As a business owner, you will always want to find ways to make savings to improve your bottom line and the overall health of the company. It is understandable that a business owner might look at company cars and see this as an unnecessary expense, but is this the case?
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Company Cars Defined
A company car is one that is provided by the business to employees for business and personal usage. If the employer does use the vehicle for non-work-related purposes, it would be classed as a benefit in kind (BIK).
It would be taxed by HMRC by the employer, and vehicles have a different BIK rate which is based on age, fuel type, emissions, etc., so it is always important to be aware of this and to find a vehicle with a good BIK rate.
Perks
A company car can be a good perk for employees. It could help a business to attract employees and improve morale, plus it is advantageous if the employee spends a lot of time traveling in their role so that it can be a smart move for many.
On top of this, you can often find discounts for company cars from popular brands like Mercedes, Audi, and BMW, so you could end up with a better car for less money if you opt for a company car.
Drawbacks
Of course, a car is also a large amount of money both in terms of buying and running, so you will need to weigh these up to determine whether or not it is a smart move for your business. The company car tax is one drawback, and you will then have to also factor in insurance, which can be higher if the vehicle is used for personal use because there will be an increased liability with the car being on the road at all times.
Protecting Your Investment
Due to the fact that the car could be at greater risk because it is being used both for business and outside of business hours, it is a smart idea to take out GAP insurance to protect your investment.
This would cover the gap between the insurance payout in the event of a write-off (the current market value), and the amount originally paid, which can be a staggering amount because of depreciation. Ultimately, it will come down to personal preference and whether or not a car is needed for the role, but a company car can be a good perk and improve the business in many cases.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.
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