Company car tax

Company car tax guide

Sorting car tax can be complicated at the best of times, so understanding what taxes apply to company cars and who is responsible for paying them can be a real challenge.

The term ‘car tax’, also commonly referred to as ‘road tax’, refers to VED (Vehicle Excise Duty). Put simply, company cars that are exclusively driven for businesses purposes are exempt from car tax. However, company cars that are also used for private mileage can be subject to tax.

That’s why this blog will explain how taxing company cars works, addressing:

  • Who is required to contribute.
  • What standards must be met for exemption (both for employers and employees).
  • How to calculate company car tax.
  • Fleet tax schemes fleet operators could use to save money.

How does company car tax work?

Whom pays the tax on a company vehicle depends on its usage. If a company vehicle is used for personal use as well as business use, then the taxing responsibility falls on the employee as well as the employer. This is because the permission from the company to use the vehicle privately makes the vehicle a benefit-in-kind, and it should be taxed as such.

If a company car is not used privately, it is not required to be taxed by either party. If this is the avenue you wish to pursue, you will need a written company car policy stating company vehicles aren’t to be used for private use to back up any claims. It can be a difficult to prove that a company car is not available for private usage.

Company car no private use

It’s important first to understand that ‘private use’ for company cars does include using the vehicle to get to and from work, unless travelling to a temporary place of work. If you or employees are using company vehicles for the work commute, this qualifies the vehicle as a benefit in kind and will need taxing as such.

If a company vehicle is not being used for any private use, there are steps you can take to ensure it is clear that the company vehicles don’t require taxing:

  • Store the vehicle and/or the keys on business premises.
  • Ensure employment contracts ban private use and have a company car policy written.
  • Keep a mileage log.
  • Insure the car for business use.

With these considerations in mind, we’ll now take a look at company fuel benefit and how to work out what tax is owed on a company car that is used full time.

Company car fuel benefit

If you use a company car full time which is paid for by your employer, you are required to pay the company car fuel benefit.

To work out company car fuel benefit, you need to take your BIK percentage and multiply it by the fuel charge multiplier. As of the 2022 tax year, the fuel charge multiplier is £25,300.

If you’re looking to save money on your fleets fuel expenditure, you can browse our range of fuel cards here to find a fuel card that fits your fleets needs.

How much company car tax will I pay?

There are a number of factors that influence how much company car tax you pay including:

  • How often you have the vehicle.
  • What type of fuel the vehicle uses.
  • The amount you pay towards the cost of the vehicle.

Company car tax on electric vehicles

For the 22/23 tax year, the tax rate on fully electric zero emission vehicles is 2%, and this rate increases for vehicles as their emissions increase and, for hybrid vehicles, as their electric mileage capacity decreases.

How to calculate company car tax

To work out how much tax is owed on a company car, you’ll first need to multiply the cars P11D value by the percentage banding the car sits in.

The P11D value of a car can be calculated by taking the list price including any optional extras, VAT, and delivery charges, and removing the cost of the first year registration fee and the annual VED car tax.

Once you have this figure, you multiply it by the percentage BIK band of the car which is determined by its emissions. You can find your vehicles BIK band here.

This number is then multiplied by your income tax band.

If you’re looking to save money on your fleets fuel expenditure, you can browse our range of fuel cards here to find a fuel card that fits your fleets needs.

How to reduce company car tax

Our tips for reducing company car tax include:

  1. Contribute up to £5,000 towards the cost of the company car to reduce the taxable value.
  2. Pay the full cost of any private fuel to avoid private fuel tax.
  3. Car share to split the tax expectations.
  4. Choose an electric car where possible.

When does my car tax run out?

Car tax for both personal and company vehicles runs out when it is no longer paid for. If you set up a standing order on personal car tax, for example, so long as your standing order payment goes through you are taxed and covered.

For company vehicles and fleets, fleet managers can benefit from the DVLA fleet scheme to help manage the cycle of tax payments on company vehicles.

DVLA fleet scheme

The DVLA fleet scheme offers help to companies with fleets of 50 or more vehicles, in order to alleviate some of the administrative burdens of maintaining larger numbers of vehicles.

