Tidying Up Your Investments

When it comes to tidying up your investments, think about your kitchen drawers. Seriously.

Nobody wakes up and thinks ‘Yes, today’s the day I finally get round to sorting all those loose ends I stuffed away, in the hope that one day I’d get round to it. Let the fun begin!’

But once the job is done, there’s a great sense of wellbeing. By clearing away what you don’t need and doing some organising, you’re also clearing your mind.

That’s what tidying your investments is like, albeit at a much larger scale.

We’re potentially oversimplifying but tidying up loose ends in your investment portfolio will have a far greater beneficial effect than sorting your knives and forks.

Let’s see how it’s done.

DON’T WORRY ABOUT THINGS YOU CAN’T CONTROL

A lot of excitement (and worry) is caused by the unknown elements of finance markets and investments. But if you’re looking to tidy your investments, you’re better off concentrating on the factors you can control. That’s why, whether it’s SIPPS, investment bonds, ISAs, whatever the product, we recommend a low-cost, diversified approach. Think global, act local.

At Fortus Wealth Management, we do this with independently researched advice and through globally diverse, low-cost, index-tracking portfolios. We’re an independent financial advisors in York and Scarborough. We can help you spread your money further through cheaper products in a range of places are things you can control, whatever the financial outlook is.

CHECK YOUR OBJECTIVES

You can’t tidy up your investments without understanding and identifying what those investments were set up for in the first place. Did you have a target amount you wanted to achieve? Was your portfolio set up for a specific reason that may no longer apply, e.g., paying off a mortgage? We can help you review your investments with a full understanding that objectives can change over the years.

CONSIDER THE LEVEL OF RISK

Keeping money in savings may feel safer, and very appealing when the markets are volatile. But don’t forget that over the years that money will lose its value against the rising cost of living and might not fund the lifestyle you were hoping for. And the collapse of Northern Rock proved that even saving isn’t without risk. If you’ve checked your objectives and had the opportunity to talk your investment dreams through with a professional adviser, you’ll know better how much risk you want to take.

For example, if you want your portfolio to achieve a specific amount within a certain time, you may want to put your money into higher-risk, higher-reward areas. You can do this with the knowledge that you have enough time within your objectives to recoup from other areas, if your riskier investments don’t make the returns you’d hoped for.

We can help you think about the appropriate time to be in investment markets to get the desired results.

AVOID FOLLOWING THE HERD

Don’t be tempted to invest in the latest trends, just for the sake of it. For example, cryptocurrency is currently a popular investment option – but it’s highly speculative. This means it might not be suitable if you’re approaching retirement. Avoiding the herd mentality can reveal bargains on the buy side.

RETHINK YOUR LOSERS

You may want to hang on to losers in your portfolio for emotional reasons, for example, those you inherited. Or, you may have made money in the past from an investment and think it’s only a matter of time before it happens again. We can sit with you to look at your losers and ask, ‘If you were starting your portfolio from scratch, would it be a good idea to buy those investments?’.

BE TAX EFFICIENT

Is your portfolio tax efficient, saving you unnecessary costs? Can you avoid the Capital Gains Tax (CGT) threshold on stocks that have had a good run? Fortus is uniquely placed to offer expert tax tips as well as wealth management advice, thanks to our strong relationship with our team of accountants.

DON’T PANIC

In today’s fast-moving, volatile digital world, people are often living their best lives on social media, or we’re reading doom and gloom news headlines. it’s easy to worry you’re either being left behind, or the markets are too risky to look at tidying up investments right now.

But looking back through history, Investment markets have always found a way to grow over time, no matter if the current financial outlook might not look so rosy. And although wealth management naturally involves an element of risk, we can keep it to a minimum with low-cost and high levels of diversification. So, step back, take a deep breath, and get in touch with us.

