It’s not often you have true car envy but when your customer sends you pics of their latest car, the Audi RS3, you definitely have to admit some jealousy!
A big thank you to our existing customer (based in Corringham outside London), who takes both personal and business leasing deals from us us, for sending through these great images. When you are changing a VW Golf R, it is very difficult to replace it with something which is going to exceed your expectations; however with the RS3 you do get a truly special performance car.
One of the points raised in this transaction, which often does get asked in conversation, is whether or not a customer should have a personal contract hire or business contract hire (if the choice is available). If you do take a business lease through a limited company, there are some benefits to the company in that the rentals can be offset against corporation tax.
For vehicles registered after April 2018 any car which emits 110g/km of CO2 (or less) a business can claim 100% of the rentals against tax BUT for vehicles which emit more, a company may only claim 85%.
If your company is VAT registered you can claim up to 50% of the Vat on the finance rentals and 100% of the VAT on the maintenance rental. With commercial vehicles/LCVs you can often offset 100% of the rentals and claim back 100% of the VAT on the finance rentals, so long as there is no private use.
For the individual driver, if you have a company car you are effectively enjoying a benefit which is subject to tax. For an employee, having a company car is not “free” as some believe; it does give the opportunity to have a vehicle with maintenance and insurance (sometimes fuel) included. For risk-averse persons, particularly those with poorer credit, this can be a route forwards. However, when you have a vehicle you need to calculate the tax payable on the vehicle which is done by taking the P11d of the vehicle, the CO2 of the vehicle and the tax bracket for the driver.
In essence, the more expensive and more polluting a vehicle is, the higher the rate of Benefit in Kind (BiK) will be.
In this example, if you were on the 40% tax bracket, you could be paying £700 per month plus for the car. The vehicle is therefore clearly not “free” and you do need to careful consider your tax position.
In the alternative, if you take a personal contact hire arrangement, you have the ability to avoid any tax on a BiK basis. That being said, as the car is in your name, this is your risk and if you do not pay for the vehicle, this will affect your personal credit rating, unlike the business arrangement above.
Also, the amount you pay per month will include Vat and you will not be able to reclaim any of this back.
If you are swapping from a company car scheme to a personal scheme, you need to factor into the equation the maintenance and insurance on the vehicle; don’t just get the best car you get possible get within your budget.
Try and consider the “whole life costs” which will include the running of the motor vehicle, the servicing, tyres, maintenance and fuel, as these should be relevant within your calculations.
Also, if you are receiving a company car allowance, work out your monthly contribution from your employer after tax. If you receive £500 gross from your employer, this will be subject to income tax at the relevant rate (20, 40 or 45%) and so you need to apply this when working out your budget.
Whether you should have a business contract hire arrangement (company car) or personal contract hire arrangement (allowance/business mileage) is very much a personal decision and should be based on your needs and requirements. However, what business contract hire customers’ need to be aware of is that the UK is continuing to increase the rate of tax for company car drivers and as we are “CO2” focused tax regime, this is making many cars very expensive to procure via a company car scheme.
Added to this fact, is that after 1 September 2018 any cars registered must adhere to the new WLTP standards. You are going to see CO2 increase on most vehicles, reducing the amount of “eco” options available to a customer.
In terms of the car shown here, the Audi RS 3 SPORTBACK 2.5 TFSI RS 3 Quattro 5dr S Tronic, this is based on the following configuration:
· Glacier white Metallic Paint
· 19″ 5 arm rotor design alloy wheels
· Fine nappa leather – Black with diamond stitching
As standard the car includes Audi sound system with 10 speakers, cruise control, 19” alloys, LED headlights, sports seats, black brake callipers, oval twin exhaust, nappa leather, Audi parking system plus, heated washer jets, ASR, EDL, electronic stability control, sport suspension, Audi connect, Audi smartpone, mobile telephone preparation, Audi virtual cockpit with 12.3” instrument cluster, navigation, auto dimming rear view mirror, electrically heated and folding door mirrors, DAB radio, RS design body styling, Audi beam, climate control, 3 spoke flat-bottomed steering wheel, black styling pack, LED interior light pack, storage pack, 60/40 split folding seats, anti-theft alarm and a Thatcham cat 1 alarm/immobiliser. In terms of the additional factory options, consider – privacy glass, the sports exhaust system and a fixed panoramic roof for the perfect car.
On the technical-side, company car and business drivers can note the P11d at £44,420.00 and CO2 at 189g/km for a standard car. The 2480CC 7 speed auto engine delivers combined MPG of 34, 400ps and 0-62 times of 4.1 seconds. A fairly impressive car all round!