The scheme offers a range of benefits including bulk taxing. This allows companies to tax vehicles in one transaction rather than individually. Once registered for the scheme, you can apply to use the Post Office Licensing scheme and the Bulk Electronic Relicensing Transaction, both of which can help you track and tax your company fleet each month with one simple transaction.

You can read more about the DVLA Fleet Scheme and the benefits it offers here.

How can fuel card services help?

At Fuel Card Services, we aren’t able to manage your company car tax for you. However, we do offer a MileageCount service, as well as advanced telematics tracking, that can help you get a clear and accurate picture of the business mileage your drivers are conducting.

Having this understanding of exactly how many miles are being driven for business purposes can help you make your reporting more effective; making filing for tax easier and creating opportunities for you to optimise your driver’s routes to save money. Browse our fleet services.

Understanding the legal drink driving limit

Understanding the legal drink driving limit

Alcohol impairs your cognitive ability, motor function and reactions times, making driving under the influence of alcohol a fast track to accident, injury and even death. For the sake of your own safety and the safety of those around you, it’s important that drivers understand the legal driving limit, the penalty for drink driving, and the risks associated with driving under the influence.

Similarly, it’s important that your business manages its commercial fleet in the right way; providing the right guidance and advice to employees around drinking and driving while also setting out some clear policies that ensure you’re legally covered and have a process for tackling issues as they arise. And it’s crucial that as a driver, you understand and are equipped with clear guidance from your employers.

What is the legal alcohol limit for driving?

In the England, Wales and Northern Ireland is 35micrograms of alcohol per 100 millilitres of breath, 80milligrammes per 100 millimetres of blood, and 107milligrammes per 100 millilitres of urine – as per the government’s guidelines.

Despite these strict limits, there are many other factors that influence how much alcohol inhibits each individual person. Factors such as sex, body weight, metabolism, food consumption and hydration all influence the real time impact of alcohol on an individual cognitive functions.

Consequently, it’s impractical to roll out blanket recommendations that say ‘X amount of drinks means X amount of danger’, and so a limit is set on the amount of alcohol that can be present in one’s blood, breath or urine at any one time while driving. Fleet drivers need to know and adhere to these limits.

What is the penalty for drink driving?

If you are caught driving or attempting to drive while over the legal limit or otherwise unfit to drive from drinking, you could face 6 months imprisonment, an unlimited fine, and a driving ban of at least 1 year.

The implication of drink driving can leave you unable to carry out personal and workplace duties and may leave you incapable of retaining your job if your work relies on your ability to drive legally. Any of the above charges could lead to a significant increase in insurance costs, and could impact your ability to travel to certain countries.

In the case that you cause death by driving over the limit, you could face up 14 years imprisonment in addition to an unlimited fine and 2-year minimum driving ban.

Managing drug & alcohol consumption in your fleet

For fleet managers, ensuring the safety of your fleet is one of the highest priorities. Having an appropriate drug & alcohol policy in place is the first step in ensuring your fleet is operated correctly and safely. Your staff need to understand what is expected of them in terms of drug and alcohol consumption and the consequences of drug and alcohol use, and this is particularly true in any industry where workers are operating heavy machinery.

‘Heavy machinery’ for drivers could encompass vehicles themselves, and even equipment at the depot that’s used for maintenance and upkeep.

That said, it may also be useful to open up a conversation around substance misuse within your business. Increasingly, employers are moving from using punitive language around alcohol and drug use to talking about signposting, mental health, and treating addiction or substance misuse as a problem over demonising the addict – and so having a framework for talking about these topics may help facilitate a positive and constructive culture within your business.

Fleet management tools

What, though, can you do to improve driver safety from a tool perspective?

Fleet management tools like Tele-Gence offer fleet managers increased awareness and control over the actions and safety of drivers. The smart technology is designed to decrease costs whilst increasing driver safety by tracking important data such as departure and arrival times, and provide tailored driver safety scores that your managers can work with.

When it comes to dangerous driver and driving under the influence, tools like Tele-Gence can help to identify concerning driving patterns and hazardous practises so you can intervene and handle any challenging situations before accidents happen.

If Tele-Gence sounds like something your fleet management could benefit from, you can learn more about the service here, or get in touch with our team to discuss your options.

What is hypermiling?

Hypermiling guide: Can it save your fleet money?

