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What should you think about before choosing your company car?

Posted by Stephen Clarke on 28-Mar-2017 13:54:03
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It’s a bit of a salesman stereotype, but cars are important to me.  I’ve owned many interesting cars over the years, mostly pre-children – a right hand drive Porsche 964RS, a BMW M5 Touring, and two Caterham Superlight R500s, among others.  Motorbikes are a similar weakness – I have had many, including a very nice Ducati 999R.  My middle-aged knees won’t take that now so I have a BMW S1000XR.

My first car

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Porsche 964 RS

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Ducati 999R

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Caterham 7 Superlight R500

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 Caterham 7 Superlight R500

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Before joining Acuity I drove a 2013 Volkswagen Golf GTi (white, manual, 5 door, performance pack for those who are interested in details).  There was a company car available from a recently departed member of staff, so I agreed to take it.  It helped that I could put the cash from the Golf into extending our house and replacing the kitchen, which can’t be delayed any longer!

The car offered is a perfectly pleasant BMW 520d saloon with M-sport pack.  With a P11d value of £41,000, it averages about 47mpg in the real world (claimed manufacturer figures 60mpg) with the 187bhp engine.  It’s pretty remarkable really – 10 years ago it would have been unthinkable to have a car that could do nearly 700 miles on £75 of fuel and achieve 0-60 in 7.5 seconds whilst transporting 5 people in complete comfort.  However, the taxation system makes a diesel car less attractive than they have been – HMRC advisory fuel rates pay 11p per mile (not currently covering the cost at 47mpg) and the annual tax bill for a 40% tax payer rises from £4,081 this year to £4,407 next year for the 520d.  In most cases a personal car would make sense.

However, there is an alternative.  The era of the plug-in hybrid as the car of choice for the company car driver is here.  My preference is for the newly launched BMW 530e.  A 4-cylinder petrol engine assisted by an electric motor gives a combined output of 248bhp with 0-60 in 6 seconds.  Real world economy should be about 40mpg.  It is better than that though; I’ll be able to commute for the cost of the electricity, as it should have a 30 mile range on battery only, and the HMRC advisory rate is 14p per mile.  Congestion charge is free and it’ll be especially economical around towns and cities in traffic. 

The best bit is the tax.  I can have a £50,000 car for £1,800 tax this year, and £2,600 next year.  That is a £150 a month tax bill for a £50,000 car which allows me to commute 40 miles a day for next to nothing. 

But why not a purely electric car?  Tesla have a decent range and performance at a price.  Small hatchbacks like a Nissan Leaf make sense for short journeys.  For me, HMRC’s assumption of a zero fuel cost makes them impractical; 14p per mile on a plug in hybrid adds up when compared to the no allowance per mile on an electric car.  The exception is the BMW i3 range extender – the benefit of an electric vehicle with the safety net of a petrol generator, still getting the HMRC advisory rate on business miles.

It’s a 530e for me.  M-sport plus pack, carbon black, ivory white leather (brave choice), piano black trim, Harmon-Kardon speakers and BMW’s excellent Microsoft Exchange integration.  All for £150 a month in tax.

BMW 530e

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Topics: Company Car

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