When running a company car the employer is liable for Class1A National Insurance Contributions and the employee is liable for company car tax, by providing a ‘cash for car’ scheme it removes this issue and can be seen by the staff member as a salary enhancement.
The company also removes the whole of life costs which you would have if you operated company cars as well as the headaches with administration of running a car fleet.
The employees will see an additional rise in their salary and a savings on any benefit in kind (BIK) tax that they may have been liable for.
More and more firms are offering their employees a company car allowance, there are so many benefits for both sides but one important factor is that if the employee left, you wouldn’t be stuck with a car that needed disposing and potencially paying for.
Company car allowances allow your staff membert to buy or lease a new/used car using differing finance solutions. This can be a personal car lease, personal contract purchase (PCP), outright purchase or traditional hire purchase (HP).
Employees using their vehicles for business can claim back mileage via Authorised Mileage Allowance Payments (AMAPs). The government sets the target rate which reduces once the driver has hit 10,000 miles. It is worth while for businesses to put policies in place so that employees do not overstate their mileage.
It is also important to put policies in place to cover the business in terms of insurances, it is really important that they take out the correct cover for business use. Also, employees still have a duty of care to ensure that cars are fit for use.
Can We Help?
Yes, we can help with discussing this with the business and how to implement systems and we can also speak to the employees and offer them offers on car leases or vehicle subscriptions.
We can also set-up affinity programs to help employees save money on set-up fees on car leases and other short-term solutions.
If you would like any further information on company car allowances, please speak to the team on 01332 290173 or use the ENQUIRY FORM below.