To Company Car or not to Company Car

I learnt a new phrase the other day, range anxiety, which has nothing to do with a middle-aged man suffering testosterone deficiency, no its about electric cars. More on that later.

Gone are the good old days when a company car was a significant perk and a great way to incentivise staff. Car policies could even be tweaked a bit, within larger groups, where one more profitable chief exec could get the same Ford Granada, but his was the 2.2 Ghia – just without the badge.

With the exception of those travelling long business miles the BIK of 30% of the vehicle cost of your car when new is too costly? From the companies view the cost is the same, but there’s nothing sexy about a Ford Mondeo even if you can tweak the badge, so where’s the incentive.

As an employee I can drive my own car, a 10-year-old Jag if I want (flash git), and I can claim mileage based on the civil service rates. Ok I bear the running costs, and the hidden cost of depreciation. If I’m unlucky to be accident prone, my insurance premium will increase, but hey how much depreciation is there in the 10-year-old Jag.

What about cabby cars or SUVs. Those clever revenue chappys have closed down the loop holes where vehicles that met the rear carrying space of X cubic c capacity but had 5 seats were effectively considered vans. The one exception is the VW Touran, but gone are the X5, the Q7 ……If you want to drive a second hand one that was registered as a “van” you can still do this.

So, what are the revenue rules on mileage? Business travel can only be claimed. Business travel is when you are travelling from one place to another as part of work commitments. To calculate the distance allowable, it is the lower of; the distance between your home and the temporary place of work or, the distance between your normal place of work and the temporary place of work.

Travel from home to work is not a business journey. You can repay employees when they use their private cars for business purposes. This payment can be made, tax free, by the amount of business kilometres travelled. The rates are detailed in the table below along with a link to the Revenue website.

https://www.revenue.ie/en/employing-people/employee-expenses/travel-and-subsistence/civil-service-rates.aspx

How do I compare the costs of having a company car to running my own car and claiming mileage? Here is a short video of our Car Expenses Tool.

 

Download this tool for FREE.

“Car Expenses Tool” — Caffco

Back to the Testosterone deficiency – Electric cars.

You can avoid BIK if the company provides you a fully electric car – not a hybrid. New in the Finance Bill 2017. https://www.irishexaminer.com/business/electric-car-tax-exemption-slips-under-the-radar-461934.html  https://www.oireachtas.ie/documents/bills28/bills/2017/11517/b11517d.pdf

So, what’s available that deals with Range Anxiety– the new Nissan Leaf which has a range of 270Km, costs from €30,000, and looks a bit better than the Robin Reliant that was the old one.

If you drive 200km one way once a week like me, you may suffer Range Anxiety. The new Leaf stats seem to be able to cope with this.  What else do I get, emmm,  a social conscience, a compost bin and some slippers. You don’t pull the birds with a leaf, you definitely need a hook. I can’t take the badge off the back like my old Ford Ghia. It’s just not sexy. Interestingly a director in SIMI recently told me he sees a greater market opportunity in retired people owning electric cars. They are not in a rush, won’t forget to plug it in, and don’t do great mileage.

Want something to incentivise the movers and shakers in the company, something cool and sexy that won’t carry the BIK burden. Something you could literally launch into space. Did the earth move for you my dear, well we’re on the way to Mars. Yes, it’s the Tesla. Budget too big – go for a second-hand Tesla they range €50,000 – €70,000 (still big bucks) on Car Zone – selling like hot cakes. There s no VRT on electric cars so you could look at importing from the UK.

Now while the Tesla is optional to get the slippers and the compost bin, people will be too busy looking at the car to see your feet.

Warning becoming a Tesla driver means you join a bit of a club and you may find yourself meeting other Tesla drivers for coffee and discussing the range and wheel diameters and other technical stuff that unwittingly starts to excite you. Who needs testosterone replacement!

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