Company cars: implications for your staff and your business
Tax implications for your employees
If you provide an employee with a motor vehicle they can use for private use, it counts as an employment benefit or ‘benefit in kind’ on which they will be charged tax, similar to the way they are charged tax on their wages. If you also provide free fuel for your employees' private use, they will be taxed on the cost of the fuel.
Employees do not have to pay tax if they only use their vehicle for work. If the vehicle is parked overnight at or near an employee's home, or they use it to commute to work, they will still have to pay tax.
The rate your employees will be taxed is calculated as a percentage of the vehicle's cost and the percentage is based on the carbon dioxide (CO2) emissions of the motor vehicle.
More information on company car and van taxation and benefits can be found on the HM Revenue & Customs website.
Information on Fuel Consumption and CO2 Information can be found on the VCA website.
Tax implications for your business
VAT
If you’re VAT registered you can reclaim the VAT on the purchase price if the vehicles are used exclusively for business purposes and not available for private use. If the motor vehicles are available for private use, you can reclaim the VAT on the cost of repairs and maintenance.
National Insurance
You will be liable to pay Class 1A National Insurance contributions on motor vehicle and fuel benefits you provide to employees.
Tax relief
You can claim tax relief on:
- the cost of motor vehicles used in the business - these are known as capital allowances and are worked out as a proportion of the cost
- interest paid on bank loans used to acquire the motor vehicles
- maintenance and running costs
- rental payments, if you have leased the motor vehicle
Insurance for your business car or van
Your business maybe severely impacted should one of your fleet be involved in a road traffic accident so don’t always go for the cheapest insurance you can find. Look for well-known companies that provide good support in the event of a claim and have experience in providing insurance advice for business vehicles.
Get a business van insurance quote from MORETH>N BUSINESS
Get a quote for business car insurance
Driver management
You are legally obliged to make sure that your employees' business-related driving does not endanger others. You should encourage them to create a positive image of your business by behaving responsibly, especially if they’re driving around in vehicles with your company name and logo on them!
Installing additional time saving features such as satellite navigation systems to make sure your drivers don’t waste time fuel and money by taking a wrong turn, and your customers or suppliers are note left waiting around. TotalPDA sells a large range of new and refurbished satellite navigation systems including TomTom, Navman and Garmin
If you need to be able to quickly locate your vehicles or drivers at any time, there are tracking/driver locating systems available to help you do just that. Take a look at this pay as you go phone locating and phone tracking service that allows registered users to locate a mobile phone handset and then display the position instantly on a web map of Great Britain & N.Ireland - with an accuracy of up to 50 metres.
Your drivers could save time and money with a Fuel Card Account. They won't have to keep fuel receipts or fill out expenses, and a Business Fuel Card Account helps you manage your fuel expenses and keep track of your fleet . Fuel Cards are accepted 24/7 at most service stations nationwide.
Health and safety for your drivers
If you operate your own vehicles, your drivers are allowed to work a maximum of 60 hours in a single week and no more than an average of 48 hours a week. This is normally calculated over 17 weeks. You and your drivers are responsible for offences against drivers' hours and records rules. Download advice on drivers' hours and tachographs from the Department for Transport (DfT) website (PDF).
It is good practice to require drivers to have regular medical checks.
Make sure your drivers know what to do in the event of an accident, including insurance cover and details. Some insurance companies provide driver accident packs for this purpose.
Make sure your drivers are planning journeys realistically, taking into account the distance, time of day, weather conditions and any known roadworks.
Ensure someone in the business is responsible for carrying out routine vehicle safety checks
Make sure your staff know how to load and unload safely – see our manual handling training dvd
Consider having a written policy for driving on business that provides information on safe driving on motorways or when tired, tyre safety and reversing.
You could also advise your drivers and staff on fuel efficiency to help control costs, including respect for speed limits, avoiding frequent acceleration and hard braking, and switching off the engine when stationary.
Download a PDF leaflet on managing work-related road safety from the Health & Safety Executive (HSE) website
More information on safe driving policies for companies.
Download a variety of safety awareness posters for you and your drivers.
Comprehensive business driver and vehicle information can be found on the BusinessLink website.
