Complex tax rules that apply to business cars means that companies should seek specialist advice when it comes to company car funding to maximise tax breaks, claims Volvo Car UK.
Volvo has embarked on a programme to train its corporate sales team and business centre dealers after it became clear that companies were continually highlighting areas of confusion including:
Volvo is urging fleet managers, user choosers and small and medium-sized companies to seek car funding advice from Volvo dealership-based business teams following the launch of its new tax efficient training programme delivered by Hampshire-based BCF Wessex. So far the in-house corporate sales team has received the specialist training and that is now being rolled out to Volvo UK's 24 business centres in its national dealer network.
Comments Volvo National Corporate Operations Manager Selwyn Cooper: "The tax rules are complicated, and depending on a customer's personal situation, play a great part in determining whether they would be better off driving a company car or buying the car privately. Volvo invested in its bespoke car tax training programme to ensure its staff now have the highest level of expertise to help customers make informed decisions and not simply fall into the trap of looking at just the monthly rental figure."
Jeff Whitcombe, who devised and delivered the training alongside his business partner David Rawlings, says: "With the right training, a corporate sales manager can offer in-depth and insightful guidance to the customer which would be difficult to provide without specialist knowledge; what's more the advice is all part of the service. Volvo has taken the lead and companies can really benefit."
The corporation tax rules favour lower CO2 emitting vehicles. For example, when a company purchases a sub-111g/km CO2 vehicle, of which Volvo has three - the C30, S40 and V50 in the fuel efficient DRIVe range - it can claim a 100% first year allowance rather than spreading its capital allowances over several years. So, if a small company, that pays tax at 20%, spends £25,000 on such a low emission car, after claiming its first year allowance, the company's corporation tax charge is reduced by a massive £5,000, which is £4,000 more tax relief than would be available if the company had bought a comparable car with emissions of, say, 111 g/km.
Adds Jeff Whitcombe: "Invariably, when whole life costs are discussed corporation tax is omitted because of its complexity but, actually it can account for a vast boost in cash flow." Other factors that need to be taken into account include disallowance for leased cars with CO2 emissions exceeding 160 g/km; VAT blockage on company cars available for private use; and tax-free allowances (Approved Mileage Allowance Payments or AMAPs) that an employer can pay a driver using his or her own car for business worth 45p per mile for the first 10,000 business miles and 25p per mile thereafter, as well as being tax deductible for the company. Jeff Whitcombe concluded: "Once all the elements, including running costs and annual road tax, are put in the melting pot, there are a number of Volvo vehicles which prove exceptionally cost effective for both employer and employee."
The Volvo DRIVe range also has a positive effect on the income tax paid by company car drivers:-
|Model||CO2||Benefit Kind||In (BIK)||20% Payer||Tax||40% Payer||Tax|
|C30 1.6D DRIVe 115HP ES Start/Stop||99 g/km||13%||13%||£479||£959||£479||£959|
|S60 1.6 DRIVe 115HP ES Start/Stop||114g/km||13%||16%||£609||£750||£1,219||£1,500|
|V60 1.6 DRIVe 115HP ES Start/Stop||119g/km||13%||17%||£640||£837||£1,280||£1,674|
Note to editors: "DRIVe Towards Zero" is Volvo Cars' vision for developing cars entirely free from harmful exhaust emissions and environment-impacting carbon dioxide. The DRIVe badge is fitted to those models that offer the best environmental performance in their respective segments. The newly arrived S60 and V60 DRIVe models join the line-up alongside the London Congestion Charge beating C30, S40 and V50, along with the XC60 and XC70, whilst the Volvo V70 DRIVe (119 g/km) and Volvo S80 DRIVe (119 g/km) have been recently re-introduced with their new Euro V diesel engine. This provides drivers with a choice of nine DRIVe models, of which seven produce CO2 emissions of under 120 g/km and three below 100 g/km.