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<<<<but to keep them happy I was considering a Dacia Sandero Stepway
If I was offered a Dacia I would not be happy, in fact I would be cross.
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That just shows the advantage of setting leasing rates and letting the employees choose. One person might be quite happy with the considerable amount of 'car for the money' provided by a Stepway or a Logan MCV - another, like Quizman, wouldn't be seen dead in one.
I suppose another factor is whether the employees are going to meet clients in their company cars. If the firm's image is important, as it may well quite reasonably be, then there's an argument for making a shortlist of 'credible' cars from them to choose from.
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Avant is right, the more options an employee has, the happier they will be.
I had company cars from 1989 to 2006 and the policies changed at each employer.
But in each case, there was either a list of approved company cars for each level of management, or at the most generous company where I was a senior manager, you could choose anything within reason to a monthly lease limit excluding soft tops.
I would say to your 3 employees, here's a list of 5 or 6 cars to choose from, or you can keep your own car and claim 45p per mile for business use, which you then reclaim from HMRC.
In either case you should introduce a mileage claim sheet, with all business journey details - the rest is private mileage. As Smileyman says, a chat with an accountant may be beneficial
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Thanks all.
One member of staff has a compnay car now (Clio) because if he ran his own car, it would be a wreck and we need him in something reliable and presentable. One member of staff uses their own car and would probably be happy with mileage, but I am sure would not say no to a company car. Another is using a spare car, but in reality needs it now as their role has changed and they cannot afford to buy a car. So its all a mixed bag and I thought it easier to get all three the same car. None of them are bothered about image, they just need wheels.
15 years ago, if you offered me a Dacia, I would have walked away; now I would be erfectly happy in the Sandero Stepway. Seems to have the basic performance and kit I require for little money.
However the BIK issue is interesting.
I will do some more homework.
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I would say to your 3 employees, here's a list of 5 or 6 cars to choose from, or you can keep your own car and claim 45p per mile for business use, which you then reclaim from HMRC.
In either case you should introduce a mileage claim sheet, with all business journey details - the rest is private mileage. As Smileyman says, a chat with an accountant may be beneficial
If a company pays 45ppm to an employee for using their own car on company business, then there is nothing to claim from HMRC. This is the approved mileage rate that HMRC set.
Mileage allowance below this level is a 'cost' to the emplyeee and therefore a tax rebate would be due on the difference (eg if the rate were 25ppm from the company the employee can claim 20ppm off their tax code).
A mileage rate above this would be a taxable benefit (eg if the company pays 65ppm, then the top 20ppm would count as taxable income).
If emloyees are already doing company mileage, then no doubt there is already a mileage claim form in place.
Might also be a good idea to have a list of approved mileages between common destinations and make sure everyone uses it. Exceptional mileage (eg to avoid a crash or congestion) should be noted on any claim.
We use Google Maps to set the standard mileages.
We also have to attach a vat receipt for fuel to each claim form. This allows the company to claim back 5% of the vat.
Some companies that offer a car allowance also set conditions on the car (eg must be less than 5yrs old). My employer makes no such conditions though, so I can run anything I like.
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For privately owned cars used for business HMRC will allow up 45p per mile for up to 10,000 miles per annum then 25p per mile thereafter free of tax (or NI to both employee and employer) .. anything above and HMRC will want payments.
However if your employer pays below this threshold then you may be able to claim income tax relief from HMRC on the shortfall.
Don't forget to add the passenger rate if applicable.
For company owned cars use the 'Advisory Fuel Rate' for your mileage payment instead.
In all circumstances unless you drive a very high mileage, or are lazy with recordkeeping you really do not want to allow any employer to fund fuel for private mileage ... the rate charged by HMRC is punative.
See link to HMRC website for more information and online calculator
http://www.hmrc.gov.uk/rates/travel.htm
This post ignores the processing of VAT.
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Keep it simple.
Make your vehicles pool vehicles instead of personal issue and tell the staff officially they are not permitted to use it for personal mileage.
Keep a log book in the vehicle.
Staff are permitted to drive home in the vehicle provided they are on call.
When HMRC gave us an audit, they where happy with this set up.
What made them most happy was the log book being completed into such detail, there was no suggestion staff where using the car's for personal use.
If they do use it for personal I don't care, but they are told clearly not to leave themselves or the company open for any tax liability.
I trust them which is why I employed them. They know not to take liberty's by putting mega personal miles on the cars.
Its pathetic that we are so obsessed as a country to get every penny and stop or tax every conceivable benefit for working.
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Its pathetic that we are so obsessed as a country to get every penny and stop or tax every conceivable benefit for working.
That's because company cars used to be a huge tax-free perk - and would be again if the rules were relaxed.
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Be very careful about classifying any vehicle as a pool car for HMRC purposes. There are a lot of rules surrounding this including that the vehicles should be kept at business premises at night not at the employees homes. HMRC are generally suspicious of "pool cars" as they are sometimes denoted as such to avoid paying tax under p11d.
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I would be tempted to make some of these vehicles small vans, if not carrying rear passengers, as the tax bill will be significantly less.
Else the tax bill is a big consideration, and if I was the employee I wouldnt want to be paying tax on a car that I didnt personally like.
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Mokkaman is right and unless I am misunderstanding DaveyK's comments there is a tax liability for the employees even if he is turning a blind eye to limited personal use. It also doesn't avoid that liability by having affected employees complete a falsified log where personal use is not declared. Insurance would be an issue too if personal use is outside the agreed cover. Risk of detection is probably low but should it come to light there are potentially serious consequences for all concerned in what is no doubt intended as a simple employee-friendly concession.