Many businesses with fleets of vehicles will be feeling the bite of current fuel prices, which have been rising drastically since the start of 2022. Fleet managers will be looking for ways to make every drop of fuel take their vehicles a little further. One possible solution to this problem is hypermiling.

What is hypermiling?

Hypermiling is a term used to describe techniques that drivers can use to increase MPG. It is suggested that, by using these techniques, you could boost your MPG by around 40%. In a time when drivers may dread their journey to a fuelling station, getting an additional 40% MPG from every tank of fuel could seriously keep costs down. It is however a controversial set of techniques, as concentrating too hard on keeping fuel consumption low can make drivers less aware of the road.

What is most likely to waste fuel?

With hypermiling being the term for ultra-fuel-efficient driving, the first thing to understand before putting hypermiling techniques into use it what’s most likely to waste fuel in the first place. Having a good grasp on what habits make fuel consumption higher and what external conditions might negatively impact the efficiency of fuel consumption will help those looking to apply hypermiling techniques apply them correctly and appropriately.

How weather impacts fuel consumption

Cold weather causes higher fuel consumption. Firstly, through aerodynamics; cold air is denser than warm air, meaning your car will have to work that bit harder to travel through it than it would on a warmer day. A study by the US EPA suggests that a drop from 24 degrees Celsius to 7 degrees Celsius increases urban commute fuel consumption by between 12 and 28%.

Additionally, cold weather can adversely affect the performance of your vehicle’s components, from under the bonnet to the tires. An engine in warmer condition doesn’t have to work so hard to get warmed up and cold can affect tire pressure which will impact both the safety and efficiency of your vehicle.

What are some hypermiling techniques?

So additional miles per gallon and an increase in efficiency sounds great, but how exactly can you achieve this?

Ask yourself whether the drive is necessary

For most fleets, driving isn’t optional. However, for smaller, local businesses, it could be worth considering. Could the 5 minute drive be replaced by a 20 minute walk or a 10 minute cycle? Efficiency is obviously key for businesses, but could the money saved from not driving negate this small loss of productivity?

Maintain a sensible speed

A general reduction of 20mph can have huge benefits for your MPG. Of course, this is quite extreme – you’d end up driving too slowly in some places. However, it’s worth remembering. Perhaps driving at 60mph instead of 70mph on a motorway would make a lot of difference and keep the fuel in your vehicle for longer.

When you need to speed up, be gentle with your accelerator – don’t put too much strain on your engine.

Anticipate the road ahead

Stopping and starting frequently means more fuel is consumed. Therefore, hypermilers try to avoid stopping as much as possible. If you see a build-up of traffic ahead, begin slowing. Take your foot off the accelerator and apply a gentle brake if necessary. There’s a chance the traffic will have cleared by the time you reach it, meaning you won’t have to stop at all.

What can be achieved by driving smoothly?

Drivers who follow these techniques might also plan their journeys to avoid roads where stopping is guaranteed. If you can avoid taking a route where you’ll have to stop at multiple junctions, and instead take a route that follows a steady flow of traffic, this is likely to be favourable for your fuel economy.

Driving smoothly and avoiding stopping where possible can decrease that unnecessary fluctuation in acceleration, helping you to increase your fuel efficiency.

Drive behind other vehicles

This technique certainly brings considerations about safety to the forefront of the discussion, which we’ll talk about in a moment. Keen hypermilers will try their best to drive behind other vehicles as often as possible. This is because, when a vehicle moves, it displaces the air it is travelling through. That means any vehicle behind will face less air resistance, meaning they don’t have to push their vehicles as hard.

This technique is referred to as “drafting”, and it’s even used by racing drivers to gain advantage over the cars ahead of them.

This is a very controversial practice. It’s argued that when a driver focuses on drafting, they lose awareness on the rest of the road. If you are going to do this, make sure to maintain a safe distance between yourself and the vehicle ahead. Failure to keep a safe distance could actually see you getting fined.

Keep your vehicle well maintained

A badly maintained vehicle is a less efficient vehicle. Make sure your tyre pressure is adequate and your oil levels are topped up. A regular service is key to ensuring your vehicles are efficient. For HGVs, daily walkaround checks should be carried out to ensure that your vehicle is maintained well, so you can focus on the driving.

For cost effective vehicle servicing with discounts at selected garages, take a look at MyService.Expert .We have pre-negotiated rates at thousands of main dealer and independent garages nationwide. And it’s pay-as-you-go!