GET IN TOUCH

 

Business Advisors & Accountants In Leicester | Fortus

8 Ways to Achieve a Strong Relationship Between Sustainable Finance, Accounting and Your Business

1. WHAT IS SUSTAINABLE DEVELOPMENT? WHAT DOES SUSTAINABLE FINANCE & ACCOUNTING HAVE TO DO WITH INVESTMENT GROWTH?

Sustainable development is a development meeting present needs, without compromising the ability of future generations to meet their own needs. Sustainable finance is considered as investment decisions that take into account the environmental, social and governance factors of an economic activity or investment.

The financial sector has tremendous power in financing and raising awareness of sustainability issues, whether by allowing research and development of alternative energy sources or supporting businesses that follow sustainable and fair business practices.

Environmental considerations may include climate change mitigation, plus the wider environment, for example biodiversity conservation, pollution prevention and circular economy. Social factors include human and animal rights, as well as consumer protection and diverse employment practices. Governance factors refer to management practices, employee relations and compensation for both public and private institutions.

2. SUSTAINABLE INVESTMENT IN ECONOMIC PROJECTS WITH SOCIAL PRACTICES

Investment in businesses, businesses and projects that seek to achieve development goals and environmental, social and sustainable governance standards is already increasing, with the demand for financial specialists with expertise in this fast-growing specialised field who are able to achieve a sustainable finance relationship and accounting in investments and projects. In addition, Bloomberg Global recently reported on this trend, saying that it is already one of the most sought-after areas in Asia.

A recent report by the United Nations Intergovernmental Panel on Climate Change makes it urgent to integrate environmental, social and institutional governance, among other factors, into investment decisions in order to make a rapid and actionable impact on the environment.

You can view the report here.

3. WHY IS SUSTAINABLE FINANCE IMPORTANT?

One of the biggest reasons sustainable finance is important is that it forces us to take a generally fresh look at what we do for our world, and how it affects people and meets the needs of economic growth. This is by helping companies increase profitability which achieve a relationship between sustainable finance & accounting by helping them reduce costs for things in the financial system such as day-to-day operations, maintenance, and energy, ultimately saving money. Sustainable finance also builds trust related to customers who want to purchase products or services from companies they believe in.

4. CHALLENGES FOR ACHIEVING SUSTAINABLE FINANCE & ACCOUNTING

The main challenge in implementing sustainable finance & accounting standards, is that it can be very complex. A lot of companies try to do this at the superficial level, which ultimately doesn’t lead to change within their organisation.

To make a real impact, companies need to consider sustainable finance & accounting in implementation strategies in all aspects of finance management.

5. HOW APPROPRIATE IS ACHIEVING SUSTAINABLE FINANCE & ACCOUNTING FOR YOUR BUSINESS?

There are plenty of benefits to implementing sustainable finance & accounting practices within your  resources and business cost savings, reducing risk from obligations, and building trust with clients to name a few. Even if you are a small company in a small field or sector of the market, it is possible to start implementing basic sustainable development principles on a small scale and growing sustainable finance & accounting practices over time.

If you’re ready to take the next step, here are some things you can do. Sustainable finance & accounting is the next development for many businesses. As society demands more companies to achieve sustainable economic development goals and know the value of these goals in terms of responsibility, transparency and environmental awareness, it is time to start seriously researching how to integrate natural and basic sustainable practices and ensure sustainability and financial capacity of the company. Today, it is no longer limited to companies with only large investment volumes, small companies have recently also begun to participate in this movement that has prioritised corporate responsibility, transparency and environmental awareness.

Achieving a relationship between sustainable finance & accounting is not only about doing what is best for your company, but also about doing what is best for your community and the planet and not doing any practices that may affect the development of the global ecosystem. And that you should look at all aspects of your business, not just one, to focus on areas where you can implement sustainable finance & accounting practices so that they are part of your day-to-day operations.