Company cars: implications for your staff and your business
Tax implications for your employees
If you provide an employee with a motor vehicle they can use for private use, it counts as an employment benefit or ‘benefit in kind’ on which they will be charged tax, similar to the way they are charged tax on their wages. If you also provide free fuel for your employees' private use, they will be taxed on the cost of the fuel.
Employees do not have to pay tax if they only use their vehicle for work. If the vehicle is parked overnight at or near an employee's home, or they use it to commute to work, they will still have to pay tax.
The rate your employees will be taxed is calculated as a percentage of the vehicle's cost and the percentage is based on the carbon dioxide (CO2) emissions of the motor vehicle.
More information on company car and van taxation and benefits can be found on the HM Revenue & Customs website.
Information on Fuel Consumption and CO2 Information can be found on the VCA website.
Tax implications for your business
VAT
If you’re VAT registered you can reclaim the VAT on the purchase price if the vehicles are used exclusively for business purposes and not available for private use. If the motor vehicles are available for private use, you can reclaim the VAT on the cost of repairs and maintenance.
National Insurance
You will be liable to pay Class 1A National Insurance contributions on motor vehicle and fuel benefits you provide to employees.
Tax relief
You can claim tax relief on:
- the cost of motor vehicles used in the business - these are known as capital allowances and are worked out as a proportion of the cost
- interest paid on bank loans used to acquire the motor vehicles
- maintenance and running costs
- rental payments, if you have leased the motor vehicle
Insurance for your business car or van
Your business maybe severely impacted should one of your fleet be involved in a road traffic accident so don’t always go for the cheapest insurance you can find. Look for well-known companies that provide good support in the event of a claim and have experience in providing insurance advice for business vehicles.
Get a business van insurance quote from MORETH>N BUSINESS
Get a quote for business car insurance
Driver management
You are legally obliged to make sure that your employees' business-related driving does not endanger others. You should encourage them to create a positive image of your business by behaving responsibly, especially if they’re driving around in vehicles with your company name and logo on them!
Installing additional time saving features such as satellite navigation systems to make sure your drivers don’t waste time fuel and money by taking a wrong turn, and your customers or suppliers are note left waiting around. TotalPDA sells a large range of new and refurbished satellite navigation systems including TomTom, Navman and Garmin
If you need to be able to quickly locate your vehicles or drivers at any time, there are tracking/driver locating systems available to help you do just that. Take a look at this pay as you go phone locating and phone tracking service that allows registered users to locate a mobile phone handset and then display the position instantly on a web map of Great Britain & N.Ireland - with an accuracy of up to 50 metres.
Your drivers could save time and money with a Fuel Card Account. They won't have to keep fuel receipts or fill out expenses, and a Business Fuel Card Account helps you manage your fuel expenses and keep track of your fleet . Fuel Cards are accepted 24/7 at most service stations nationwide.
Health and safety for your drivers
If you operate your own vehicles, your drivers are allowed to work a maximum of 60 hours in a single week and no more than an average of 48 hours a week. This is normally calculated over 17 weeks. You and your drivers are responsible for offences against drivers' hours and records rules. Download advice on drivers' hours and tachographs from the Department for Transport (DfT) website (PDF).
It is good practice to require drivers to have regular medical checks.
Make sure your drivers know what to do in the event of an accident, including insurance cover and details. Some insurance companies provide driver accident packs for this purpose.
Make sure your drivers are planning journeys realistically, taking into account the distance, time of day, weather conditions and any known roadworks.
Ensure someone in the business is responsible for carrying out routine vehicle safety checks
Make sure your staff know how to load and unload safely – see our manual handling training dvd
Consider having a written policy for driving on business that provides information on safe driving on motorways or when tired, tyre safety and reversing.
You could also advise your drivers and staff on fuel efficiency to help control costs, including respect for speed limits, avoiding frequent acceleration and hard braking, and switching off the engine when stationary.
Download a PDF leaflet on managing work-related road safety from the Health & Safety Executive (HSE) website
More information on safe driving policies for companies.
Download a variety of safety awareness posters for you and your drivers.
Comprehensive business driver and vehicle information can be found on the BusinessLink website.