car leasing

[jamoor]

does anyone here lease cars for their busines

we are thinking of leasing 2 mondeo size cars for reps is it better to buy and finance them or lease they need to do around 25k annum

I am concerned about damage charges mileage charges etc....

[Eric Mc]

And factor in the different tax treatments as well - plus VAT reclaimability.

[DavidY]

I used to buy the cars and then do a finance leaseback, that way I felt that I got a good purchase price on the vehicle and usually bought 1 year old cars, and then I wasn't constrained by mileage rstrictions/penalties, though obviusly we had to pay for all the maintenance

davidy

[Welshbeef]

ave you thought about giving the reps a cash allowence & give restrictions i.e,. car has to be newer than x years clearly you will have to have copies of the MOT (if older then 3 years) & insurance.

This way IF they decided to leave you have no car to dispose of/carry on paying out the lease. Also it allows the rep to choose what ever car they want to i.e. upgrade/downgrade & as is usual in this ECO car case the employee downgrades to a very economical diesel so your companys effective footprint will reduce.

ECO car takes out any requirement of fleet management for your comp & is more tax efficient for the employee.

[note I run my own car and take the cash so clearly my views will come from that base]

[jamoor]

Welshbeef said:

ave you thought about giving the reps a cash allowence & give restrictions i.e,. car has to be newer than x years clearly you will have to have copies of the MOT (if older then 3 years) & insurance.

This way IF they decided to leave you have no car to dispose of/carry on paying out the lease. Also it allows the rep to choose what ever car they want to i.e. upgrade/downgrade & as is usual in this ECO car case the employee downgrades to a very economical diesel so your companys effective footprint will reduce.

ECO car takes out any requirement of fleet management for your comp & is more tax efficient for the employee.

[note I run my own car and take the cash so clearly my views will come from that base]

Strangely reps arent interested, they actually just want a car and sit in and drive

What are the different tax treatments? I am not too sure about this kinda stuff and our accountant is away until monday.

[Eric Mc]

Very complicated.

Wait until your accountant comes back.

[Welshbeef]

jamoor said:

Strangely reps arent interested, they actually just want a car and sit in and drive

What are the different tax treatments? I am not too sure about this kinda stuff and our accountant is away until monday.

I think this is because if the car is in their name and then they are say Sacked/made redundant/move jobs they will have to continue to pay for the car - and the new job they go to may not allow you to take the cash and run your own car.

Different tax treatments (for an individual) if you take the comp car you pay BIK tax based upon CO2/km while if you run your own car you pay PAYE on the cash you receive for the car & you can also claim £0.40/mile up to 10k and £0.25/mile there after for all business miles (not commuting) whil if its a comp car your just going to get the cost of the fuel back.

From a company point of view:-
If an employee opts out of the company car then there is far less problems for the company all they do is the payroll dept take out the additional tax.
If the employee takes the comp car then the company has to have a fleet dept which will organise the MOT/servicing/ car collection logging business miles /; arranging car insurance all their overheads.

If the company only want to offer a car to the employee then the company have a few options:-
1 buy the car for cash - this has an impact on the cashflow & the car will be depreciated over a number of years and when sold if its been depreciated too much or too little an adjustment is made. Note Depreciation reduces profits and reduces tax
2 lease the car - the financial interest associated with this lease are tax deductable it is the most tax efficient method and of course rather than you having a big cash outflow if buying the car all you have is the monthly lease cost so that the company can invest what they would have on the car on higher returning investments.
3 sale and lease back - you buy the car cash then sell it and lease it back from the new owners. This will release funds back into the company which will be available for further investment at a higher rate of return than would be achieveable if sat in the asset "car".