There are many benefits associated with development practices and projects used to finance the sustainable development of companies, some of these are common benefits such as:

  • Employees become happier and more productive when the company they work for makes positive contributions to society in the public perspective.
  • Environmental impacts can be measured and adjusted as needed, allowing for greater efficiency.
  • Achieving a sustainable finance and accounting relationship can attract new talent, which can mean easier hiring and increased retention rates.
  • It’s a great way to express a company’s social and financial responsibility

6. SUSTAINABLE DEVELOPMENT GOALS OR ESG TRENDS AND SOURCES IN SUSTAINABLE FINANCE & ACCOUNTING

Sustainable development is the dominant or directed source of financing, as one CNBC report pointed out that there is no more interactive area than the triple sustainability governance area on Wall Street, as the size of funding funds that aim for sustainability approached nearly $ 2 trillion.

7. PROMOTING A GREEN RECoVERY TO ACHIEVE SUSTAINABLE DEVELOPMENT

As an example, Egypt’s Vision 2030 is the basic strategy to achieve sustainable development, based on achieving the relationship of sustainable financing and accountability through 3 main dimensions in this sector, namely environmental, social and economic, and determines the course of policies and programs necessary to achieve the desired goals.

Egypt is working to attract environmentally friendly investments such as: manufacturing electric or natural gas-powered cars, solar energy, green hydrogen, seawater desalination, and wind power generation, in a way that helps improve Egypt’s competitiveness in the environmental performance index by increasing the proportion of green public financial investments funded by the government to 50% by 2025. There are other countries that are moving in this same direction.

8. WHAT CAN ACCOUNTING FIRMS DO IN THE SUSTAINABLE FINANCE & ACCOUNTING SECTOR?

A business doesn’t need to do this alone. Accounting firms can help you establish your company or start your business in accordance with the methodology of sustainable development, environmental, social, and governance standards and in accordance with the objectives of sustainable development on an accounting basis. A firm should strive to achieve a relationship of sustainable finance & accounting in all your business and investments, and care and listen to your vision, challenges and needs in order to provide the right advice. That’s the right partnership to have.

Morison Global

Published by Morison Global member, Dr. Ahmed M. Hassanien, AHG, Egypt

The Fortus Hub

The Fortus Hub offers great opportunities for ambitious business owners, founders, and directors to participate, engage with, and learn from one another.

Download the app to access tools and advice from thought leaders and professional peers who will support you in making courageous decisions that accelerate revenue and growth.

Welcome news for spouses or civil partners going through separation

Back in July 2022, we shared a blog outlining the proposed changes to the transferring of assets between spouses or civil partners. This is when the government announced that for assets transferred from 6th April 2023 onwards, couples would have 3 years from the date of separation to make the transfer, and the transfer wouldn’t be liable to Capital Gains Tax (CGT). 

Now we’ve reached 6th April 2023, it’s official: married couples and civil partners are able to transfer assets without paying any CGT on any increase in the transferring assets value.

pre-6th april 2023…

Up until 6th April 2023, separating couples could transfer assets in the year of separation without any CGT implications however thereafter, the couple would be taxable on any increase in value.

post-6th april 2023…

From 6th April 2023 the rules have changed:

  • Separating couples now have 3 years to transfer assets at no gain, no loss (this means any gains or losses from the transfer are deferred until the asset’s disposed of by the receiving spouse or civil partner).
  • Any transfers which are part of a formal divorce agreement can be transferred at any time.
  • Relief on the marital home can also be claimed if one of the couple retained an interest in the property, even if they’d moved out (assuming no other property’s been nominated as their Principal Private Residence).

There’s a ‘but’…

Not all issues are removed.

For example, overseas tax rules still need to be considered when transferring assets.

as always, we’re by your side

The changes remove some of the tax issues that a separating couple would rarely consider but it’s still important to consider the tax and financial issues of a separation. As always, we’re here to provide early advice through what can be an incredibly difficult time.

Drop me an email or give our team a call any time on 01604 273782.

 

Beyond COVID-19 Action Plan

Business may never be the same again.

Download our Beyond COVID action plan to sense check the critical areas you need to prioritise today, to prepare for tomorrow.

The Power of Mentorship with Morison Global

This year, a handful of Fortus colleagues and I had the amazing opportunity to once again attend Morison Global’s International Women’s Day event!

