In most cases, it is up to you, as owner-director of your small business, to arrange insurance for your company car. Typically, if the company owns the vehicle, the company will arrange company car insurance under a fleet insurance policy. This insurance will cover your employees for both business and private mileage.

Company fleet car insurance

Fleet insurance is designed for businesses who have two or more vehicles. So, rather than paying multiple premiums for several vehicles that all have unique renewal dates, fleet insurance makes things simple. You can renew the insurance for all your vehicles at the same time and pay a single premium, reducing the amount of admin.

Fleet insurance extends to all classes of vehicle owned and operated by your company for its business operations. This includes any company-issued cars your employees use for work journeys, as well as taxis, motorcycles, minibuses, HGVs, trucks and even plant used on construction sites.

Similar to private car insurance, fleet insurance is mostly available in three different levels of cover:

Third party covers your business if other people claim against you for injury or for damage to their vehicle or property

Third party, fire and theft covers your business if one of your fleet vehicles is damaged by fire or stolen, as well as if other people claim against you for injury or for damage to their vehicle or property

Comprehensive covers your business is a vehicle in your fleet is stolen, accidentally damaged or damaged by fire, as well as damage to other people’s property or bodily injury

Most insurers will also offer vehicle breakdown cover as an add-on.

Typical questions fleet insurers ask include:

• How many vehicles does your company own?
• What types of vehicles do you want to insure?
• How old are the vehicles?
• How often are the vehicles used?
• Condition of vehicles?
• Where are the vehicles kept overnight?
• Are any of them fitted with additional antitheft devices?

Named driver or any driver policy?

Named driver policies are more affordable and suitable for smaller businesses, while any driver policies are better suited to larger businesses where cars are interchangeable – but that flexibility comes with higher insurance costs.

Company car insurance rules UK

However, if an employee uses their own vehicle, they need to ensure they have business car insurance and not just “social” or “social and commuting”.

Business use insurance covers:

• Visiting customers
• Driving between offices and locations
• Travel to meetings
• Running errands
• Ferrying clients
• Driving colleagues

How to save money on company car insurance

There are several ways you can reduce your company car insurance premium:

• Choose a car in a lower insurance group with low emissions
• Park the car overnight offroad in a locked garage
• Install security features such as alarms, immobilisers and tracking systems

Grey fleet vehicles

If an employee uses their own car for your business, for which receive a fixed mileage allowance, these are known as grey fleet vehicles. It is the employee’s responsibility to insure the vehicle, but the company has a responsibility of care to ensure that correct company car insurance is in place.

Under the Health and Safety at Work Act 1974, managers of grey fleet vehicles have a responsibility to check that all vehicles are properly serviced, maintained and insured for business use. They should keep records of all grey fleet vehicles for at least 12 months.

Pro tip: Grey fleet cars can be an economical solution for both employees and companies since neither are subject to benefit-in-kind charges against either the car or the fuel.

Business insurance vs commercial insurance

If you carry passengers or goods, commercial insurance may be a better fit than any of the three classes of business insurance above.

Company car insurance rules if employee has criminal record

Criminal convictions increase how much your company car insurance costs and even if you will be able to get company car insurance at all. Obviously, insurers will balk at criminal convictions for car theft or drink driving. However, there are specialist car insurance policies for those with criminal records.

MoneySuperMarket data suggests there can be nearly a thousand pounds difference between the cost of insuring somebody with a criminal record and someone who doesn’t have one.

Company car insurance rules for new drivers

Again, insurance companies understandably charge new drivers higher premiums based on their lack of experience.

Strictly speaking, there are no age restrictions on fleet insurance, but most insurers operate on an Any Driver Over 21 or Any Driver Over 25 basis – but this does not mean younger drivers cannot access fleet company car insurance. You can always ensure younger drivers can drive fleet vehicles by adding them separately.

Best fleet insurance brands

Admiral

Admiral Fleet Insurance is aimed at small businesses running at least three cars or vans. You do not have to name individual drivers on the fleet insurance policy as it covers any driver aged over 25.

There are two types of Admiral Fleet Insurance policy, depending on what you carry:

• Own goods (e.g., plumbers, builders, carpenters)
• Carriage of goods for hire and reward (couriers, furniture removers)

Admiral Fleet Insurance includes the following in standard cover:

• Windscreen repair
• Courtesy cover
• European cover
• Stereo cover
• £5,000 personal injury cover
• SatNav and personal belongings cover

You can also upgrade fleet insurance cover:

• Personal injury cover up to £100,000
• Legal cost cover
• Breakdown
• Van contents cover

Aviva

Minifleet

Fleet insurance for small businesses with anything between one and 15 vehicles used by a business.