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Completely agree with catsdad and Mokkaman.
In addition, nobody takes care of or responsibility for pool cars, they get abused, services get forgotten, nobody wants to clean them, so on a lease agreement you'll get hit at the end for excessive wear and tear.
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Must admit if someone issued me with a Dacia as a company car, i'd probably do the same as i would if someone had forced me to accept a Maestro (well apart from the MG or Turbo version), leave.
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This is not true.
As each pool car has a log book, every time a new driver uses the vehicle they must undertake a quick check for any damage or faults.
Furthermore, one of the office staff has a check list each month to complete on each vehicle to check fluid levels, tyre wear, condition, book service and MOT when required, tax, insurace, toll tags, etc.
We employ good staff, we have no problems with our pool cars.
Our pool cars are not flashy, you don't tend to thrash the life out of a 1.4 petrol Nissan Note. Likewise we have no problems with our van drivers although the one problem we do have more often than ever before is stone chips obliterating the front bonnet and side wings.
We have given up on getting them touched up and will leave the fiorinos until they hit 80,000 miles and get them touched up prior to sale.
Im Not convinced the latest batch of Fiorino vans we have are of the same paint quality as the previous lot we had. We have also suffered identical part failures on all of the fiorinos which never occurred on the earlier batch of Fiorinos we had.
I'm suspicious Fiat have tried to squeeze a bit more profit out of the vans by lowering the paint and component quality.
Thinking of going back to Citroen Berlingo or Peugeot partner vans. While they are more expensive, the Citroen/Peugeot aftersales is a lot better than Fiat. I am sick of rubbish Fiat dealers.
Edited by daveyK_UK on 16/07/2014 at 05:06
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The best thing for your business would be to pay your employees a reasonable car allowance that enables them to go out and purchase a decent car, not new but less than 5 years old. You can dictate the type or age of car so it doesn't reflect negatively on your business. If they want to spend more on a new car then that's their choice. Pay them 25p a mile business mileage and they claim the extra 20p a mile off HMRC. On 10,000 miles thats £4,500 a year to the employee which if they drive a sensible car could cover all their fuel, servicing, consumables,breakdown cover, insurance.
Alternatively if you're happy your employees will stay for 3 years or more and you don't mind taking out lease contracts and paying a bit more than if you gave out car allowances contact a few leasing companies and see what specials they have or will be having. The offers that are heavily supported by manufacturers are significantly cheaper, often by up to 50%. Let tthe employees know what cars you're considering so they're ok with them or tell them thay can have up to £x a month on a lease deal. I wouldn't go out and buy cars for cash even if you can get a good deal as you'll spaend a lot of time 3 years later trying to sell them off and you can't get the VAT back but you can get half the VAT on a lease.
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The best thing for your business would be to pay your employees a reasonable car allowance that enables them to go out and purchase a decent car, not new but less than 5 years old. You can dictate the type or age of car so it doesn't reflect negatively on your business.
Blimey!
So not only do they suddenly have a sizeable tax bill to pay, they are told what they can and cannot buy and drive! Good way to lose employees.
The car allowance is a taxable benefit. Most people will be of the mindset, "Well, if I'm going to have to pay tax on a car or car allowance, I'll have a shiny new company car then"
The exceptions will be those who already have a fairly decent car or those who are enthusiasts and would put the allowance towards something they would not normally afford.
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Old toffee - im pleased I dont work for your business.
We dont go down the personal mileage route, we find it to cumbersome and the increasing legislation on employers to show a duty of care when it comes to fleet road safety makes it far easier to have some pool cars, keep them well checked and serviced, and trust the staff to look after them properly and play the game with HMRC.
I dont want to put my nose into my staffs private affairs and ask for copies of MOTs, businss insurance, car road worthyess, etc - I take all the hassle out of for them by providing the vehicles so they can concentrate on doing their job.
I pay them a good wage, they dont need to waste time working out how they can make a few pence here and there by claiming milage and trying to squeeze every penny out of their own vehicles.
I purchase all of our vehicles and we often keep the cars for 3-6 years, the vans we keep to 80,000 miles regardless of age (the vans are always modern diesels and the strong advice from my friend a senior tech at nissan is to get shut at 80,000 miles - the fiat service managers are in agreement).
With `1 owner and a comprehensive service regime plus the monthly check logs, I find our cars are easy to sell onto the trade when we change.
Some of our rivals go for the lease option and think the clients want to see their contractors turn up in shiny new insignia's or 3 series instead of our Nissan Note's.
We sell ourselves on being dependable, good value and sensible.
Nissan note fits the bill perfectly for how we market ourselves.
I have yet to be told I didnt win some work due to the type of car my staff or I have turned up in.
I dont get cars as status symbols. I understand why some people buy cars for speed an performance, but to buy a car as a staus symbol such as rubbish like a 1 series or x3 is not for me.
Its a sign of weakness.
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>>>Old toffee - im pleased I dont work for your business.
OK, perhaps on reflection "dictate" was the wrong choice of word! I meant to suggest that if an employee was paid an allowance then it is quite appropriate for the employer to ask that it is say a 5 door not 3 door, 5 seats (if taking clients out) it is no older than 4 years old at the start and is kept in good order and looks smart. Lots of decent, employee centric companies work this way and a savvy employee can run a nice car and have it paid for within 3 years by the allowance and mileage they get or use their existing car and fund a MX5 or S2000 on the side.
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