Whole Life Costs for Company Car Fleets
When you are purchasing a fleet, there are multiple costs that need to be considered before you make a decision. These are referred to as the vehicle's 'Whole Life Cost (WHC)'.
The Whole Life Cost considerations are as follows:
Vehicle Purchase Price
The price the car was paid for, including any discounts (this is not the list price).
Vehicle Registration Fee
A fee paid to the DVLA when the vehicle is first registered and taxed. This is currently charged at £55.
Vehicle Excise Duty (VED)
The first year of VED, based on your vehicle’s CO2 emissions, is included within the purchase price of your vehicle. For each subsequent year, this will be a standard flat rate of £140.
Vehicles with zero emissions are exempt and all vehicles with a list price over £40,000 will be subject to paying an additional £310 supplement between years' two to six.
It is also more commonly referred to as road tax or car tax.
The estimated total fuel costs for the vehicle.
If the vehicle is also available for the employee's private use, then the total fuel costs will depend on whether free fuel is provided for this. Use this calculator to calculate fuel costs for your vehicle - http://cccfcalculator.hmrc.gov.uk/
Service, maintenance and repairs
Projected costs for service, maintenance and repairs are set by data providers. These costs take into account the Manufacturer’s service scheduling and an allowance for tyre replacement based on the distance the vehicle will travel and over what time period.
Any finance costs related to the vehicle if it is not paid for in full upfront.
Insurance needs to be considered whether this is on an individual model basis or on a Fleet policy.
Residual Vehicle Value
Residual value, also referred to as resale value is the amount taken from the sale of the car minus the purchase price. These values are set by data providers.
Class 1A National Insurance Contributions (NICs)
If the company car is made available for private use, this is seen as a benefit. On this basis, the employer will have to pay Class 1A NICs on the value of this benefit. This is the same case if free fuel is provided for the employee’s private use.
Plug-in Car Grant
This is a government grant used to encourage customers to consider an electric vehicle.
Qualifying vehicles are assigned to one of three different categories, based on a combination of zero emissions mode and CO2 emissions up to a max of 75g/km.
Please visit www.gov.uk/plug-in-car-van-grants/eligibility
for confirmation of vehicle eligibility.
All of the above will together give you an informed view of the WLCs involved before you make any decisions.
Looking for a company car fleet to lease for your business? Check out JCT600 Vehicle Leasing Solutions.