Single vehicles insured under Aviva’s Minifleet policy will be offered a no claim discount-rated quotation, a two-vehicle police can choose with NCD or fleet rating and any policy covering more than three vehicles will be offered a fleet-rated quotation.

• Repairs guaranteed for three years
• Courtesy car
• Legal services and advice included. Optional breakdown cover

Fleet

Designed for businesses with more than 13 vehicles. You can choose between different types of cover: third party only, third party fire and theft, and comprehensive.

• Repairs guaranteed for three years
• Courtesy car
• Legal services and advice included. Optional breakdown cover

NFU Mutual

NFU Mutual’s Fleet Insurance product provides wide ranging cover for businesses with five or more vehicles (cars or commercial vehicles). It covers theft of or damage to the vehicles as well as your legal liabilities for personal injury to other people and for accidental property damage (up to £20 million for damage caused by cars and £5 million for damage caused by all other vehicles).

Vincent Wright, commercial motor and liability manager at NFU Mutual, told Small Business: “It’s not just prudent but crucial for businesses to ensure they have high quality commercial vehicle insurance, ideally one that covers every possible claim – from theft and damage, to excellent legal, accident and rescue cover too.

“A stolen or damaged van, truck or car can mean not just days but weeks of delays and financial loss for businesses. Our commercial vehicle insurance at NFU Mutual has an excellent reputation, largely thanks to the prompt response we offer and benefits such as New Vehicle Replacement [NVR], road rescue, trailer and tools cover, as well as personal accident cover.”

NFU Mutual’s cover also includes:

• New Vehicle Replacement, which means if you purchase a UK model from new that vehicle will be replaced as new if stolen or written off in the first two years for cars and one year for lights goods vehicles 
• Legal expenses cover up to £100,000 – to help customers recover uninsured losses for claims where they (or their driver) were not at fault
• If customers use one of NFU’s approved repairers, the benefits include a three-year guarantee on repairs and a loan car while your vehicle is being repaired (this will be a small car, not a direct replacement)
• Road rescue after an accident – recovery of cars and light goods vehicles following an accident, including transportation to a repairer, home address or destination
• Breakdown cover for cars only – If your vehicle breaks down more than 1/4 mile from where it’s usually kept, you have roadside assistance, which includes labour costs up to one hour to repair the vehicle at the roadside and if a roadside repair isn’t possible, we will transport the vehicle to a suitable garage within 20 miles

Cover is chosen by the customer and can be comprehensive, third-party fire and theft, or third party only. These will all meet the minimum legal requirements in the UK and the European Union.

• You can extend your breakdown cover to include other vehicle types, assistance at home/place of business, vehicle recovery to anywhere in the UK, and onward travel for passengers (availability is determined by type of and number of vehicles on the policy)
• Tools cover – Loss or damage to tools while they’re in the vehicle, up to £500
• Trailer cover – customers can cover trailers in the same way as other vehicles, including while they’re detached
• Personal accident cover – this covers you for injury following a vehicle accident: death, up to £15,000; loss of limbs or eyesight, up to £5,000
• Personal effects will cover loss or damage to personal effects while they’re in the vehicle, up to £250.

QBE

Award-winning insurer QBE has been providing motor fleet cover since 1927. However, it is only available through brokers. It covers some of Britain’s best-known companies with thousands of cars on the road. Ideally customers have been trading for over two years and drivers are aged over 25.

Mini fleet

QBE Mini Fleet covers cars, vans, trucks (up to 7.5 tonne GVW), minibuses, agricultural, special types, or a mix of business vehicles on one policy.

It typically quotes for between 3 to 10 vehicles (with the capability of up to 15), across a wide range of sectors, including clerical, manufacturing, construction and tradespeople.

• National repair centres
• Mobile repair service
• Courtesy vehicles
• All repairs guaranteed for three years

Compliance

QBE says that compliance is one of the biggest challenges facing any business, especially in the small-to-medium sector.

In particular it helps firms:

• Stay up to date with latest regulations
• Offers templates for driver handbooks and policies, collision investigation protocols and scene-of-accident report forms
• Advises on electronic driving-licence checks

QBE also has a strong social conscience, offering customers the choice to have up to 25 per cent of their premium diverted to “impact” investments, which deliver a positive environmental or social impact.

Swinton

Swinton offers fleet insurance starting from just two vehicles registered to your company. Vehicles covered include cars, vans, HGVs and trucks, and vans. It offers two levels of fleet car insurance, comprehensive and third-party, fire & theft.

