Is a company car scheme worth it?
A company car can be great for those who commute lots of miles to benefit as the vehicle is paid for meaning you don’t have to worry about unexpected costs. Car allowance is less common but offers more flexibility as the money can be used to purchase a new set of wheels or pay its running costs.
How does a company car scheme work?
A company car scheme is where a company offers its employees a vehicle for personal and business use. As the salary is sacrificed before tax and national insurance contributions are taken, the employee effectively gets a brand new car at a significantly lower cost than the retail market.
Who is eligible for a company car?
Define which employees are eligible for company cars. Often, this falls into two categories – “Job Need” or “Status” drivers. Job Need drivers will be eligible for a vehicle due to the job role or function they perform. Generally, this involves significant mileage or carrying of equipment or personnel.
How does ECOS scheme work?
An ECO scheme works by giving employees a monthly salary allowance to spend on a car of their choice. The allowance is worked out individually for drivers and is based on their car grade, tax bracket and annual business mileage.
What is the best company car to get?
Our pick of the top company cars with low tax are:
- Tesla Model 3.
- Skoda Superb iV.
- Volvo XC40 (T5 Recharge)
- Kia e-Niro.
- Range Rover Evoque (P300e PHEV)
- Mercedes A-Class (A250e)
- Toyota Corolla.
- Audi A6 (TFSI e)
How much salary is a company car worth?
The IRS figures that to be the realistic cost of operating an automobile. So, a company vehicle should be worth about (15,098 miles x $0.54/mile) = $8,152.92 per year. To be safe, I round up to $8,500. A good rule of thumb is to value a company vehicle at $8,500/year.
How much does a company car add to your salary?
What is a salary sacrifice car?
Salary sacrifice car is a cost-neutral option for companies who want to offer their employees a car. The employee finances the car through payroll deductions and take advantage of the employer’s right to deduct VAT and reduced social security contributions.
Do you pay National Insurance on salary sacrifice?
Using salary sacrifice means that the employee and the employer pay less National Insurance contributions. Employers may decide to maximise the amount of pension contributions by adding the savings they make in lower employer National Insurance contributions to the total pension contribution amount they pay.
What is an eco scheme and how does it work?
One additional feature of an ECO scheme is that employees are given a much wider choice of cars and they may be given the further option of trading up (with a cost) or trading down (with a saving). ECO is fundamentally different to offering employees a cash allowance instead of a company car.
What is the company car scheme?
The scheme is a tax efficient way for organisations to offer all their employees a brand new, fully insured and maintained car at a cost lower than they could achieve in the retail market.
Are employee car ownership schemes making a comeback?
ECO schemes have been around for many years but became somewhat overshadowed by salary sacrifice in recent times. However, changes to the way that BiK is calculated for salary sacrifice cars means that employee car ownership schemes are having a revival.
What is eCos and how can it help your business?
For employers that want to provide a car benefit to their employees, ECOS is a tax efficient way of doing so. A viable alternative to simply providing a company car, the overall scheme can be altered to provide the exact level of benefit that you want to give to your staff, offering great versatility and flexibility for budget purposes.