Company Car Or Car Allowance?

24th June 2019

Ultimately, it’s a question of finance. Weighing up the benefits, if you’re financially able to insure, service and maintain a car an allowance is a good way to go. This way you would just claim back business mileage from your company but it does mean that you will need to keep up to date travel and distance records.

The advantages of a company car is there is no purchase price for yourself to pay and that all repairs, MOT, insurance and fuel costs (for business) are covered by the company. There main issue is the additional tax were you will be expected to pay in relation to having a Benefit in Kind(BIK)–  the amount of tax is based on emissions and list price. HMRC have a standard rate list to work this out per vehicle and it’s worth noting that all diesel cars are always more heavily taxed.

A commercial van is also an option which gives a lot more freedom against tax if they can be solely used for business purposes. There may also be the possibility if certain criteria are met to use a fleet car for business trips without the need to pay any further taxes.

When considering purchasing a business related vehicle it would be best to have a discussion with an accountant about this first.

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