We are constantly telling our clients that traditional company cars are, in many ways, the optimum solution for employees with significant business mileage.
And yet the number of company cars on the road is falling, and fast. People who have no choice but to sit in a car virtually every day, to do their job, are moving to cash. Why?
Ok, so we keep saying company car tax is too high. But how to quantify that in simple terms? Let’s take 5 cars from an actual client review – take the actual whole life cost, less the proportion that relates to business use, and compare that to the company car tax the employee would actually pay (these employees all pay tax at 40%).
The results are on the graphic. Factoring high business mileage (which of course doesn’t reduce the company car tax liability) means we have an effective tax rate of 192% at one extreme. Even the PHEV is 77%. Yes, an electric car gives an incredible result – but by definition are these not the least appropriate for employees with significant business mileage?
The contradiction here is that the Government acknowledges the role the company car has to play from a safety and environmental perspective – but seems to hit those with the greatest need with the highest tax charges.