Reduce the weight in your vehicle

This is another one that may not be possible for certain drivers if deliveries are being made. However, it’s a well known fact that the less weight in your vehicle, the less fuel is consumed. Are you carrying unnecessary items in the boot of your car for example? Removing them could improve your MPG.

Is hypermiling safe?

It can definitely be argued that some of these techniques aren’t safe. Travelling at slow speeds can in fact be more dangerous on some roads. You’ll also not win the respect of many other drivers on the road who might be stuck behind you as you maintain a moderate speed.

Similarly, the controversy surrounding ‘drafting’ as a technique to save fuel will probably not put you in other driver’s good books and does open you up to increased risk of accident that could hurt you or others.

Remember that following the laws of the road is more important than saving fuel, as failure to do so could cost lives. Only use hypermiling techniques when it is safe to do so – do not put yourself and other road users in danger.

How else can fleets save money?

As mentioned, hypermiling might not be the safest or most popular way to improve your MPG, but there are other ways to save on fuel costs!

One of the best ways for fleets to save money is by getting a fuel card!

With a fuel card, you could see discounts of up to 10p per litre. You’ll also save a great deal of time with HMRC approved invoices – no more holding on to receipts!

Get in touch today to find out more about fuel cards – the smart way to manage your fuel and fleet costs.

And if you want to keep a tab on your fleet’s mileage then our Mileage Count tool is the perfect addition to your fleet management tools. Learn more about how Mileage Count can improve the ease of tracking fleet mileage.

Fleet cars- which vehicles should I choose?

The Ultimate Guide to Fleet Cars

Cars are the most common type of vehicle used by commercial fleets in the UK, and these can be owned either by a business, or owned by an employee and registered for commercial use.

Naturally, there are many considerations to be made around bringing the right fleet cars on board and creating the right infrastructure to facilitate a productive and hassle-free experience for your drivers that doesn’t break the brand.

Short-term considerations around the business’ bottom line, though, are not the only consideration to be made when picking your fleet cars. In fact, the legislative and ethical considerations surrounding the UK’s commitment to achieving net zero carbon emissions by 2050 should also play a role in how you design your commercial fleet.

For example, the UK is set to introduce a Zero Emission Vehicle mandate for car manufacturers in 2024 which will impact the types of cars that are on the market in the coming years. So, how do you go about bringing the right fleet cars on board?

Things to consider when choosing a fleet car

There are a number of factors to consider when procuring fleet cars for your company, and these factors will influence what make and model you choose to buy or lease, and which additional features are useful too.

Carry out some research following our guide below to help you pick the perfect fleet cars and other fleet vehicles for your fleets needs.

Usage and route planning

Understanding the types of journeys and routes the fleet car will need to do is the vital first step in picking the right vehicle. You’ll want your fleet car to be fit for purpose, so think about exactly what sort of trips it’s going to be making.

Long motorway trips, inner-city driving, country roads and off roading (perhaps for rural deliveries) may all require different vehicle capabilities, and this should be in the forefront of your mind when looking at car specifications and features. Powering your fleets is also crucial, and access to filling stations and electric charging stations can help determine whether you ought to invest in diesel, petrol, electric or hybrid vehicles – and whether you should look for features like stop-start technology to help increase efficiency and save costs.

Having an unsuitable car for the fleet’s needs can result in increased costs for the company, either through excessive fuel consumption or maintenance costs. You might find that cars ill-suited to motorway driving consume excessive amounts of fuel, or costly wear and tear, for example.

Similarly, consider the possible trajectory of environmental legislation as well as your business’ responsibility that might impact your fleet in coming years. For instance, if an electric vehicle offers many of the same benefits as a petrol or diesel car, consider choosing it over the latter in order to bolster your business’ efforts to minimise emissions.

Operational costs

The full scope of the cost of your fleet cars is not captured within its price tag. Instead, operational costs, maintenance, fuel, leasing, and tax must be considered to help you make an informed decision.

When looking at used cars in particular, it’s important to identify any faults or weakness that could incur future costs – and to develop a process for thoroughly inspecting second hand cars to spot any potential issues.

