Looking to buy a company car? Company car leasing and buying is becoming more and more common, experiencing a surge in popularity among eligible car owners – it’s an affordable approach to driving a brand-new car (or an entire fleet of new cars).
There are many benefits and drawbacks to think about before determining whether committing to a company car is right for you (or your company), whether you’re a business owner wishing to offer this perk to your staff, or an executive considering this potentially beneficial option. We’re here to break down and outline some options to consider when committing to a company car.
Should you buy or lease your company car?
When it comes to buying a car – be it a company car or a personal motor – the outright or leasing debate always comes into play (each has pros and cons). So, when acquiring a company car, which option is best for you? You could even opt for car finance options with no deposit when making the decision.
Leasing allows your company to operate a brand-new car with a complete manufacturer’s warranty for a fairly small up-front start cost, followed by monthly payments. Buying outright gives you the advantage of full ownership of the car.
As you evaluate your business situation, keep in mind the pros and cons of each of these options and your inspection checklist. Acquire accurate and realistic quotes, do your homework (conduct some research), search around the market, and consult your fleet manager and accountant for some assistance.
Do you need the car for business and personal use?
A number of drivers only have access to one car, which they utilise for both personal and business use. Having two vehicles for two purposes can be costly (gasps) – why pay for two vehicles with insurance when you can have one car that facilitates both work and personal use?
However, if your work requires you to drive a larger vehicle such as a van, it’s understandable if you don’t want to use this for personal use. A smaller company car, on the other hand, might not be ideal for your everyday life, hobbies, and activities – if you need to fit large items and equipment in your boot for a hobby (like fishing gear), for example.
It’s best to consider whether your car is going to be for just business use or for personal use as well – this will help you decide before committing to buying a company car.
Consider mileage requirements
Before committing to a company car, assess the usage of your existing car and the potential company car, as well as their mileage patterns, and essential items like safety equipment. This will make it easier to determine how much you require a company car, weed out any unsuitable options as soon as possible, and make sure any new car options are appropriate for your purpose. After all, you don’t want a car that won’t actually assist your work responsibilities.
What engine technology should you choose?
Gone are the days of simply deciding between petrol and diesel; we now have the choice of electric and hybrid (as if there wasn’t already enough choice).
Electric vehicles are now all the rage, providing a better effect on the environment than their predecessors which are harming the planet by releasing fuel emissions and vast amounts of carbon dioxide (a greenhouse gas) into the earth’s atmosphere.
Many companies are now following the trend of ‘going green’ and becoming more environmentally friendly which is a good move for many businesses – the government is even offering discounts on electric vehicles for individuals and companies.
An electric vehicle may only be feasible if you have access to a charging station, but a hybrid engine could also be a feasible option.
What about capital allowances?
The acquisition of an asset by a business is not considered an expense that can be removed from profit for tax reasons, which is an important point to keep in mind.
Capital Allowances, which have limits on how much can be claimed, are a method of obtaining tax relief. The amount of Capital Allowances that can be claimed in relation to cars directly relates to the quantity of CO2 emissions the car emits. There is less tax relief available the more CO2 your company car emits. However, because there are only three bands to take into account rather than a full range of percentages, capital allowances are a little bit easier to understand.
