At first glance a company can seem perfect – after all, what could be better than a car your company pays for rather than you? However, signing up for a company car is something that you should be taken care of and that you should give careful consideration to. Any financial decision like this is a big one, so it stands to reason that you should think about it properly and make sure it is the right one for you.
Thankfully there are different ways that you can go and getting help advice about company cars, so being well informed isn’t a possibility!
If you do decide that a company car is the right decision for you then you have the added decision of what type of car to get – which can be even more pressure!
However don’t let this stress you or make the process a big worry, instead do your homework, read up on the options and make sure you’re as informed as possible.
The first thing you should do is head over the HMRC website. Here you’ll find loads of information on the pros and cons of company cars. It also has a calculator which helps you work out the tax implications and where you would stand if you did have one. You’ll have the chance to work out a rough calculation by submitting information such as car age, fuel type and list price of the car. You’ll get taxable benefits as a company owner if you give company cars with free fuel for your employees. You’ll also need to consider whether they are putting any contribution towards the car for private use or not.
When you work out the tax liability of a company car there are many factors that you have to take into consideration. You’ll need to decide whether you’ll be in charge of things like maintenance of the vehicle and even insurance and/or road tax.
How Does It Work?
If you’re a nice boss then you can simply give your employee a budget and let them choose their own car however you could just as easily choose the car for them (popular if you want everyone to have the same)
You’ll then need to contact a car dealer that deals with company cars. If you can find someone passionate about providing employees with a vehicle then you can often negotiate a better deal. For example Jardine Matheson from Jardine Motors believes company cars are essential for business most days even if it just to enhance your image when dealing with clients. If you head over to Jardine Motors you’ll see a whole host of different cars and finance deals/options.
Then you will need to start looking at the taxable benefits and liabilities. Much of this has so many variables that there is no exact science. Instead you need to spend a little time researching all of your options and working out what is best for your circumstances.