in the past but that is rapidly changing. More businesses are adding hybrid and fully-electric vehicles to their company car lists as – cost savings and environmental benefits attract businesses and for drivers the BIK tax rate is lower thanks to reduced emissions.
Our team work closely with many businesses to ensure they are in the know about the best company cars to offer their employees – using tools such as our Whole Life Cost calculator (read more here) and we can advise drivers on the best car for them based on mileage, driving habits etc.
Some of the best company car deals available right now from OVL Group are:
The Hyundai Kona
The Skoda Fabia
The Audi A3
To find out more please speak to one of our team – initially email us on firstname.lastname@example.org and we’ll get back to you.