Being part of the Morison Global community’s something we’re incredibly proud of. As of 2023, they’re now the 9th largest global association of leading professional service firms, providing cross-border accounting, auditing, tax and consulting needs of business owners.

Our collaborative effort with Morison Global, alongside our International service line offering, means that we get to work alongside them on exciting projects – this also includes their International Women’s Day events we’ve participated in for three years in a row.

As the event began, we were welcomed and introduced by the Morison Global team as well as this year’s panellists before getting ready to take this year’s “Embrace Equity” pose for the group photo. The panellist discussions then began on ‘The Power of Mentorship’!

Hosted by various speakers – ranging from Heads of HR; Partners; as well as Audit, HR, and Senior Managers – current and future leaders in varying stages of their careers shared their experiences and challenges to date within their fields.

Starting off, ‘The Power of Mentorship’ event re-emphasised the necessary steps for businesses to further support future female leaders. Training, coaching, and of course the importance of mentorship in allowing more women into successful business spaces was the main introduction to today’s discussion.

The panellists were given a warm-up question, starting with what they found their main concerns were regarding women within the Accountancy & Consultancy industry. The main theme that cropped up, unsurprisingly, was the industry’s heavy male dominance despite many firms on the panel having a 40-60% female workforce – with very few women making it to Partner level. Discussions were had around the barriers preventing the progression up the corporate ladder, including work-life balance, maternity leave, and potential workplace harassment within the industry.

Leading off the back of this, our group of speakers were then asked about changes within the industry from when they’d first joined compared to present day. Despite more women coming into this field of work, the difficulty in retaining people within businesses had been tough. However, business changes made during the Covid pandemic meant that a lot more firms created better flexibility – greatly helping and impacting female professionals. Where businesses have succeeded, they’ve kept (and some have even enhanced) their flexibility offerings in an attempt to not lose good talent. Therefore, it’s up to businesses to put in the work to do what’s necessary to keep good talent and ensure they’re given the necessary tools and resources to develop.

Discussions then led with the following question: “What can be done by current leaders in supporting future leaders?” Advice was shared across the group regarding needs and wants to be made clear to management, as well as raising better awareness around available training for young women coming into the industry. Current panellists at their firms had already implemented, or were in the process of implementing, new coaching programmes for their inspiring leaders. Not only to help them get to where they want to, but to also show how valued they are by the business in an attempt to give back.

 

So, what had helped you get to the position you’re in now?

  • Having a good support system, as each mentor’s able to provide a slightly different perspective.
  • Being valued by your workplace.
  • Setting boundaries e.g. less travel, learning to say ‘no’, being clear about certain goals and demands.
  • Developing strong relationships with the Partners at your business.
  • Achieving a good work-life balance to ensure burn-out’s minimised.

 

But in order for women to reach senior roles in the first place, the difficulties in which women face climbing up the corporate ladder had to be addressed. A lack of role models within your network makes you less likely to be aspirational. And from personal experience, panellists have previously had troubles regarding womens’ confidence in coming forward for extra support, despite having the drive and tenacity to seek more senior positions, and has meant they’ve in fact been approached to be mentored instead.

The same issues regarding family life and work-life balance was reintroduced again, as many businesses still haven’t been receptive or flexible enough to accommodate. But also current working environments are of great importance, so again women have to be pushed towards training and mentorship programmes if they don’t feel encouraged or made to feel comfortable in the workplace.

One of the main takeaways from the session is despite varying circumstances across the world in elevating women into senior roles, diversity within businesses is of great importance for others to have role models, not only look up to but also feel inspired by.

Are you being misled by your R&D Tax Credits provider?

FRAUDULENT ‘SPECIALISTS’ ON THE RISE

Recent coverage in the press highlights the fraudulent activities of some ‘R&D Tax Credit specialists’. Quite rightly, HMRC are taking action to identify these companies and curtail the bad advice they’re offering to naïve clients and consequently, bringing prosecutions to both individuals and the fraudulent R&D ‘boutiques’.

