Working with local customers is very beneficial to us in that we are able to offer a more consultative approach and discuss the advantages and disadvantages of leasing a car and/or van. For a growing small business, making the right decision on vehicle procurement is crucial, as they need to ensure that the next 2-3 years are consistent and practical (particularly given economic uncertainty).
Some small businesses do not give proper thought to the right finance products and, as a result, they end up with a vehicle which is not appropriate for the business or on a finance product that is not beneficial.
Having considered company car tax the customers had enough information to realise that procuring a car through the business would leave them exposed to considerable benefit in kind liabilities. When you receive a car through your business, as an employee, you must pay tax based on the P11d value of the vehicle, the CO2 per km and your own personal tax threshold.
For the business while the monthly rentals can be offset against corporation tax (subject to CO2 per km thresholds), only 50% of the VAT on the finance rentals can be reclaimed.
In this case, we had a business of two directors, who produced their individual and business tax calculations to realise that this would perhaps not be quite as effective as first thought. As such, we went on to discuss a commercial vehicle/LCV. For a business using cash, you can claim 100% of the write down on the commercial item under your Annual Investment Allowance, subject to a £200,000 threshold. For rental products, you can claim 100% of the monthly rental, so long as there is no personal/private use AND you claim back 100% of the VAT provided there is no personal use and you are a VAT registered business.
Unlike a company car tax position, using a van (or commercial vehicle), is based on a taxable benefit of £3,230 for the year 2017-18 with this increasing to £3,350.00 for 2018-19. What this means is that a company van user, with a fuel benefit (which is set at £633 per year), would pay £797 per year if they are in the 20% income tax bracket and £1,593 if they are in the 40% income tax bracket. As you will note, this offers employees considerably less tax exposure in comparison to a car; you would be paying anywhere between £400-£800 per month for a “decent” car. For a small Vat registered business, using a pickup, which is considered as a commercial vehicle is a practical route for some employees. However, ensure that the payloads does not fall below 1000KGs, which can happen when you add accessories, as this will make your vehicle become a company car and therefore be taxed as one. That would be an expensive error.
On a day to day basis, you need to ensure you happy driving a pickup. Over the last 5-years, there have been considerable increases in aesthetics, technology and equipment with trucks, to the extent that many of the modern vehicles match what would you receive on a car – heated seats, sat nav, parking sensors, parking camera to name but a few. If you have a cover or top on the load area, you can benefit from some considerable storage space coupled with a higher driving position which many customers now crave. However, these are still a commercial vehicle and this will not mirror the driving experience you would have received from a BMW 3 series or Mercedes E-Class; some drivers find the transition more difficult if they are operating higher mileages and have previously been using more comfortable vehicles.
Additionally, fuel economy is not what you would get from a car; please do not jump into a truck if you need 60-70 MPG. Quite frankly, this isn’t going to happen. You would also need to ensure it is fit for the business purposes, in that you need to be confident it fits your company image too. For those operating in the construction industry for example, this would be a popular choice.
For more information on leasing a pickup, speak to our van lease team here at CarLease UK.
In terms of the vehicle shown here, the Mitsubishi L200 DIESEL Double Cab DI-D 178 Barbarian 4WD Auto, this is based on the following specification:
· Electric blue Metallic paint
· Leather – Black
· 17″ alloy wheels
· Bed liner – under rail
· Tonneau cover – hard type
As standard the vehicle includes automatic rain sensors, rear privacy glass, brake assist, trailer stability assist, lane departure system, cruise control, rear view camera, 4WD drivetrain, smartphone link, auto dimming rear view mirror, electric heated and folding door mirrors, start/stop button, DAB radio, HDMI port, steering wheel mounted controls, chrome external features, illuminated door guards, bi-xenon headlights, dusk sensing lights, LED daytime lights, climate control, leather steering wheel,17” alloys, Thatcham Cat 1 alarm, engine immobiliser, heated front seats, 4-way electrically adjustable seats, emergency stop signal system and leather upholstery. You cannot add any further factory options; you can only influence the colour choice. If you do want to add extras these will be dealer fitted – load liner/hardtops etc
On the technical-side the vehicle has a list price £28,075.00 and CO2 at 196g/km. The 2442CC 5 speed auto engine offers 37.7 combined MPG, 178ps and 0-62 times of 11.8 seconds. Service intervals on the L200 are set at every 12 months or 12,500 miles, whichever lands sooner.
Check out the best commercial lease deals on the Mitsubishi L200 @VanLease UK – or – read more pick-up and commercial reviews below…