Car Fleet Management - Lease or Buy?

Motor vehicles - Should you lease or buy?

For many people the choice of car finance is growing. The major car manufacturers are offering attractive low deposit and low interest rate deals. These deals are for private motorists. Private motorists generally get a choice of cash purchase, with large discount, hire purchase where they buy a car on credit, a PCP or personal contract plan, where they buy and finance the car's depreciation or a personal lease, where they effectively rent the car over a long period. But what if you are a business car user or vehicle fleet manager?

Corporate fleet buyers have traditionally chosen between buying or leasing. Buying, as it implies, is simply acquiring the full title to the asset, then disposing of it at an optimum period in the vehicles life. Leasing means acquiring use of the vehicle, whilst the title is held elsewhere. Depending on the finance and tax regime operating at the time, companies tend to switch between the two options. The finance regime includes availability of cash flow or credit, the level of interest and the way the asset (i.e. the vehicle) is treated for depreciation and taxation.

However, there are other aspects of leasing such as fleet management that may encourage corporate fleet managers to take the leasing option. Amongst the fleet management solutions provided are the following:

• Vehicle breakdown
• Vehicle maintenance and servicing
• Vehicle tracking
• Licence management
• Insurance management
• Accident management
• Tyre management
• Fuel cards
• Vehicle disposal

Motor vehicles - And who manages?

Utilising a fleet leasing company that provides a comprehensive range of vehicle management services relieves the client company of many of the trivial headaches associated with opearting a vehicle fleet. Ultimately the job of a company is to deliver satisfaction to its chosen customers. Not to take on additional and non-value-adding administrative functions. Outsourcing vehicle fleet management, along with the financing and disposal task allows companies to focus on their core business.

Ski Chalet Sell-Off Prompted by French Taxes



A UK-Owned and Managed Chalet in Morzine

 Over the weekend the Sunday Times covered the story of rising French taxes and their impact on the British holiday home market in France. The increased taxes take the form of a new 15.5% social tax on rental incomes and capital gains which is on top of the existing 20% tax on rental income and 19% tax on capital gains. In addition there is a new sales tax, equivalent to our stamp duty, levied at 6% on properties with a sale value of more than €250,000. Most UK-owned holiday homes are either gites in rural areas or ski chalets in the Alps and Pyrenees.

The article covered the one particular ski chalet owner, Alexandra Beeley, under the heading "Time to sell my chalet". Ms. Beeley had bought her chalet in 2009 for €750,000 and it is now worth €800,000. Given the chalet has increased in value Ms. Beeley would be hit by the new taxes.

All in all the article suggests that property taxes could amount to as much as 40.5% of the final selling price (19%+15.5%+6%).

The socialist government of Francois Hollande appears to have viewed the British holiday home owner as a lucrative and popular source of additional taxation. According to the newspaper the new taxes will hit hundreds of thousands of UK citizens who utilise French properties as part holiday home and part small business. Worse it seems, our own HMRC will still get in on the act. As any residual capital gains are liable to 18% UK capital gains tax. Incredibly the 15.5% social tax is not taken into account in any HMRC calculation, so in effect incurring double taxation.

Although the new taxes may bring in revenue in the short term, like Hollande's other socialist policies, it is likely to backfire in the long term. From experience I know some parts of rural France rely heavily on the inward investment of British property investors and the revenue from British holidaymakers. Discouraging British investors will see the jobs created by property conversions dry up. Many ski chalets and gites are the product of these renovation projects.

In recent years a number of smaller British owner companies have set-up specialist catered chalet businesses in France. The ski industry in France is in a precarious state. Costs are rising and the fall in value of the £ versus the € means extras such as ski-passes, ski-school and food and drink are increasingly expensive for the valuable British tourist. Business owners are not going to invest if taxes squeeze all of their potential gains. If British chalet owners follow the lead of Alexandra Beeley, there could be a major exodus of British chalet owners from the Alps and Pyrenees.