Continually keen to support HMRC, our Fortus team are working with our clients to ensure…

  • They receive the best possible service
  • They receive the R&D tax credits they’re entitled to
  • That their claim’s correct and meets the criteria set by HMRC

So, how do you know for sure the tax specialist you’re currently working with is giving you the right information and not making a fraudulent claim on your behalf?

Here are a few things to look out for…

Their website’s convincing and they have pictures of lots of staff

Websites are cheap and easy to produce, anyone can create one fast. Some companies don’t even have physical offices. They may just have a rented ‘service office’ and the group photos you see on their website contain many who don’t work there anymore.

Ask yourself, have you ever met any of the staff working on your claim in person or was it compiled over email and telephone calls?

They quote a high number of clients and money claimed

This is all well and good if you’ve got the proof to back it up. Sometimes a quick look on Companies House will reveal they haven’t been trading long enough to generate the numbers they’re stating.

Also, there are many other websites that give information about companies and their trading activities, so it’s worth doing some research.

“We can get you £30k!”

Many of our accounts clients at Fortus, including small retailers, hairdressers and even Will Writers, have been approached by ‘Tax Specialists’ offering to claim R&D tax credits of circa £30k on their behalf. Their service even includes a report written with no input from the client!

Clearly this is just one example of the fraudulent activities the ‘specialists’ are engaging in, leaving the unsuspecting client with potential fines and penalties.

“Our technical reports are approved by HMRC…”

HMRC doesn’t ‘approve’ any tax agents’ technical reports and as such these can be the subject of a compliance check even after the claim’s been paid. If your provider or a new provider claims this, ask them to provide you with the proof that HMRC have ‘approved’ their technical reports… they won’t be able to do it!

This is an example of another attempt to mislead naïve and innocent clients. If they’re claiming this, what else can’t they substantiate?

If you have any doubts, are worried about making an R&D claim, or continuing with your current provider, then you should…

  1. Get a second opinion from a credible specialist – for example a member of the Chartered Institute of Taxation (like Fortus). We’re always happy to help businesses who have problems and issues with regard to past or existing R&D tax credits claims. Just give us a call or drop us an email, any time.
  2. Ensure your R&D specialist takes the time to explain the scheme, the qualifying criteria and what evidence you must have for a successful claim in words and phrases you understand and can relate to your industry.
  3. Ensure your provider shares the report and the financial information used to make your claim – check you’re comfortable and understand all the information used BEFORE your claim is submitted to HMRC. Fortus offer a service to help and support R&D tax credit claimants who are unsure of what information’s being used in their claim, providing the necessary advice and guidance (in plain English!)
  4. Keep good records of money spent on qualifying R&D activities, including the people, the work they carried out, and their time. Also record money spent on subcontractors, materials and any other costs associated with the work done. Good records equal better claims.
  5. Remember you’re ultimately responsible – if you’re ever in any doubt, seek our advice.

How ChatGPT Will Change Cybersecurity

Artificial Intelligence (AI) and machine learning are rapidly transforming the cybersecurity industry. With cybersecurity constantly evolving due to new threats emerging daily, protection of data has rapidly grown to become a complex task. However, with advanced technology like ChatGPT, the cybersecurity landscape is set to change dramatically.

With its ability to generate human-like text, ChatGPT has been used for a wide range of applications, including language translation, content creation, and even chatbot development. However, its potential in the field of cybersecurity is yet to be fully explored. These technologies have the ability to make it easier for organisations to protect their networks and data by improving the detection and prevention of cyber threats.

HERE ARE SOME EXAMPLES OF CYBERSECURITY ADVANTAGES FROM CHATGPT:

Threat Analysis:

Hackers are constantly devising new methods to exploit vulnerabilities in computer systems, and it can be difficult for human analysts to keep up. ChatGPT can be trained to identify patterns in data that might be indicative of a potential attack. By analysing vast amounts of data, ChatGPT can quickly identify potential threats and alert security personnel, allowing them to take pre-emptive action.

