Controlling costs is a common target for most businesses. Ensuring the company is meeting its objectives and keeping employees happy with an appealing benefit package is a difficult balance, but is it possible if you choose the right provider for your employee car benefits.
If you select the best solution for your company car entitled drivers, as well as for your non-entitled drivers, both you and your employees will be able to enjoy tax savings.
Company car tax explained
A traditional company car is classed as a taxable benefit, so both you and your employees will pay tax to provide and have access to that car. It’s a simple sum to calculate how much Benefit-in-Kind (BiK) tax is due.
Both of these calculations will provide an annual total of tax that would be payable.
You can view the latest rates on the gov.uk website here.
How to make savings
Employee Car Ownership Schemes (ECOS) give you and your employees the benefits of a company car without the associated tax burden – increasing flexibility, improving controls and generating savings.
With ECOS, the ownership of the vehicle passes to the employee when the car is delivered. This means that BiK tax and Class 1A NICs are not applicable. You deduct a fixed amount from your employee’s net pay each month to contribute towards the running costs of the car.
Additional benefits of ECOS
Take advantage of low BiK on EVs
Salary Sacrifice Cars allow your employee to give up some gross pay in return for a brand new EV. With the taxable salary amount reduced, your employees will make savings on income tax and NICs, and your business will save on NICs too. However, BiK tax will be applicable for your entitled drivers, as the vehicle will be classed as a company car.
Choose a provider which can offer all solutions
Get in touch today to ensure you’re delivering a car benefit to your employees in the most efficient way for your business.