Company cars are top SME investment

Wednesday 26 August 2015

The latest biannual Business in Britain survey published by Lex AutoLease has found that a company car is the top investment priority for small to medium-sized enterprises (SMEs) in the UK.

Contractors who travel to meet clients will know just how useful the flexibility of a car can be, particularly in the face of increasing train fares and the unreliability that often comes with public transport.

Out of the 1,500 SME decision-makers surveyed, 76 per cent had plans to make some kind of business investment in the next 12 months. Some of these commitments were set to be major decisions, as 28 per cent expected to spend £100,000 or more in the process.

Nine per cent of SMEs planning to make business investments were considering a car or another kind of company vehicle, compared to the eight per cent that was reported in January this year.

However, when it comes to travel freelancers have another major concern. The government has recently published plans to prevent contractors claiming travel expenses if they can be defined as being under the supervision, direction or control (SDC) of someone who would otherwise be regarded as an employer.

The government have planned the changes as a move towards fairness, as employees are unable to claim expenses for their commutes. However, some have warned that there is danger that those who are genuinely self-employed could be put at a disadvantage compared to larger companies, where expenses will be largely unaffected.

The changes largely depend on the distinction made between workers who travel from home to a temporary workplace, and those who are commuting to their permanent place of employment.

The measures were announced as part of chancellor George Osborne’s summer Budget in July.

Commenting on the proposals, Andrew Chamberlain, deputy director of policy at the Association of Independent Professionals and the Self-Employed, said: “If the proposals are implemented in their current form, larger businesses that will remain unaffected and so can continue to claim tax relief for their employees expenses will have a competitive advantage over small businesses, many of which will simply have to close as their increased fees to make up for the lost tax relief make them uncompetitive.”

He also raised concerns about the potential for an overly strict definition of which workers fall under SDC, which has the potential to affect a significant number of contractors.

The government’s proposals on limiting contractors’ expenses will be open to consultation until September 30th 2015.

If the costs of travel are likely to hurt a contractor’s bottom line, or make their rates uncompetitive, then remote working is an option that is becoming increasingly popular. This is largely thanks to advances in technology that allow workers to collaborate on projects and edit in real time, as well as the increased reliability of video calls made over the internet.

This is something that any freelancer who is considering upgrading their travel arrangements may want to discuss with their contractor accountant, so that they can fully understand the impact that the changes may have on them.

By Victoria McDonnell

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