Whilst company cars may be essential for your business to thrive or function, they can be a massive drain on the company's finances, but this does not have to be the case.
Whether you run a taxi business, couriers or estate agents, there are a few ways by which you can save money on company cars. You will be able to get the most out of using the cars by paying the least - it is a win-win situation if you follow the available advice. But how can you save money on such a financially draining commitment?
Get tax relief on company vehicles
HMRC charges a tax rate [1] which is basically in line with the benefit that you receive from having access to and use of a company car.
It has been stated by the British Government that you will be expected to pay tax on a company car if you or your family use the company car for private leisure purposes and for the purpose of community.
The amount of tax you pay can be reduced based on a number of things, such as:
- You only have it part-time
- You actively pay towards the upkeep (if your employer pays for your petrol for person trips, this will be taxed separately)
- The car has low Co2 emissions (e.g Toyota Prius, G-wiz)
There are also company car tax exceptions which are as follows:
- You are a partner of a Partnership
- A Partner of Limited Liability Partnership
- Your company car has been adapted for mobility reasons
- You are the proprietor of your own business
- The car is not used for personal use
Consider fleet insurance
Seeking out fleet insurance is a sure way to save your business some money. If your company requires more than one vehicle, it can seem impossible to fulfil the legal requirement to insure them all.
Insuring all your vehicles and driver under one umbrella insurance policy is likely to be the most beneficial option for you. It is basically like getting a discount for buying the cars in bulk.
To obtain fleets insurance [2] you need a minimum of two vehicles, whereas the maximum number under one policy can stretch right into the hundreds, depending on the policy provider. You can also add thing like ‘any driver' so that your employees can use each other's vehicles without having to set up each person's insurance for a vehicle one-by-one.
Agree to pay a higher voluntary excess
If you agree to pay a higher voluntary excess, it will mean that you will be agreeing to take on more financial responsibility if you ever have to make a claim. If you agree to pay more in the initial stages, the insurance provider will be sure to decrease the amount that they charge you, by saying ‘thank you' for taking on more of the responsibility.
It is not uncommon for companies to ask their employees to pay for their excess as this means they will have to be a safer driver or risk paying out of their own pockets for any damages when they have to make a claim on the insurance.