When your business requires a fleet of company vehicles to operate efficiently, choosing the right solution can be tricky with so many options available to you. Should you hire your vehicles? Should you lease vehicles? Should you offer employees a company car? What about grey fleets? And which option is best suited to your company? Rosedale Leasing, specialists in car business leasing, discuss your options to help you make the decision on which method is suited to your needs and is the most cost-effective.
Many business owners opt for business leasing throughout their company, and often offer their employees a ‘company car’ benefit. This is a popular choice amongst employers who offer the scheme as a ‘company benefit’ — in Arval’s 2017 Corporate Vehicle Observatory (CVO) report, 39% of UK respondents said they currently offer their employees a company vehicle option. To put that into perspective, in 2016, over half of the UK’s new car registrations were company vehicles. 51% of new cars were registered for fleets, and businesses accounted for a further 3.9%. In total, 1,380,750 cars were registered for fleet use, with 105,786 for business uses.
With business leasing, the employers usually cover the monthly business leasing costs, whilst the employee is likely to pay a Benefits In Kind tax (BIK), also known as company car tax, depending on the value of the vehicle and the emissions. For companies that are VAT registered, some business leasing deals allow owners to claim back their VAT on their leased vehicles.
Long-Term & Short-Term Hire
Vehicle rental services allow business owners and fleet managers to present their staff with brand new vehicles on a flexible basis, for short-term or long-term use. Many companies offer rental for as a little as an hour, or as long as a month, or more. Fleet managers can monitor vehicle usage and mileage, as well as emissions and associated costs.
In 2015, there were 15,500,000 UK rental transactions, of which 63% of them were rented because they were more convenient and flexible. For fleet purposes, 2016 figures show 2,638,851 vehicles were rented, to which 430,862 vehicles were on a short-term basis.
According to Lex Autolease’s annual Report on Motoring for 2016, it was estimated that there was close to 14 million grey fleet vehicles on the road across the UK. As an employer, if you operate with a grey fleet, you have a legal obligation to look after your employees who are driving the vehicles. The grey fleet refers to any vehicles which are used for business travel but do not belong to the company in question. Whilst grey fleets eliminate leasing costs, or the cash purchase of buying the vehicle outright, the British Vehicle Rental and Leasing Association (BVRLA) suggest that employers throughout the UK are still spending up to £5.5 billion each year on their grey fleets!
Arval Total Care package, available with Rosedale Leasing, is a package that could be referred to as the complete vehicle solution for both business and personal use. 60% of 250 small businesses stated that they would be interested in a quote from Arval — which currently operates over 162,265 fleet vehicles across the UK. In 2015, 25% of leasing quotes to SMEs included Total Care, as Arval brokers can now automatically quote of the product with business leasing deals.
For businesses, Total Care is a great solution for cash flow control — with one fixed monthly cost throughout the whole duration of the lease contract. The package covers all your vehicle requirements within one cost, to ensure peace of mind. The beauty of signing up to Total Care is having everything covered in one fixed price — the all-in-one solution includes an insured vehicle, maintenance and breakdown, glass protection, accident management, and third person liability. The package offers business owners a hassle-free and cost-effective way to consolidate all the associated costs for vehicle leasing and management.
So which method is best for your business? Costs can add up quickly so having a cost-effective way to finance your fleet is key — but the contract agreement must also suit the requirements of your fleet. Do your research before investing, and make sure you are choosing the right solution for your business.