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Company cars cost comparisons

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Hi all,

I am only a small accountancy practice, working for very small limited companies and the self employed, so I don't have any clients with company cars or even who consider it up to recently.

As electric cars become a more viable option and the current BIK rates make it more attractive (currently), I wanted to ask about how you undertake your cost comparisons.

I am of course aware of how to do the main part of the cost comparison, however I wonder whether you would include the savings that would be made in personal tax, whether that be standard income tax or the dividend rate, because if the car were purchased personally, the Director/Shareholder would have to pay that before having the money available to pay for the car personally.

I would be interested in others' opinions and views.

Thank you for your time.

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By David Ex
18th Aug 2021 11:43

It all depends on what you are trying to compare. For an OMB then yes, you would need to compare (a) company provides car with (b) individual provides own car.

As long as you include all relevant costs and benefits and state any assumptions, you can do no more.

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By david_dbu
19th Aug 2021 10:15

Absolutely agree, thank you.

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By paul.benny
19th Aug 2021 09:42

It's hugely difficult to do a one-size-fits-all comparison.
- how would company or private car be funded (savings, borrowings, PCP, lease).
- new or used? (Attitudes tend to change when it's a company vehicle)
- what replacement cycle (ditto)

I'd also be wary about a decision based on a tax advantage. Are the tax concessions for EVs going to last for the period of ownership? My guess is they will start to be eroded.

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By david_dbu
19th Aug 2021 10:14

Absolutely agree with all your points.
Tax should never be the only factor in making a decision.
As you say the electric car incentives will only last so long, and actually they're already on the way out with BIK rates increasing.

Thank you for your thoughts and input.

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