April 09 will see the biggest shake up in company car taxation history!
Here’s why…
Ian Roddy, Sales Director of
Your accountant may well in the past have recommended that you purchase your vehicles outright because of the “expensive” car rule, but from April 09, this rule will no longer apply and we will find that “expensive vehicles” with CO2 emissions of under 160 g/km will be considerably more cost effective to finance via contract hire.“
Why will contract hire become more cost effective?
This is all due to a combination of new annual Write Down Allowances, revised VED (Vehicle Excise Duty) brackets based on vehicle CO2 emissions and the often forgotten protection from uncertain residual values. These all combine to make contract hire the clear winner when looking at the cost comparisons over the life time of the vehicle.
Ian went on to say “It is the uncertain residual values that can have such a profound impact on the overall cost of ownership of a vehicle; and it is also the most forgotten element when your accountant considers whether outright purchase or leasing is the best option for you.
Plus, in this economic climate, your accountant will also now be considering the “cost of funds” for your vehicles. “Cost of funds” are the actual and opportunity costs of taking the capital sum out of your business rather than using it within your business as working capital or the ever essential cash flow. As contract hire is a monthly payment, the capital sum remains within your business, and as the amount is fixed, this also allows you to budget for your vehicles.”
Since the announcement, we have spoken to many accountants who all recognise that now, as it is so essential to reduce the levels of risk within your business, contract hire is one of the least risky routes to keeping your workforce mobile. Here is a summary of why contract hire is becoming so popular:
1) The capital remains within your business, providing you with cashflow and earning you a return on your investment.
2) Contract hire is a fixed monthly fee, which allows you to budget tightly.
3) There are no surprises with unforeseen maintenance costs, as this is all covered in the monthly maintenance element.
4) Courtesy vehicles are provided to cover maintenance and servicing, keeping your workforce mobile at all times.
5) There are no nasty shocks when disposing of your vehicle, as the contract hire company takes all responsibility for the disposal and any losses incurred.
Whether you currently have company owned cars, staff with cash allowances or are considering the benefits of company cars in your business, come and talk to us. As NI’s leading vehicle management company, we are experts in providing impartial advice to business owners about the best funding and vehicle solutions both for your organisation and your staff.
For advice now on how to choose the vehicles that will save you money call