Depending on the scale of cover you opt for, policies can include:

• Loss or damage to your vehicles
• Vehicle recovery in the event of an accident or breakdown
• Legal fees
• Damage to the windows or windscreens
• Replacement locks should your keys be stolen
• Support towards medical expenses
• Driving abroad, usually with a maximum limit of days allowed per year
• Cover for any personal belongings lost or damaged in an insured vehicle
• Trailers attached to a vehicle insured under the policy
• Courtesy car

Towergate Insurance

One thing that sets Towergate Insurance apart is that it offers fleet customers a dedicated fleet risk manager. This broker offers two types of fleet insurance: Minifleet, which covers up to 12 vehicles, and Fleet, aimed at businesses with at least five vehicles.

Best business car insurance brands

AXA

Customers with an AXA personal car insurance policy can extend it to cover using their personal car for business purposes. To ensure cover is in place for this, customers must specify they use their vehicle for more than social and commuting when they purchase their policy by selecting business use from the options.

However, AXA’s business car insurance policies exclude cover for any goods or materials carried in connection with a business. Personal cars being used for making deliveries (including hire and reward) are also excluded from cover.

• Courtesy car
• Breakdown assistance

Hastings Direct

Hastings Direct suggest you take out its comprehensive personal car insurance and then upgrade to its business car insurance package. There are a range of comprehensive personal car insurance packages starting with Hastings Essential, going up to its Premium policy, which features as standard windscreen cover and window damage, personal belongings protection up to £300 and a courtesy car.

More on company cars

Can you have a company car if you’re self-employed? – Mike Parkes of GoSimpleTax explains the must-know info about owning a company car when you’re self-employed

Buying a car through your business – If I bought my car for £7,000 + VAT and use it 50/50 for business and personal use. How much can I claim back? I’m so confused.

A guide to car leasing for small businesses – In this piece, we look at how leasing your business vehicles can help save money.

How to manage company car tax as a small business owner – If your employer gives you a company car on top of your salary, you still have to pay tax on it. We look at the ways you can reduce your company car tax bill

The post Company car insurance rules appeared first on Small Business UK.

Many self-employed people couldn’t operate their business if they didn’t have a vehicle. Some sole traders use their own car, van or motorbike, for which they can choose to calculate and claim actual expenses or use simplified expenses and claim mileage expenses.

However, if your own car isn’t suitable for business, you may need to buy or lease a company car, van or motorbike or even buy or lease another vehicle to keep pace with your business’ growth. Here are some considerations before deciding.

Can you claim on your car if you’re self-employed?

If you use traditional accounting – where you record income and expenses by the date you invoiced or were billed – and buy a car for your business, you can claim this as a capital allowance, so you can deduct some of the value from your profits before you pay tax.

The CO2 emissions of the car and the date you bought it determine how much capital allowance you can claim and the gov.uk website sets out what you can claim for different types of cars.

If you’re a sole trader or ordinary partner and use the car for business and personal reasons, you’ll also need to calculate your claim based on the proportion of business use versus what you use the car for personally.

If you use cash-basis accounting so you record income and expenses by the date you were paid or paid expenses and buy a car for your business, you can only claim this as a capital allowance if you’re not using simplified expenses with the mileage allowance.

For capital allowance purposes, HMRC classes a car as a vehicle that’s suitable for private use or that most people use privately, one that was not built for transporting goods. A motorhome is classed as a car for capital allowance purposes.

>See also: Buying a car through your business

How do I claim capital allowances?

Sole traders claim for capital allowances via their Self Assessment tax return (SA100). As explained on government website gov.uk: “You must claim in the accounting period you bought the [car] if you want to claim the full value under first year allowances. These enable you to claim for up to 100 per cent of the cost of certain qualifying items against your business profits in the year of purchase.

“If you do not want to claim the full value, you can claim part of it using writing down allowances. You can do this at any time if you still own the vehicle.”

You cannot claim annual investment allowance (AIA) on cars; claim writing down allowances instead. Writing down allowances enable you to deduct a percentage of the value of an item from your profits each year. For business cars, the rate depends on their CO2 emissions.

Buying other types of vehicle

For all other types of vehicle purchases, including vans, you claim an allowable expense which HMRC allows you to deduct from your earnings via Self Assessment with other expenses to arrive at your taxable profit.

And because they’re not cars, you can claim AIA on motorbikes, lorries, vans and trucks. You can deduct the full value of a non-car vehicle from your profits before tax. If you sell the motorbike, lorry, van or truck after claiming AIA, you may need to pay tax.

