I met an interesting client from Stockport yesterday, who was introduced by an IFA from Knutsford. They have grown their business to such a degree that they are paying the full rate of Corporation Tax and asked me to write a report on ways to bring this rate down.
It became clear that they had a very strong brand image and were keen to promote this further. Consequently, they have a sales team who are out in the field following leads and meeting clients. This has a downside in that in one instance, a member of staff reclaimed over £6,000 for mileage for using his own car last year. We discussed the possibility of the company providing cars for the sales team, with suitable logos on the vehicle to further promote the brand.
I explained that company cars with a CO2 rating of less than 120 attract a capital allowance claim of 100% in the year of purchase and therefore the whole of the cost of the car would be written off in one year. I then calculated the cost to the employee and in the example given (for an Audi A1), the cost for a basic rate employee was only £30 a month.
The client could immediately see the advantage from the commercial viewpoint of brand awareness. But more importantly, there were also the tax advantages of providing a “green” car – which would reduce the running costs of the vehicles yet not increase the burden on the employees.
I am meeting them again next week, so we will see what that brings.