Decisions, decisions, decisions…
When it comes to your work vehicle, there are a number of important decisions you have to make. In the end, it all comes down to personal choice and what works best for you, but there are financial aspects to the decision so it’s essential to take the time to consider it thoroughly.
Employers usually offer three options which are: -
•A traditional company car to be chosen from a list, or with conditions applied
•A salary sacrifice where you swap some gross (pre-tax) income for a car
•An opt-out where you receive a cash allowance instead and use it to fund you own vehicle
The third of these options brings yet more choices to make: -
•Do you buy or lease?
•Do you go for new or second hand?
•Do you purchase outright or arrange finance?
The right way to go?
There was a time when the most popular choice would have been to keep a company car, no questions asked, but with less-attractive (and ever-changing) tax implications, Benefit In Kind calculations to consider and, of course, a sharp rise in the availability of Personal Lease and Contract Lease options, the opt-out is now the way that the vast majority of employees choose to go.
And when you consider the many benefits, that’s really no surprise: -
Without the restrictions of the company car list you can go with the manufacturer, model and specification of your choice, limited only by practicality and budget!
Having your own vehicle means that you keep it even if you lose (or change) your job. Ownership allows you to build up your own insurance profile and no-claims bonus which can bring substantial savings.
Since you won’t have your car added to your salary as a Benefit in Kind, this will reduce your final tax bill, especially if the addition of this benefit takes you over the 40% tax boundary.
A handy bonus if you aren’t issued with a fuel card. Claiming for business miles on your own vehicle equates to around 45 pence for the first 10,000 miles and 25 pence per mile thereafter.
With the choice to opt-out made, is Personal Leasing then the best option?
Most people like the idea of being able to have a new, high specification car for a lower monthly payment than they’d have to find to finance the purchase so, yes, leasing is a popular and good choice.
With all the benefits a new car offers – low maintenance costs, high fuel efficiency and manufacturer’s warranties, it can be a great way to run your car of choice within your monthly vehicle budget.
There will, of course, be an element of up-front cost even with the leasing option – usually a one-off payment equivalent to anything between 1 and 12 month’s payments - but, if you can afford to pay a little bit more at the beginning, this will bring your monthly costs down.
As a cautionary note - pay attention to the mileage limits set at the beginning of the lease. These are usually between 8,000 and 12,000 miles per annum, but make sure this fits your usage to avoid picking up an additional charge per mile when your lease ends.
The final thing to consider in your decision is that the car will never be yours. This means you will need to repeat the process at the end of your lease but, as a plus point, you’re also not lumbered with the spectre that is depreciation!
If you would like some assistance in making your decision or would like to explore the Personal Lease costs for your shortlist of dream cars then simply get in touch with our helpful team or visit https://www.360autoleasing-leicestershire.co.uk to see what we can offer.
8th of September 2020
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