Improve Cash Flow, Save Tax, Motivate employees – Impossible?

 In these times of fragile growth and uncertain financial pain to come is it possible to finish this year on a high and start next year with a team straining at the leash to capitalise on the growing confidence and new business opportunities. So can we really be serious IMPROVE CASH FLOW, SAVE TAX whilst MOTIVATING STAFF? Yes very serious…

Improve Cash Flow

Businesses or companies where the owners/directors have their own vehicles can sell these vehicles in a sale and leaseback arrangement. This works best where the vehicles(Cars or Vans) are either owned outright or there is a significant amount of equity(ie the vehicles value is substantially greater than any outstanding finance amount).

The existing vehicles are sold to us at an agreed value. The resulting capital can then be injected into the business without a cap in hand visit to the bank, or complicated cash flow forecasts. Replacement vehicles can then be supplied by way of a tax efficient Lease or Contract Hire agreement.

Other significant cash flow benefits include minimised servicing and repair cost’s as the new vehicles come with 3 year 60,000, some 100,000 mile Warranty. Most come with at least 1 year roadside assistance, a good number of the better badged vehicles get 3 years breakdown cover. Not to mention no tyres, exhausts, brakes, MOT’s, cam belt changes at £500+ per time. For now we rest our case on cash flow.

Save Tax

Until 2009 vehicles owned by a company were subject to a 25% yearly write down allowance and leased vehicles over £12,000 subject to a sliding scale of taxable benefit. This year sees a significant shift in that the CO2 emissions of a car now not only set its road tax price, it’s benefit in kind taxation % but also the % of the lease rental offset against taxable profit. Example a car with less than 160g/km of CO2 100% of the monthly lease cost can be offset against tax!

So by replacing older vehicles with vehicles with lower CO2 emissions the company can SAVE TAX in more than one way. Most of the new generation models with lower CO2 are also much more frugal, 50+mpg is not unusual. So by replacing older less fuel-efficient vehicles not only can we reduce direct cost but also pay less VAT. Less fuel purchased = Less VAT paid. Seems simple however it’s a deeper consideration than can we afford new cars at this time.

Motivation…

It would be fair to say most companies this year will not be considering large pay increases and most have probably trimmed where possible. Company cars traditionally an emotive if not the biggest thing apart from the £’s earned are not top of the employees mind. In some cases they are happy to still have a job. Therefore the impact on a Sales director, Sales manager, Sales engineer, account manager etc of a shiny new motor on the drive at the end of the most difficult of years will not only finish their year on a high but rejuvenate them for the start of 2010. Coming back after the Christmas break in that new, fuel-efficient, low-cost, taxed with no costs for nearly a year vehicle. He/She will be lifted motivated and glad they stuck at it, more importantly glad to get at it…On the other hand…?

So Improve Cash Flow in the right circumstances yes, Save Tax, improve fuel economy, reduce maintenance cost’s and be ahead on the street with a re invigorated motivated team. Sounds like a plan to us!

For more on how we can make these words a reality call 0845 373 5368 and ask for Paul Parkinson, Managing Director Synergy Automotive or email paul@synergyautomotive.co.uk

 

 

 

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