Security Protocols:

Security protocols are set to protect computer networks from unauthorised access or attacks. However, developing effective security protocols can be a time-consuming and complex process. ChatGPT can be trained on datasets of past attacks and security breaches, allowing it to develop sophisticated security protocols that can better protect computer networks.

Incident Response:

ChatGPT can be used to improve the efficiency and accuracy of security incident response. When a security breach occurs, it is essential to respond quickly and effectively to mitigate the damage. ChatGPT can be trained on historical data to develop incident response plans that are tailored to specific types of attacks.

By automating the incident response process, ChatGPT can reduce response times and improve the accuracy of responses, ultimately reducing the damage caused by security breaches. Considering the benefits, the use of AI has the potential to completely transform the cybersecurity industry. However, we shouldn’t become blind to the threats and dangers surrounding ChatGPT.

HERE ARE SOME THREATS FROM CHATGPT:

Realistic phishing emails:

ChatGPT can be trained on a dataset of phishing emails and then used to generate new, more convincing phishing emails. Unfortunately, this means the number of successful phishing attacks will only grow. However, in preparation of ChatGPT being used maliciously, it can be integrated into the company’s anti-phishing training to improve employee awareness.

“Deep Fake campaigns”:

Despite being showcased as a chatbot, with additional steps, ChatGPT can be used to generate audio and video output. By fabricating credible audio/video of a person following a script that the real person never performed, these Deep Fakes can be harmfully used for fraud, robbery, misleading, impersonating, smear campaigns, brand attacks, etc.

Misinformation:

If one can modify the content used by ChatGPT to affect how it learns context, then this could create large-scale misinformation campaigns. Unsuspecting people could appear to support a misleading version of reality or events, or other similar false narratives, resulting in the spread of misinformation.

These are just a few examples of how ChatGPT can be used in cybersecurity, but the possibilities are endless. Keep in mind that ChatGPT relies heavily on data to generate responses, and its accuracy depends on the quality and relevance of the data it has been trained on. In the case of cybersecurity, there may be limited and incomplete data on emerging threats, making it difficult for ChatGPT to provide accurate and relevant responses.

While ChatGPT can provide useful insights into cybersecurity, it is not a substitute to human expertise and judgement. It is essential to use ChatGPT as a starting point for further investigation and analysis by cybersecurity professionals.

 

Morison Global

Published by Morison Global member, DDK & Company, New York, USA

An Employer’s Guide to Company Cars

Company cars for employees are among the most popular workplace benefits. Acquiring and retaining staff in the current climate is difficult, so providing a new car can be a very enticing perk. But what is a company car and is it suitable for your business? 

In this guide, we’ll look under the bonnet and show you how a company car works, the advantages, the responsibilities, and the potential alternatives. Fasten your seatbelt…

 

WHAT IS A COMPANY CAR?

Company car allowance is a scheme for employers. It allows them to provide their employees with a financial incentive, instead of a company owned car.

A company car is a vehicle bought and funded by an employer for its employees to use as a benefit, or often known as a ‘benefit in kind’. A company car is considered such if the driver can take the car from where they work and use it as a method of private transport. 

HOW DOES a company car scheme work?

Despite its name, a company car can be offered by any employer. For example:  

  • Sole traders and other self-employed persons.
  • Limited Liability Partnerships (LLP). 
  • Charities. 
  • Embassies. 
  • Local or government authorities. 
  • Limited Liability Companies (LTD).
  • Public Limited Companies (PLC). 

To qualify for a company car scheme, your employees usually need to be in a permanent and significant position within your business. They would also need to have a regular work pattern, and their wages must not drop below the minimum wage after joining your scheme. 

A company car is classed by HMRC as a privilege paid for by the employer, so employees who enter the scheme must pay Benefit in Kind (BIK) tax. How much they pay depends on: 

  • The car’s age.
  • The fuel type.
  • CO2 emissions.
  • The size of the engine.
  • The car’s list price.
  • The income bracket of the employee.  

