Should you have a company car or a car allowance as a business owner?
Company car or car allowance – a question we are often asked is are you better to buy and hold your vehicle it in your business, or personally and simply make a claim for business mileage.
The short answer is, probably the latter! The private use element dictated by HMRC means that the individual will see a tax charge based on value of vehicle and emissions. Additionally, the company would also pay an NI charge at almost 15% of value of the benefit.
Usually the employee can get equivalent money out of the business in a much more tax efficient way, simply by processing a mileage allowance claim, which is currently 45p per mile for the first 10,000 miles of business travel.
Sometimes however it is worthwhile… remembering that the benefit in kind calculation is based on emissions, and that there are certain types have low emissions (clearly we can’t name names, but while rather expensive, Tesla does tend to be a rather tax efficient brand)
Vans also are treated differently, as are pickups which are classed as commercial vehicles, and therefore are able to get full tax relief, including VAT back on the purchase price, and the tax element is usually less than the running costs.
Talk to your accountant about the specific vehicle you have in mind, before you make your decision, or contact us if you have any further queries.