A couple of weeks ago I warned about the “private fuel trap” where you could be out of pocket if you have your company pay for your private mileage.
There is a similar potential problem with company cars in general and this could affect you whether you are getting one or managing a fleet of them. Nowadays the taxable benefit to the employee is worked out by looking at two things: the list price of the car, and the amount of carbon dioxide it emits. So Range Rovers will cost a 40% taxpayer over £10,000 whereas a Tesla S only stings to for about £1,300 (depending on models in both cases) because it’s a pure electric car.
On top of that if you are the company providing the car will have to pay National Insurance on top. It’s not all bad news as you (the company) can claim back some VAT and tax but this won’t always offset the employee’s personal tax and NI bill. In the case of an expensive, high emissions car and a 40% (or more) taxpayer, the difference could run into thousands (around £5,000 with the base model Range Rover)
Even if the numbers do work out in your favour (which they might for cheaper, low emissions cars and lower paid staff) it’s still worth looking to see if you are paying a huge amount to give your staff only a small benefit.
As if that wasn’t bad enough you still have to work out how to fund the car in the first place as leasing isn’t always the best option. It’s enough to make your head spin. Talk to your accountant or find a car leasing firm that can do the sums for you (I know one if anyone is interested). You could save an awful lot of money.