Company car demand
The demand for company cars continues, with fuel economy, low maintenance costs and minimising company car tax through low CO2 emissions behind most corporate decisions.
Whilst the less efficient and more expensive vehicles are still better be financed personally, if you choose to finance your vehicle through your limited company, rather than in your own name, then this is great news for you!
Whilst not all freelancers and contractors have looked to change policy during the ever changing economic climate, many have embraced running a new car through the business in an attempt to keep cash flow going – whilst balancing the need to keep car expenditure to a minimum. Many have come to recognise and appreciate the real value of a ‘company car’ and this is contributing to an upward trend.
There are a number of reasons for this; as with purchasing a business car, the amount of lease rentals a business can claim against their taxable profits depends on the car’s CO2 emissions.
If the vehicle is under 130g/km CO2, for example a BMW 520, Mercedes E220 or Audi A4 2.0, the business may offset 100% of the lease rental payments against their taxable profits. If the vehicle emits over 130g/km CO2, then there is a 15% restriction on the amount the business can claim against their taxable profits, so just 85% may be recovered.
It’s also been found that even if company car costs are marginally greater than buying it personally, contractors and the freelance market find it more convenient and easier to budget if all costs are being paid for by the ‘company’ and maintains an attractive way to manage their finances.
Kudos’ director Russell Bowker predicts the upwards trend is here for the foreseeable future; “We have seen a renewed popularity for the company car over the last couple of years and believe this is unlikely to change as we move into the New Year. This has been fuelled by more efficient engines so lower benefit in kind tax and drivers wanting to remove a vehicle finance agreement from their personal credit file to help with mortgage applications.”
“We have been focusing on keeping our website and potential customers up to date with a wide range of cost saving solutions, which boosts the businesses and industry alike.”
This article was provided by our friends at Kudos Vehicle Management who specialise in vehicle finance and leasing solutions for contractors and the self-employed market.
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