Five ways to cut the cost of company cars

Story: Richard | Posted 15 June 2012 | In Business Car Management, Featured Posts, Issues, SME Advice, Special Reports

Tagged with: cutting cost, EcoBoost, Electric Vehicles, hybrid, Mercedes E300 BlueTEC Hybrid, plug-in, range-extenders

The hybrid comes of age. New Mercedes E-Class Hybrid is capable of 56mpg and with 109g/km emissions qualifies for 15% company car tax. Not that we'd suggest you should start trumpeting the fact on the side of your own company's business cars!

Author: Jo Tacon, car finance writer, Business Car Manager

Britain’s taken on a retro tinge; bunting for the Jubilee, and austerity politics that recall a very different time from the credit-soaked atmosphere in which we operated until recently. It’s all very chin up chaps – keep muddling through.

How can business car managers respond to this mood? Where can we save a bob or two? Should we eschew internal combustion altogether, and insist your drivers take up the velocipede, the penny farthing, the two-wheeler: in short, the humble bike?

Two wheels good!

So let’s start with the extreme. What could be more fitting in these straightened times? Bikes don’t need refuelling, maintenance is cheap, and then of course there’s the parking. But we don’t see two wheels replacing a petrol- or diesel-fuelled workhorse anytime soon. (Hmm, horses. Might be something in that. Mind you a bale of hay is 3 times the price of a litre of petrol these days.)

But don’t write the idea off altogether. For those rare fleets where a bike could be a practical replacement for a company car, there are some attractive options available to sweeten the pill.

Salary sacrifice schemes make bikes an attractive add-on

A salary sacrifice scheme – such as that offered by cyclescheme.co.uk – can help both employers and employees reduce their tax bills. How do they work? The principle is that an employee gives up – ‘sacrifices’ – a part of his or her salary in exchange for the loan of a bicycle and safety equipment. This is a ‘non-cash’ benefit in taxman parlance. Because the sacrifice is taken from gross rather than net pay, the employee ends up paying less tax and NI. A pension contribution isn’t a bad analogy.

While a scheme like this isn’t going to replace a company car scheme for most businesses, it might well be worth looking as an add-on, complementing rather than replacing the cars and vans you already have.