Repairs and maintenance

Maintenance is a cost that could end up high if you don’t do sufficient prior research, particularly when purchasing or leasing second hand fleet cars. We suggest conducting proper research by calculating projections around the real cost of the vehicles you’re interested in and gauging how expensive they’ll be within six months, a year, five years, and ten years based on vehicle makes, models, and ages.

Utilising a fleet vehicle maintenance software can also help you to stay in control and on top of maintenance needs for your fleet.

Safety

Safety is a huge factor when consider when picking your fleet vehicles but it’s also an important consideration when they’re on the road too. For this reason, its worth considering investing in fleet management technologies that will help to boost the safety of your fleet.

Tele-Gence is an advanced telematics service that is designed to improve driver safety and reduces costs too, with the use of the best market technology. Not only is it easy to use, but it’s also flexible and fully customisable so you can ensure that once you have picked the right fleet cars, you have a functional and tailored telematics service that fits the bill.

Business standards

After safety and other important decisions that influence driver safety and compatibility with the role your fleet car needs to play, you should consider your business standards and the image your want your fleet to communicate.

Company image is important, so by selecting your fleet cars and other vehicles to reflect your business appropriately you could help to unify this image. Factors to consider include branding and business objectives, as well as the value that standardisation could bring to your business if appearances matter.

Row of black fleet cars

Used fleet cars – the pros and cons

Used fleet cars can be a source of saving in many ways because of their age. This also applies to insurance rates, which are often lower for used vehicles and you can still find relatively new models for significantly less money than you would purchasing them new.

However, second hand cars are typically less reliable than their brand-new counterparts, and balancing base costs for the initial vehicle purchase against long-term maintenance and repair costs is key for fleet operators. You may find that a used car delivers unforeseen costs in maintenance, repair, and adjustments that a new vehicle simply might not.

If you opt for used fleet vehicles then take your time to research the vehicle value, have it inspected by a mechanic, check its VIN and history report as well as asking for warranties – and conduct a test-drive if possible.

Supply chain issues in the car production pipeline are currently having a harsh impact on second hand vehicles, pushing up prices while new vehicles are at reduced rated of production. Keep this in mind whilst looking of your second-hand fleet vehicles and be mindful that the price you pay for a fleet vehicle currently might not be reflective of its value.

The benefits of used fleet cars

  1. Lower depreciation hits.
  2. Lower car insurance rates.
  3. Cheap registry renewals.

The disadvantages of used fleet cars

  1. May not be as reliable as new vehicles.
  2. Wear and tear.
  3. Higher mileage.

New fleet cars – pros and cons

Purchasing or leasing a new fleet car can be a great way to avoid the typical used car challenges around longevity and maintenance – in favour of reliability. With access to better fuel economy, you may even find that the overall cost of your new vehicle is cheaper than a second-hand counterpart when forecasting over a number of years. Not to mention the peace of mind you may also enjoy from knowing that your vehicle doesn’t have a murky past.

The pitfall of a new vehicle, of course, is the upfront cost you are likely to pay. New cars are fundamentally more expensive and on top of the immediate cost there are additional fees to pay such as registration and auto sales tax.

With car production currently being affected by semiconductor chip shortage prompted by the coronavirus pandemic and the recent fire in a Japanese factory, now is tricky time to look at purchasing new cars. Delays in the car production pipeline mean you need to act efficiently and consider the value and role of new cars for your fleet.

The benefits of new fleet cars

  1. Reliable.
  2. Up to date technologies.
  3. Low maintenance costs.
  4. No damage or wear.

The disadvantages of new fleet cars

  1. Expensive – both for the car and the addition fees (registration, auto sales tax, dealer documentation).
  2. Higher depreciation rates.

Fleet Management Services

We hope our fleet cars guide has helped make you aware of some of the key considerations to make when expanding your fleet in the modern day, as well as the legislation and market movements to look out for.

After you’ve made your vehicle choice and your fleet cars are out on the roads, make sure they operate as safely and efficiently as possible with invaluable fleet management services.

We offer a range of fleet services that can help with every aspect of fleet management from increasing safety with My Drive Safe, to tracking mileage with Mileage Count.

Get in touch with our experts today to discuss what fleet services might be of use to you.

vehicles parked on the side of the road

Where can drivers park on the road?

Many businesses use drivers to make deliveries. Whether it’s food or parcels, the UK lockdowns saw the rate of deliveries increase quite dramatically. With more drivers making deliveries, this means more cars need to park on our roads.

