Just set up your business? How to get the business cars you need

Business car purchases now comprise around half of the new cars sold each year, bringing many finance and brand cohesion benefits. As business cars become increasingly attractive to companies, we explain the differences between personal and business cars, as well as how to get started with your business car fleet.

What is the difference between personal car and business car?

While any car can be purchased as a business car, there are a number of financial incentives that make certain models significantly more cost-effective for both the company and the driver. There’s also a number of commercial and branding reasons why a business may choose a specific model of car for their employees.

With manufacturers now incentivised by an emissions-based tax system, new incarnations of popular brands have been developed to help reduce CO2 output and therefore costs, without sacrificing performance or design, such as the award-winning Vauxhall Ampera.

The market has shifted in line with technological advances, with low-emission diesel engines now proving the most popular engine type for fleet cars. Compact business cars are also gaining popularity, such as the class-leading Renault Captur. Many companies chose to build their entire fleet with ‘business edition’ cars only, in order to create a standardised template for employees and maximise potential savings on bulk purchases.

Reliability is often a key factor when investing in fleet cars, ensuring that your staff can be confident of avoiding a break down and arriving at meetings on schedule, as well as avoiding headaches with maintenance and insurance-related paperwork. Ford car models have received many past awards for reliability both in the eco-sector and in the used-car range, and Jaguar’s XF was voted this year’s best used executive car by AutoExpress.

With first impressions being a major factor in business, commercial drivers or companies that rely heavily on meeting their clients on location are likely to require a car to reflect the character of the company, be that prestigious, luxurious, practical or fun.

Is there a difference in business car finance?

Dealerships with an extensive selection of fleet cars, such as Perrys have, can offer discounts on bulk purchases, or if there is an agreement in place for a certain amount to be purchased over a specified time period. These discounts are often changeable depending on the quantity of cars required, but they can easily add up to a reduction of thousands of pounds per vehicle.

An important consideration will be the rate of company car tax that will be chargeable to your employees. A company car is classified as a Benefit in Kind (BIK) – a perk on top of base salary – and so is taxable in the same manner as annual wages.

The tax bands that fleet vehicles fall into do not correlate with regular Vehicle Excise Duty, with over 30 separate permutations based on emission levels. Those that fall into the lowest tax band (including electric vehicles) will be taxed at just 5%, whilst those with the highest emission rates will be charged at 35%.

There is currently a 3% surcharge on diesel engine fleet cars to compensate for the additional harmful chemicals that are released by such models, however this is often offset by the overall efficiency of diesel engines.

In order to work out how much tax your employees will be paying on a specific model, simply follow these steps:

  • Multiply the P11D value (cost of the car minus non-taxable features) by the company car tax band (dependent on emissions) to work out your BIK figure
  • Times this by the personal tax rate of the employee (e.g. 20%/30%) to give you a figure for the amount of tax payable.

How can a new business owner set up a business car fleet?

It’s easy to get started setting up your business car fleet. Most initial enquiries begin with a phone call or visit to a local dealership in order to assess what models are available and what discounts are on offer. Perrys can offer industry-leading deals on new business cars, so ask us first and we’ll make sure we get you the best deal!

Depending on your business type and the budget you have available to invest, you’ll have many decisions to make, such as whether to go for new or used cars, petrol or diesel engines, practicality or design. Your Perrys dealer will take the time to check all these points with you to ensure you are getting a deal that’s right for you.

The dealer will want to check some details with you, such as your registered business number and the amount of vehicles you’re likely to require. If you’re looking for a significant quantity of vehicles or long-term deal, then there may be some scope for you to negotiate a further discount.

Once all your criteria have been satisfied, all that remains is to place your order, distribute the vehicles amongst your staff and ensure that the relevant paperwork is sent off to HMRC each year. Enjoy cruising in executive style!

If you’re looking to set up a new fleet of business cars, or would like some extra advice from the experts, simply call on our friendly and helpful Perrys team, or stop in to your local dealership today.