Reducing the cost of business motoring

Over recent years, the cost of motoring has increased significantly, partly as a result of regular increases in fuel prices. Despite this, the company car remains an important part of the remuneration package for many employees.

However, tax and national insurance costs could mean that your company car may not be the most tax-efficient option for either the employer or the employee. There is also a fuel benefit charge where fuel for private use is provided with the car.

For some, an employer provided van may be a viable alternative to a company car – the maximum tax charge is £1,200 plus up to £200 for fuel!

The company car or van benefit is subject to a Class 1A national insurance charge of 12.8% payable by the employer.

It may also be time to review the company car policy completely, as it may be more beneficial to pay employees for business mileage in their own vehicles, at the statutory mileage rates.

We can help you to weigh up the relative costs and benefits of each option and decide on the best course of action for your business.