What are the implications of getting a company car with your new job?

Congratulations!  You have just landed your dream job and one of the perks is you get a company car.  What does this mean to you and what should you know?
 
Company cars have been offered as part of selected employees’ packages for many years now as an additional incentive to attract and retain skilled employees.  The implications of this perk have evolved over the years and it is important to discuss your company car contract in detail with your new employer’s HR or Payroll office.
 
Advantages of a company car
Your employer will cover the majority of your driving expenses, often providing you with a fuel card so you are not out of pocket while waiting on repayment of your expenses.
 
Maintenance is usually covered under your employer’s agreement with their supplier.
 
No more finance charges on a loan to buy a car nor do you have to worry about the value of the car depreciating.
 
Disadvantages of a company car
The biggest disadvantage is that you can now be more heavily taxed if you choose a vehicle that emits large amounts of Co2 and will pay a 3% supplement on Benefit-In-Kind tax rate until at least 2021 if you choose a diesel car.
 
Solution:  To reduce your tax rate, select a car that is less damaging to the environment.  These would be smaller cars, cars with lower Co2 emissions, and especially electric or hybrid cars.
 
The company car itself is not usually owned by your employer.  Most often employers will use a contract hire company to provide them with a chosen range of vehicles.   Dan Gale, Business Development Manager at Dick Lovett BMW Mini in Swindon explains.  “The most appealing aspect of contract hire to businesses is that they can avoid as much as 100% of VAT payable against the monthly rentals, provided the car is used only for business.  If it is used for personal use, then you should be able to reclaim 50% of VAT. In addition, depending on the Co2 output of the vehicle, there are some tax advantages whereby some or all of the rental charges can be offset against taxable profits.”
 
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If you found this advice useful or have questions about finding work that you will enjoy and do well at, please email marketing@cdrecruitment.co.uk or call us on
Tel. +44 (0) 1793 488057.
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