Therefore, businesses should know what rules exist that dictate where their drivers may or may not park. After all, drivers can’t guarantee that they’ll find a dedicated car park – especially a free one!

Where you can and can’t park

According to the highway code, there are certain places that parking is not permitted except in extreme cases.

Double yellow lines

car parked on a double yellow line

Drivers will of course be familiar with double yellow lines. Parking our waiting on these lines is forbidden at any time of day.

Blue badge holders are able to park on a double yellow for a maximum of 3 hours, providing there is no signage that indicates otherwise. Specific circumstances may allow loading or unloading on a double yellow as long as you are seen to be cautious. However, the rules regarding when you can and can’t load on a double yellow are somewhat vague – you may wish to encourage your drivers to avoid doing this just in case.

A parking fine of £70 is typically given to drivers who have parked on a double yellow. However, this is often reduced by 50% if the fine is paid within two weeks. Either way, this is not something businesses will want to deal with!

Clearways

clearway sign

A road with a blue and red sign indicates that stopping is not permitted in any case at any time, including blue badge holders. This road is a clearway, which means exactly what it says – keep the way clear!

These signs are often accompanied with additional information such as “for the next 5 miles”. There won’t be specific road markings like a double yellow line in on a clearway, so drivers must keep an eye out for these signs.

Double red lines

double red line on road

In some areas of the UK, you’ll see red lines instead of yellow. They are being introduced into cities such as London and Leeds to improve the flow of traffic.

Just like the double yellow, these lines indicate that stopping is prohibited at any time.

Pedestrian crossings

zebra crossing

Of course, parking on a pedestrian crossing is not permitted as it would obstruct access for people crossing. The zig-zag white lines leading up to the crossing must also be kept clear, as parked cars would risk obstructing a pedestrian’s view of the road.

Single yellow line

single yellow line

There are plenty of places on UK roads that drivers are permitted to park on at specific times of the day. One example of this is a single yellow line.

A single yellow line on a road indicates that you should not park on it. However, this restriction is often lifted outside of certain times. Often, you’re able to park on these lines in the evening or at the weekend. Should you need to park on a single yellow line, look for nearby signs that will indicate when you are permitted to do so.

Much like the double yellow, blue badge holders are able to park on single yellows for up to 3 hours as long as it is safe to do so, and the signage does not say otherwise.

Outside someone’s house

Whilst the residents of the house might not be happy about it, the law states that you are perfectly within your right to park outside someone’s home. Residents do not automatically get the right to park on the road in front of their home.

However, if a driver parks in front of a driveway and blocks someone in, this could be a violation. The local council potentially has the power to move the parked vehicle.

How to park on the road safely

The highway code gives drivers some tips on parking on the road properly:

  • Park as close to the curb as possible
  • Apply the handbrake, and switch off the engine and any lights
  • Don’t park against the flow of traffic
  • Ensure valuables are not visible in the vehicle
  • Don’t park too close to a vehicle that is displaying a blue badge

If the road on which you are parked has a speed limit of 30mph, parking lights must be left on to avoid other drivers colliding with your parked vehicle.

Additional places drivers cannot park

As well as places on the road marked by lines or signs, there are also a few places outlined by the Highway Code that drivers must not stop in, unless forced to by traffic or an emergency.

  • Near a school entrance
  • Anywhere that prevents access for emergency services
  • A bus, taxi or tram stop
  • Near the brow of a hill
  • On a lowered curb
  • On a bend

However, the wording of these rules in the Highway Code states that drivers “should not” park in these places. This creates a bit of legal ambiguity as to whether parking in these places is a crime, but parking fines can still be issued by local authorities if this guidance is ignored.

How can Fuel Card Services help?

We can’t find parking spaces for your drivers, but we can make sure they’re being safe out on the road! Our telematics service, Tele-Gence, helps fleet managers to track the whereabouts of their drivers, as well as reports on their driving behaviour.

If one of your drivers were to park somewhere they shouldn’t, you’ll be able to see it on the Tele-Gence software.

Tele-Gence can also be paired with your fuel card account. Whether you’re already a fuel card customer or a fleet manager looking to cut the cost of their operations, we’ve got the tools for you.

Get in touch today!