Although investing in a company car can be advantageous in terms of travelling for your business, there are some factors that need to be considered. Here, with Lookers Skoda, we will outline the average financial commitment of investing in business travel, as well as the best new Skoda models to drive your business forward.
The specific requirements of your business must be considered when choosing what type of company car to invest in. Studies have found that within the total cars sold in the UK, 55% are company cars, which shows how popular they are for modern business owners. Company cars are subjected to a ‘Benefit in Kind’ tax (known as BiK), and this accounts for the percentage of tax that will be paid based on the cost of your business car without any non-taxable costs including the registration fee and first year’s free road tax- known as the P11D value. Carbon emissions are also an important factor in this, as the amount of BiK paid is determined by the fuel type and emissions value.
How beneficial the company car is for the economy must be considered. A company car that uses petrol with a list price of £21,000 including accessories, and a carbon emissions rate of 185g/km, will be subject to a tax of £7,140. It exceeds the 120g/km emissions standard, which incurs a percentage rise from 13% to 34%, and for a basic rate tax payer the average tax paid on a business vehicle of this specification would be £1,428, or £119 a month. The environmental qualities of a company car can therefore have a big impact on the quality of it as a business investment.
On top of the maximum 37% charge, Diesel cars have an additional 3% supplement, meaning Diesel cars face a higher tax rate pm average. A basic rate taxpayer would face a charge of £129.50 per month, or £1,554.
In an attempt to encourage the use of alternative, more environmentally friendly fuels, many large scale companies such as Uber taxi service, are trialing a series of methods to encourage drivers to invest in electric vehicles. The company has also pledged to have an all-electric fleet by 2025, under which the taxable benefit would fall due the fact that electric cars produce little to no carbon emissions.
When investing in a company car, it is important to ensure you can cover your premiums. Business vehicles are subjected to notoriously higher insurance payments, with one reason being that an employee may use the car for work and leisure purposes. Even an employees’ journey to and from work can bear influence on the type of cover they require, and it is vital to check that you have sufficient insurance on a company car, even if you are the sole user of the vehicle. Business vehicle insurance is required when you are driving to and from different work sites, or if you or a colleague is using the car to visit clients, covering many miles weekly. Business drivers are also more likely to drive on roads which they may not be familiar with, often during rush hour traffic. Overall, you should consider the purposes which you will be using your company car for, and select the appropriate policy based on this. For example, if you are supplying cars for your taxi or delivery business, you will need a commercial policy for your vehicles, taken out on behalf of employees.
There are several things to consider when trying to find the perfect company car - some of the new Skoda vehicles there is to offer are worth considering. In addition, the Skoda Superb hatchback is a great option, listed in car buyers best cheap to run cars of 2024, it is fueled by innovative Greenline technology. Fuel economy is made ultra-efficient in the spacious Superb, and the emissions value falls safely under the limit at 110g/km. This places it within the 27% BiK bracket for business drivers, making it an environmentally and economically friendly choice. Depending on the exact specification, the Superb hatchback’s miles per gallon is on average 62.8 for traveling, which does not affect the BiK classification.
Investing in business travel can have numerous positive impacts on your company if the decision is thoroughly calculated. The use of business travel can strengthen existing client relationships as well as building new ones. It is also perceived as an ‘investment in human capital’ as it promotes transparent communication, regular idea sharing and can even boost staff retention.
