Employees choosing between a company car and a salary boost ought to seriously consider the value of the former, say British tax experts. Is your business making the most of its facility to provide staff with valuable benefits?
It was revealed in early October that more than three quarters of senior level employees in Britain are entitled to car perks – but most take a cash option instead. There is a worrying trend for workers to snatch at the extra income rather than weigh up the benefits of a free car.
Jeff Whitcombe, Director of major business car consultancy firm BCF Wessex, recently shed some light on the issue by comparing the value of a Toyota Prius T3 to an extra £7k of gross income. Basically, he underlined how the Prius (worth £23k and emitting under 90g/km of CO2), would cost the employer approximately £950 on income tax, whereas the tax and NIC on the extra cash would amount nearer to £3k.
So, in this example case it’s a no-brainer – particularly considering that if you take the cash, not only do you pay more tax but you still need to pay your own commuting expenses. Although not all employees will receive the same type of choice, it is an eye-opening piece of advice to consider.
For the employers, the advice comes from a different angle – protection. If your business operates four or more company cars, then you qualify to obtain a money-saving fleet insurance policy.
Fleet insurance enables all your employees (aged 25+) who are qualified to drive, to legally operate any of your company vehicles at your discretion. Incorporating all the cars into the one insurance policy brings the overall price of insurance down.
From this point on, more companies will be looking to introduce company cars with low CO2 emissions (like the Toyota Prius T3), as to reduce the attached tax rate, according to worldwide professional services company Towers Watson.
Such automobiles can be expensive to buy and expensive to repair. With workers potentially driving up and down the country in your company cars every day, fleet cover is going to be essential – especially if you’re looking to cut costs in order to justify the initial purchase of each high-tech vehicle.
It is always worth checking the price of your fleet insurance quote with a broker who specialises in this area. Their goal is to find the best and cheapest policies on your behalf, so by just getting in touch, you’re already on your way to boosting the profitability of your business, while looking after your employees with seemingly the best value for money perk you can offer them.