Car use for business isn’t as simple as just popping out to a client’s office or doing your boss a favour and transporting some bits in the boot. There are strict rules in place for personal car use for business and falling foul of them can be costly.
Personal car, cash car allowance or company car?
If you do a lot of driving for your work, you may be offered a company car or a cash allowance in lieu of a company car. There are pros and cons to both, and the right solution for you will depend on your individual situation and desired car choice. The company car is the ultimate convenience with everything taken care of, but with this comes the benefit-in-kind (BiK) tax that is payable for a company car. For some, it’s more cost effective to take the cash allowance on top of their salary and take care of the car purchasing themselves – or to use their existing vehicle.
Commercial car insurance – where work trips matter
The first pitfall that many people face is in lacking understanding about their car insurance. It is easy when looking for a competitive car insurance quote to accept the lowest figure offered without going into specifics with the insurance company or broker but it’s important to get the right cover – not just the cheapest.
Most people assume their fully comprehensive insurance is going to cover their personal car use for business – the odd trip to a client for a business meeting or a once-a-month 200 mile round-trip for a training session, but the truth is that without the right level of commercial use insurance, these little trips can make your insurance invalid!
And having an accident when outside of your insurance cover can be staggeringly expensive.
Using your car for work – the different levels of insurance
Standard personal car insurance will cover you for all personal trips (such as dropping the kids off at school, going to the supermarket, or going on holiday), but you need to check it has ‘commuting’ to be sure it covers you on trips to your office (most do) – and even commuter insurance won’t be enough if you regularly drive to multiple sites for work.
Class one business use insurance is the next step up and covers most people’s business needs. It covers everything in your standard insurance plus adds legal cover for occasional work trips to clients, meetings etc. and if your work takes place in multiple locations.
Class two business use takes it a step further, allowing you to add a named driver on your policy (typically a co-worker) so that you don’t have to do all the driving.
If you rack up the miles for work however, then you need class three insurance which gives you ample cover for travelling up and down the country regularly for work – sales people and those who travel to provide training to customer sites are good examples of class three users.
Do get the right level of insurance. Without it you simply aren’t covered and even a prang in the office car park on a return from a meeting can find you personally out of pocket – not to mention the knock-on effect a driving-without-insurance conviction will have on your future premiums.
Finding the perfect work vehicle – the advantages of personal contract hire leasing
It’s important if you do use your own vehicle for business journeys, that it is reliable and suitable for the job required. Your employer also has a duty of care to ensure that you are safe whilst driving on company business and includes making sure that the vehicle has been properly maintained.
Getting a brand-new car can be expensive, requiring a substantial outlay if you buy it outright. To help make sourcing a new car easier, there are a number of finance options available. Leasing a car allows you to drive a brand-new model with full warranty and all maintenance requirements included in an affordable monthly contract that gives you peace of mind, as well as fitting within your car allowance budget.
Leasing offers a full range of vehicles – many of which you may have believed outside your financial reach, but by spreading the cost and taking advantage of special deals available through Maxxia, we can help you get the car you really desire rather than settling for second best.
Through personal leasing schemes, you also get the opportunity to upgrade once your contract comes to an end, and you don’t need to be tied in to maintaining a car once it’s past its prime. Simply return the car and replace with another leased vehicle!
Whilst a cheap used-car can seem budget friendly – the ongoing maintenance and other hidden costs can soon add up, meaning it’s costing more than you might have expected, plus there’s the inconvenience to factor in. Take a look at the personal contract hire options available and contact us to discuss the options that best suit you or if you have any questions.
Going green – using electric vehicles for work
Personal leasing also opens the door to the latest technology. With zero emission cars available you can become part of the ecologically friendly future, without the difficulty of needing to find substantial capital for these modern vehicles.
You will immediately reap the benefits of the reduced running costs and tax benefits associated with electric vehicles, bringing your overall regular expenses down and providing lower emission driving experience.
Taking home the advantage – personal use of business cars
It’s not just about having that comfortable brand-new drive for work, of course – it’s about enjoying your ride the rest of the time. With a personal contract hire vehicle, you get to keep that quality drive outside of work too. There are typically no restrictions on using your car for personal use – whether it’s self paid or paid for through a car allowance: it’s simply yours to enjoy.
Personal contract hire through Maxxia
At Maxxia we specialise in vehicle finance – including helping you find the perfect leased car to suit.