Which Should I Choose? – Company Car Or Company Car Allowance
First of all, let’s define exactly what Short Term Rental Is Short Term Rental (or Short Term Leasing, as it is also known) is the leasing or hiring of a car or van for a period usually ranging from one to twelve months, with immediate delivery. It is a very flexible and convenient arrangement, which can usually be extended on a month by month basis, unlike Car Leasing where you are committing to a two or three year fixed term.
The Cash for Car scheme has become increasingly popular with both employers and employees in recent years. Employers save time and money in not having to source, maintain and administer a fleet, although they must always be aware of their Duty of Care and Health & Safety responsibilities. And as an employee, you have more freedom to choose the car you drive, and you could even be better off if you don’t spend all of the car allowance you receive. However, some employers do stipulate the type and age of vehicle that is acceptable, according to the job you are doing.
If you drive a van, the rules are slightly different in that you should not be liable for tax if the only private use is to go between work and home.
Why choose Short Term Rental? There are many reasons to choose Short Term Rental over Car Leasing, the main one being that you will not be committing to a lengthy leasing contract and will have the flexibility that a short term arrangement offers.
It enables easy budgeting of your motoring costs, and the fixed monthly payments can even include servicing and maintenance. Also, there’s no need to worry about depreciation or disposing of the vehicle at the end of the contract.
Further Information on Company Car Tax & Benefit In Kind To help you work out how much Car Tax and Car Fuel Tax you will have to pay, why not check out the Tax Calculator provided by HM Revenue & Customs. Also, there is a Government website all about ‘Company Cars’ which provides useful information and guidance for both employees and employers.
If you choose a Company Car Allowance and lease a vehicle which you use in the course of your job, you’re entitled to claim from your employer a mileage allowance for each business mile travelled. H.M. Revenue & Customs approves certain mileage rates that employees can claim for business travel, and the current rate is 40 pence per mile. Check the H.M. Revenue & Customs website for the latest information.
Of course, there is a way of avoiding paying Company Car Tax altogether, and it’s not illegal! If your employer gives you the choice of having either a Car or a Car Allowance, you could choose the cash alternative, lease or purchase your own vehicle, and then claim an amount back from your employer for business mileage (currently at a Government set rate of 40 pence per mile).
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