Employers can cover expenses associated with a company car, such as the fuel or maintenance. These benefits can be provided to employees in exchange for extra tax paid from their wages. 

company car advantages

Let’s see why how the benefits of a company car can put you in pole position ahead of your competitors. 

EMPLOYEE ENTICEMENT AND RETENTION

Offering a company car can help make employees feel valued. If you pay for maintenance and insurance as well, it means there’s less for an employee to consider and makes them less worried about their finances.  

ADVERTISING

This can sometimes be overlooked as a way to showcase the brand image of your company. Having the right type of car, with the right colours, can help your company stand out from others. And if you brand your business as environmentally conscious, you could consider using electric or hybrid cars, as proof of your efforts to reduce your business’s impact on the planet.

FINANCIAL BENEFITS

You might initially think that providing and running company cars is an expense you can do without. But there are benefits for you, as well as your employees.  

For example, if you give cars to staff on a salary sacrifice basis, they pay towards it from their salary. This means you stand to make significant savings on National Insurance (NI) contributions. Also, your employees can reduce their NI and income tax liability if they divert some of their salary to paying for their car.  

You might also want to consider operating your company cars on a leasing scheme, which might save you money on maintenance and any possible replacements. 

COMPANY CAR RESPONSIBILITIES

There are certain aspects of company cars you need to consider before you go full throttle and start telling your employees about your new scheme. 

EXPENSES

If you use a company car scheme to attract talent, it increases your liability as an employer. This means you’d have to pay out for damages if an employee was involved in an accident while driving a company car. Then, you’ll end up with an increase on your company’s car insurance premiums.

ACQUIRING AND MAINTAINING

Although the costs may pay off in the long run, providing company cars involves a lot of investment upfront – especially for small- and medium-sized businesses (SMEs). And there can be extra cost to fork out if the car is in an accident or stolen.

FUEL

Usually, employers reimburse employees for fuel that’s used on business miles. Each quarter, the Government releases guidelines on how much companies should pay for fuel. The guidelines are broken down by business miles, engine size and the type of fuel. 

You could reimburse any fuel expenses on personal trips if you choose, but your employees would have to pay BIK tax.  

Be aware that sometimes, employees may be tempted to claim personal miles as business miles, to avoid BIK tax. Even if the difference is just a few miles, they run the risk of serious penalties from HMRC. 

COMPANY CAR TAX – HOW IT WORKS

Company cars are treated as a taxable benefit and the amount of tax your employees would pay depends on: 

  • Their income tax band. 
  • The car’s value. 
  • The car’s CO2 emissions. 

HOW TO CALCULATE COMPANY CAR TAX

There are factors to consider when working out the HMRC company car tax: 

  • The P11D value. 
  • Income tax rate. 
  • Fuel 
  • CO2 emissions. 

The easiest way to work out your company car tax is through the HMRC’s calculator. 

ELECTRIC AND HYBRID COMPANY CARS

As an employer, if you use electric vehicles (EVs) as company cars, your business can stand to save money. This is because you’ll benefit from paying lower car tax. HMRC offer lower rates on EVs and hybrids an incentive to help them achieve their target to phase out traditional petrol and diesel vehicles by 2030.

ALTERNATIVE TO COMPANY CARS

Of course, there are alternatives to company cars as an employee benefit. 

  • Company car allowance – This is a popular alternative, where you give employees a financial incentive, rather than a company owned car. You provide an allowance that is used by your employees to cover the cost of their own cars for work purposes. Or, it can help cover the cost of buying or leasing a new car if it’s to be used for work. 
  • Other work benefits – Your employees may not need a company car, or an allowance towards one. In which case, you can offer alternatives such as private healthcare, life insurance or free meals.

Now you can see how company car benefits compare to a company car allowance, and with all the facts on both, you can decide where the road will take you. But if you need further guidance, our tax term can help steer you to a conclusion. Give us a call on 0330 162 4389. 

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