Company transport costs can be one of the largest outgoings that any business has, yet a lot of companies fail to lower the amount of money that they spend on transport as they don’t believe there are any major reductions to be made.
However, whilst it can be more difficult for one company than another, irrelevant of the size of your company or what industry it operates in, during this recent ‘downturn’ the following 4 points have been used to help save money on transport related costs.
1. Look at company car leasing – if you currently provide several employees with company cars and aren’t doing so on a company car leasing contract, you need to look into this immediately.
The most obvious saving for car leasing is that there can be as much as 100% reduction on VAT (provided that the car is used exclusively for work related purposes) but it will be a minimum of 50% VAT reduction. Additionally, because businesses rotate cars every 2 – 4 years it is most often much cheaper for a company to lease a car than to buy it/use hire purchase as the monthly payments are as much as 50% less each month.
2. Salary sacrifice - The reduction on company car tax for low-emission vehicles has made salary sacrifice a very attractive alternative for employers and employees. Basically the car is funded by the employee taking a reduction in salary and paying the company car tax. The employee’s gross salary has the non-cash type benefit deducted before statutory deductions and they save income tax and National Insurance contributions.
It makes company cars available to staff who drive no or few business miles and would not normally qualify to receive them at low prices, as current tax rules encourage the uptake of cars with carbon emissions of less than 120g/km.
3. Promote car share schemes - something that has become increasingly popular in recent years as people try to reduce their carbon footprint and lower their business transport costs. The basis of this is two pronged. There is a community vehicle shared by colleagues that need to use it for meetings. This will require close management of the vehicle by someone and be sure to have the correct insurance. The second prong to this is that people are encouraged to car pool and where employees live within the same area they share 1 car to work and distribute the costs amongst them. This will require incentives to make this work which can vary from subsidies to increased salaries in place of the company car.
4. Reduce the consumption of fuel – if you are responsible for keeping costs down and you currently have a policy in place where you allow staff to claim any mileage incurred for business purposes, one of the quickest ways to cut your company transport costs is to remove or restrict this policy.
It’s not likely to make you a popular person within the company and you’ll no doubt receive some complaints from staff, but chances are you’ll be surprised at how many people would prefer to aid the company so that they can keep their job than kick up a fuss and complain extensively.