Wheels for work: funding the company car policy

Article Abstract:

There are many financial products with which to finance a vehicle fleet, all with particular effects on taxation and balance sheet treatment. Financial products fall under the categories of either purchasing or rentals, the difference being that purchase gives a company title to a vehicle. Purchases can be either with a company's funds or borrowed funds. Rentals are subdivided by assumption of risk to the extent of whether depreciation is assumed by the leasor or leasee. Hire purchase and lease purchase give a company title to a vehicle and must be shown on the balance sheet as an asset less depreciation. In the area of rental agreements, capital leases must be shown on the balance sheet because they incur liabilities. Operating leases are left off balance sheets and give companies the benefit of fixed depreciation costs.

Corporations

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Wheels for work: from Sierra to Saab

Article Abstract:

The UK Inland Revenue taxes company cars used for private use by employee with a salary over 8,500 pounds sterling. The level of tax on cars that cost up to 19,250 pounds sterling depends on the engine's cubic capacity, with a sharp increase when the engine capacity goes beyond 2,000 cubic centimeters. New models, such as the 2 liter Volvo 740 SE, have been introduced which are better fitted than the 2.3 liter Volvos. The purchase of a new company car and the sale of an old car should best be kept separate. If a company desires the trade-in transaction, the company should ask for a discount on a new vehicle, thereby reducing the value added tax on the new car, and must be prepared to accept a realistic price for the old one. Ask for a price on a specific car with specific options against a specific trade-in vehicle.

United Kingdom, Automobiles, Company, Company cars, Volvo (Automobile)

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Wheels for work: towards a company car policy

Article Abstract:

When choosing vehicles for a company fleet, consideration must be given to the true operating costs. Tax considerations are necessary when determining whether offering a company care is appropriate. Employees who will make private use of a vehicle of less than 10,000 miles should be offered a salary increase in lieu of a company car. The choice of model should be based on cost, image, and the model's suitability to the job. Fleet vehicle maintenance must be regulated and vehicle expenditures controlled by requiring drivers to keep records.

Accounting and auditing

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