Deciding between having a company provided car or having a personal car is never a straight forward answer, this can depend on the list price of the car, high or low CO2 emissions, private mileage and total mileage.
A recent example involved a client looking at a three year lease agreement including servicing and maintenance and so the only extra cost to consider was insurance. The list price of the Grand Cherokee was £45,000 and it had a very high CO2 emission of 218g, even though it was a diesel powered car. Private mileage was estimated to be approximately 12,000 miles per annum and no business mileage.
The choice involved either taking dividends to meet the lease payments if the car was to be a personal car, or letting the company pay for the lease payments and insurance and fuel costs and then report benefits in kind for the car and/or fuel.
Note this was for an owner managed business so the various scenarios affected the clients’ net available profit from the company as well as their personal tax position.
We could advise them they would save in excess of £5,000 per annum by drawing dividends and having the lease in their personal names.
Not all situations are so clear cut. But if you need guidance on company cars please contact us on 01932 564098.