Is leasing a car or van an option?

Leasing or hiring a car is tax deductible, but CO2 emissions should be considered when choosing a vehicle to lease. As explained by HMRC: “In some cases, if you lease or hire a car you cannot claim all the hire charges or rental payments. For example, if you leased a car on or after April 6, 2020 and the CO2 emissions are more than 110g/km, you must disallow 15 per cent of the hire charge or rental cost.”

When speaking to car dealers or vehicle leasing companies, ask them about the tax implications of the vehicle’s CO2 emissions. If you use a leased or hire vehicle for personal use, you cannot claim this proportion as an allowable expense.

Once you return your lease car, additional mileage and wear-and-tear costs are either wholly or partly tax deductible, dependent on whether you use the lease car wholly or partly for business.

>See also: 8 of the best electric cars for small business leasing

Can I claim for my car as a limited company?

The same rules apply if buying cars via a limited company, however, the employee that uses the car will then have a benefit in kind so will have to pay extra tax. The benefit in kind is calculated based on the RRP of the car and the CO2 emissions.

What’s right for you will depend on your business and its specific needs, but there are plenty of options available to help you drive future success. The key is careful planning and making sure that you account for expenses accurately and are able to claim back any tax.

Mike Parkes is technical director at GoSimpleTax

Read more on company cars

How to manage company car tax as a small business owner

The post Can you have a company car if you’re self-employed? appeared first on Small Business UK.

Whether you want to bolster your professional image or take advantage of the tax benefits, business car leasing is a simple and cost-effective way to access brand new vehicles for you and your team.  

Available to sole traders, limited businesses, or those in limited partnerships and Limited Liability Partnerships, a business lease car allows you to upgrade your company car every few years for a low monthly cost. 

Below, we explain how business car lease deals work, how they compare to personal leasing, and how you can save money with a company car lease. 

What is business car leasing

Instead of buying a car outright, business car leasing allows you to access new vehicles for a fixed monthly payment, usually over a period of between one to five years. 

Because you’re not covering the full cost of the car, a business car lease can be much more affordable than other types of finance like Hire Purchase. What’s more, if you use the car exclusively for business trips, you can reclaim 100% of the VAT on rental payments, servicing costs, fuel and mileage. However, any personal use of the vehicle will reduce the amount of VAT you can claim back.  

How does business car leasing work? 

Available makes and models vary from provider to provider, but whether you need executive transport or a transit van, business car leasing allows you to find a vehicle suited to any requirement for a low monthly cost.  

In order to be eligible, your business must be currently trading, able to demonstrate strong profits, and pass a credit check to prove you can meet your monthly lease payments.

At the start of your contract, you’ll make an initial payment equivalent to between three and twelve monthly instalments, which is then deducted from the total cost of the lease price. You’ll see this configured as something like ‘6+23’, which means you’ll pay six months up front and the remainder in 23 instalments. 

You’ll also agree a maximum annual vehicle mileage with your provider, which can generally be anything from 8,000 to 40,000 miles a year. If you exceed this figure, you’ll have to pay an excess mileage charge, so be realistic in your estimations and, if anything, give yourself some breathing room. 

Business leasing vs personal leasing

The main difference between business car leasing and personal car leasing is the ability to reclaim VAT off your monthly rental payments and contract maintenance charges, which can save you up to 20% of the cost of an equivalent car on a private lease.  

That said, if you use your car for a combination of business and private trips, you will only be able to claim some of the VAT back. Likewise, if your employee uses their company car for personal reasons, they’ll have to pay a benefit-in-kind tax, which is based on the list price of the car and its CO2 emissions. The lower the emissions, the lower the tax. 

Pros, cons and tax benefits

Pros

• Cost effective – access new cars for a low monthly payment and reclaim VAT
• No depreciation – the lease provider absorbs the cost of your vehicle’s depreciating value so you don’t have to
• Write it off against your profits – you can enter your leased company car on your balance sheet and write it off against profits

Cons 

• Charges – if you exceed the mileage, return the car damaged, or fail to maintain it properly, you’ll be charged
• No modifications – as the car has to be returned in its original state, you won’t be able to modify it or brand it in any way
• Insurance – some providers offer ‘complete care’ packages, but if not, you’ll be responsible for taking out a suitable insurance policy. Make sure to mention that the lease company is the registered owner of the vehicle. Failure to do so could invalidate any claim

Next steps

Not only are new cars expensive, they can lose up to 60% of their original value within three years. In a small business where margins are tight, business car leasing allows you to drive around a brand new car for a fraction of its actual cost.

