Taxation and Outright Purchase
A number of fleets have already changed or are looking to change the way that they fund their vehicles to ensure they are still getting the best value for money. The increase in VAT from 17.5% to 20%, a reduction in capital allowances, and proposed new accountancy rules are all having an impact. Doubts have already been raised over the future for employee car ownership (ECO) schemes, with mileages, fuel costs, and the administrative burden eroding potential savings. However, whether a fleet employs an ECO scheme, outright purchase or leases its vehicles, the continuing backdrop is one of cost reduction. Therefore, choosing a funding option which takes account of an individual organization’s own unique set of circumstances, such as vehicle type, mileages driven and tax profile is essential
Changes to VAT and a shortage of funds is pushing companies towards Business Contract Hire rather than Outright Purchase. Shifting towards Business Contract Hire is becoming increasingly commonplace, because, for fleet operators which Outright Purchase their vehicles, the increase in VAT effectively adds 2.5% to their acquisition costs, as the VAT cannot be reclaimed. Allied to a reduction in capital allowances from 20% to 18% for cars emitting 160 g/km of Co2 or less, and from 10% to 8% for those emitting more than 160 g/km, outright purchase looks increasingly less attractive. The impact of changes to the tax regimes affecting company cars is likely to reduce the attractiveness of outright purchase which has been on the wane for some time. These Taxation changes take effect in April 2012. In addition the AIA (Annual Investment Allowance), which is currently £100,000 per annum, reduces to £25,000 per annum on the same date. A car allocated into the AIA, will qualify for 100% WDA (Writing Down Allowance) in the year of Acquisition. Currently a business has an AIA of £100,000 per annum. From April 2012, this will be reduced to £25,000 per annum. Any reasonably sized business will quickly use up this £25,000 allowance, and any purchases over this amount will fall into the Plant and Machinery Pool (except cars that emit >160 g/km of Co2).
To discuss your requirements in more detail, or if you have any queries regarding any of this information, please call us now on 01653 604300
Customer Testimonials
“Thank you for yet another efficient delivery. The 2 cars arrived as promised and we are very happy with them. We are very pleased with the service and will continue to use you guys for our future car needs.”
Mr S Dodds
“Our congratulations to contracthireuk.co.uk on reaching this milestone (20 Years Trading). In a very competitive market, carleasinguk.com have remained very cost effective and have managed to retain a personal touch sadly missing in this digital age.”
Mr L Maclachlan
“I wanted to drop you a quick note to say thanks for the prompt and efficient way you have handled the order and delivery of my new car in a short space of time. I am delighted with the car and I hope to have dealings with you again in 3 years time.”
Mr M Wood
“We would like to express our thanks once again for another smooth delivery for our latest fleet vehicle. Everything was expertly handled from start to finish, as usual. Many thanks.”
Mrs T Williams
“We have just taken delivery of our latest edition to our fleet and I can't thank the team at contracthireuk.co.uk enough for the superb service levels that they provided to us once again. It is a refreshing change to have a company look after your fleet in such a well organized manner.”
Mrs S Iqbal
“I just wanted to say thank you for sourcing the right car and finance package for me. The car was delivered a week ago, and I know it wasn't the most straight forward deal to arrange. Suffice to say I am delighted with it; its exactly what I wanted.”
Mr M Bilney
“I wanted to thank you for all of your help. You are very easy to deal with and nothing was too much trouble. Keep the offers coming as we have more cars due early next year.”
Mrs J Maylor
“Many Thanks for your assistance in selecting the correct car after much searching on your behalf. The car is outstanding and the delivery was seamless. All in all, and encouraging experience”
Mr W Henry
“Thank you for all of your hard work in getting this sorted. I have been very impressed with your efficiency and willingness to help, and will have no hesitation in recommending your service to others.”
Mr C Rich
“I would like to take this opportunity to thank you for the smooth and efficient manner in dealing with our new vehicle. I have used a number of companies over the past few years, and to be honest I was very surprised by the level of service we received from yourselves, which from my experience is second to none. Every person I have spoken with have been extremely efficient and a pleasure to deal with.”
Mr M Furness
“I would like to thank contracthireuk.co.uk for their professional advice and committed customer service. Our fleet of company cars is increasing significantly over the next few months, so we will be in touch.”
Mr A Strickland
“I have recently placed my business for a new car through your company. I originally chose contracthireuk.co.uk because you provided me with the most competitive quote, but since then I have been hugely impressed with the outstanding customer care I have received.”
Mr M Wilton
Why contracthireuk.co.uk
are better than the rest
- Trading for over 20 Years
- Dedicated account managers
- Impartial funding advice
- Comprehensive maintenance packages
- Bespoke vehicle sourcing solutions
- Continual support throughout the contract
For all enquiries or further information, please call us now on 01653 604300
