For contractors, expensing fuel might not be as financially sound as buying a car through your limited company; as long as the vehicle is fuel-efficient, of course.
Top 5 fuel-efficient cars
If you own your own limited company and have to travel regularly as part of your business, you’re probably very used to claiming mileage on your expenses. However, did you know that you could be saving even more in the long-term by purchasing a car through your business?
It might not seem like the most economic option, but a wide range of the different aspects of car ownership can also be claimed on your company expenses. Everything from the interest on the loan taken to purchase the vehicle to your car insurance can potentially count as deductible expenses.
The amount you can claim varies from vehicle to vehicle, with elements such as CO2 efficiency playing a large part, for example. However, one of the most important things to bear in mind is fuel efficiency. This will determine whether it’s worth buying a car, or continuing to expense your mileage on the vehicle you already use.
With that in mind, we have sought out the best, most fuel-efficient cars for contractors and limited company owners. These vehicles should be a good fit for you, enabling you to save money in the long run; as well as enjoying all the perks of a brand new car.
Peugeot 308 1.6 Blue HDi
A lot of fuel-efficient cars are small, nippy models, but we’re going to start off with something a bit bigger. Little cars can be great, but we know a lot of contractors will be travelling with equipment and/or passengers, so need something with more room. Luckily, the Peugeot 308 has just that.
The car is available with a range of different engines, but the 1.6l BlueHDi 120 diesel is the one we’re going to focus on. With this under the hood, the Peugeot 308 is capable of an astonishing 91.1 miles per gallon (mpg). While it’s not quite as powerful as some of the other offerings, you won’t be trading in much performance for the efficiency it brings.
Ford Fiesta 1.5 TDCi
The Fiesta is the UK’s best-selling car for a range of reasons. It’s responsive, quick, safe and a joy to drive. However, certain models are also surprisingly fuel-efficient, especially the latest 1.5l diesel variant, which promises 88.3mpg. It also has lower CO2 emissions than some hybrids on the market.
If diesel’s not your thing, or you’re looking to save a little more, the 1.0l EcoBoost petrol engine is also fuel-efficient, providing you with over 60mpg. This costs around £1,000 less to purchase new, so it might be worthwhile.
TOYOTA Prius 1.8 VVT-i Active Auto
We weren’t going to get through a list of fuel-efficient cars without mentioning a hybrid, after all. The Prius is the original and still probably the best, with Toyota claiming that you will be able to get an impressive 94.1mpg. It of course comes with all the advantages of a hybrid, such as a quiet engine.
Of course, there are also disadvantages to the car, such as a reported unresponsiveness that can take a bit of getting used to. Overall it’s a great option if you are making lots of small journeys; however, it might not be suitable for long stretches of driving.
Renault Clio 1.5 dCi
The Clio has been known as an economical, fuel-efficient ride for a while now, however nowhere is this more true than with the 1.5 dCi. This diesel engine is already great for saving money, and when combined with Renault’s ECO pack – including longer gear ratios and low-rolling-resistance tyres – it should be able to offer over 88mpg.
It’s a fairly compact hatchback – albeit with a surprisingly spacious boot for its size – so might not be suitable for anyone needing to travel with a lot of equipment, but for those looking for a smaller car it’s a great choice.
Nissan Micra 1.5dCi
This might feel like deja vu, but the Nissan Micra is as good an option as the Renault Clio when it comes to fuel efficiency. This is because the two vehicles use the same 1.5l dCi diesel engine, so have the same potential for more than 88mpg.
It’s even smaller, however, so is best suited to someone who doesn’t need to lug around much equipment all day. However, it’s a nice, nippy car with a stylish look that can keep up with the larger competition, even if the engine isn’t the most powerful option around.
When weighing up whether purchasing a vehicle through your business or claiming business mileage as a tax deductible expense using a private vehicle, it is definably worth discussing further with your accountant. A specialist contractor accountant will be able to advise you based on your individual circumstance and needs.