As well as taking advantage of the latest tech and safety features, you and your employees can present a professional image when out and about, and access a variety of vehicles to suit different needs. Just make sure to be realistic about your projected mileage and shop around to find the best deal.

Want to find the perfect lease for your business? Why not use our comparison tool to be matched with the most suitable provider for your needs.

Simply fill in our free quote-finding form, and answer a few questions about your business (it takes less than a minute). We’ll match you with the best leasing provider.

The post How does business car leasing work? appeared first on Small Business UK.

Not long ago, owning an electric car was for die hard environmentalists, owing to their poor range, unappealing designs, and relative expense. 

Today, it’s a different story, with the number of electric vehicle (EV) registrations growing by 70% between 2020 and 2021. Even the most affordable EVs can do 150 miles on a single charge and many look indistinguishable from their fuel-based equivalents. 

And while they are still more expensive to buy outright, with an electric car business lease, you and your employees can access the latest models for a low monthly payment. You’ll also benefit from reduced taxes, and lower maintenance and running costs. 

As of 2022, there are 60 models of electric car on the market, with the likes of Mercedes, Vokswagen, and BMW all offering an EV, so you can save money and save the environment while travelling in style. 

Check out our top benefits to taking out a business lease on an electric car below.

>See also: How to buy an electric car through your business

Save the environment 

More than 41% of global transport emissions (which are responsible for one fifth of total CO2 emissions) are produced by passenger cars. By leasing an electric vehicle as your company car, you’re making a simple change that will have a big contribution towards helping the UK reach its net zero target. 

As an added bonus, with sustainability becoming an increasingly important purchase factor for consumers, driving an electric car is a great way to broadcast your green credentials and encourage loyalty from your customers. 

Save money 

Leasing electric cars allows you and your employees to drive around brand new models for a fraction of the cost of buying those same cars outright. For example, you can lease a small electric hatchback from around £300 per month and you can even lease the latest Tesla for just £650 per month. 

By mean value, electric cars (£32,779) are still more expensive than petrol or diesel cars (£25,685). However, it costs just £467.40 on average for EV drivers to power 8,000 miles of travel, compared to £1,199.40 in fuel costs for petrol and diesel drivers to cover the same distance. Additionally, because EV’s are much simpler machines, with very few moving parts, maintenance is just £304 per year compared to £498 for fuel cars. 

This all adds up: research from LV found that, of 13 electric cars, seven were cheaper to run over a four year lease than a fuel car. 

On top of that, as the lease company is still the registered owner of the car, you also won’t have to worry about its depreciating value. 

Save on tax and VAT

If you lease any car with emissions below 50g/km, you can fully deduct your rental payments as expenses and offset them against your profits. 

And, provided you don’t use the car for personal use, you can also claim 100% of the VAT back. Even if you do use it for personal reasons, you can still claim back 50%. 

This is a huge saving – and a key reason that lots of businesses are choosing electric leases.

  >See also: 8 of the best electric cars for small business leasing

Charge your vehicle at home and for free

Once upon a time, you’d be hard-pressed to find a charging point for your EV. Now, however, you can find charging points at petrol stations and on the street, and you can even charge for free at some supermarkets. 

What’s more all new build homes are now required to have charging points fitted and electricity providers are offering lower rates on special tariffs for electric vehicle owners.  

Lease a hybrid

If you’re not totally sold on EVs, you could always lease a hybrid. These allow you to take advantage of the cost and environmentally friendly benefits of an electric engine without having to worry about running out of juice and not being within reach of a charge point. When you do run out you can just switch to petrol power for the remainder of your journey. 

And of course, the great thing about leasing is that you’re not stuck to a depreciating hybrid or EV forever. Once you’ve reached the end of your lease term, you can take out a brand new vehicle. 

Next steps

Business car leasing an electric vehicle has many benefits. Not only is leasing a great way to drive a brand new car around for a fraction of the price, but choosing an electric vehicle gives you the added benefits of protecting the environment and saving money on maintenance and running costs. 

What’s more you can offset your rental payments against your profits as expenses and claim 100% VAT back if you use it exclusively for work. 

Battery technology is also improving all the time, extending the range of EVs, while their increasing proliferation has brought costs down considerably. There’s never been a better time to business lease an electric car.  

Want to find the perfect lease for your business? Why not use our comparison tool to be matched with the most suitable provider for your needs.

Simply fill in our free quote-finding form, and answer a few questions about your business (it takes less than a minute). We’ll match you with the best leasing provider.

The post Business leases for electric cars – could you save your business money? appeared first on Small Business UK.