The UK Government offers reasonable tax breaks for individuals using company cars, which can help with the overall costs. These tax deductions are available for full-time or part-time employees, so there’s a good amount of flexibility in the tax relief.
If the company is paying for fuel or the car is also used for personal driving, then the vehicle is taxed separately. There are a few other ways that you can find some tax relief for company cars, such as:
- Tax deductions for partners of limited liability partnership structures
- If the company car has modifications to accommodate for the mobility of the driver
- If you are the proprietor of the business
- If the car is used for solely business purposes
- If the car is designed with low CO2 emissions, such as hybrid vehicles
Consider Fuel Types
Although the technology found in engines has brought petrol and diesel engines closer in terms of efficiency, for long-distance journeys diesel is still a much cheaper option. So when it comes to choosing your company vehicles, like your fleet of vans and lorries, you might want to consider the type of driving being done.
If it involves any sort of long distances, then diesel is definitely the best option in terms of price. However, for shorter journeys, petrol engines might be the better option. As a good rule of thumb, if the mileage of the vehicle exceeds 20,000 miles per year, then diesel is the more cost-effective option instead of petrol.
An alternative approach that could really prove to be cost-effective is to switch your fleet of vehicles to run on biofuel or green fuel. They’re a great way to improve fuel economy and lower emissions.
Vehicle Selection
There are lots of considerations when it comes to selecting the type of vehicle used for your company. Opting for a vehicle with lower carbon emissions makes you eligible for tax relief, so electric or hybrid company vehicles are a good option.
Using an electric vehicle also means that there are lower running costs and exemptions from congestion charges in Clean Air Zones which will help save you even more money. There are also more fuel-efficient vehicles to consider depending on the type of driving required.
It’s a balancing act though, as your company might require a larger vehicle for their purposes. It’s always worth considering the different options though, as there are always ways to save on the overall cost of a company vehicle.
Explore Leasing Companies
Another way to lower the overall cost of a company car policy is to consider leasing the vehicles instead of purchasing them. There are lots of great leasing options available specifically for company cars, so you can end up making some serious financial savings by opting to lease rather than buy.
There are other benefits with leasing company cars too, such as the ability to reclaim 50% of the VAT on the lease payments if you lease the car through a registered company. Even better, if you’re using a company van for business purposes, you can claim back all of the VAT. This is only true for vehicles used solely for business purposes though, as you can’t claim the VAT back if the car is used for personal transport.
Leasing is also quite a streamlined process, so you don’t have to worry about selling the cars down the road. When the leasing agreement expires, you return the vehicle with no additional expenses to pay. This ensures that you don’t have any excessive company finances tied to vehicles.
