New cash or car calculator launches from Activa Contracts
Activa Contracts has launched a new online company car or cash allowance calculator to help simplify the decision-making process for drivers and fleet operators in the wake of changes announced last year.
Developed in partnership with automotive industry consultancy and tax experts BCF Wessex, the new tool can help simplify decision-making for employees and employers on the viability of the cash or car option.
As announced by HMRC as part of the draft legislation for the 2017 Finance Bill, from April 2017, employees choosing a company car where a cash alternative is available will be taxed on the greater of the company car benefit or, the cash alternative. However, for arrangements entered into prior to April current rules remain in place up to April 2021.
The tool uses a range of web-based whole-life cost calculators and comparators designed to help users to: lease or buy a car, compare a personal lease with contract hire, find a better company car for the same benefit-in-kind tax, understand the ‘true cost’ of a company car and discover the ‘true cost’ of employer-provided fuel for private use.
Using Activa Contracts’ database of more than 8,000 cars, the ‘employer cash allowance calculator’ can be customised according to a monthly cash allowance budget, lease term, annual mileage, payment profile, VAT recovery rate and insurance premium. When calculating the monthly cost of a cash allowance, the gross figure is revised for Class 1 National Insurance payments and Corporation Tax relief. Similarly when calculating the monthly cost of a company car the lease rental, maintenance, insurance and Class 1A National Insurance is taken into account.
Furthermore, the tool also calculates the amount of money employees can claim in mileage allowance relief from HM Revenue and Customs if their employer reimburses business mileage at less than the Approved Mileage Allowance Payment rate, which is currently 45p per mile for the first 10,000 business miles and 25p per mile thereafter.
Activa Contracts’ managing director Ian Hill said: “Many of our customers have a large cash allowance population. Our new calculator will determine whether the right decision has been made on an individual basis.”
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