Fleet News

25th anniversary: classic cars

IF you dream of driving to work in something that stands out from the crowd then opting for a classic car may be the way forward. Imagine cruising to work in an E-Type Jaguar, classic BMW or an open-topped sports car such as an MGB.

But as a hard-headed fleet decision-maker, the choices you have to make are tougher. Certainly from a taxation point of view, the calculations look as good as some of the classic bodywork on offer.

Pre-1973 cars are exempt from road tax, while company cars more than 15 years old and worth less than £15,000 today attract a benefit-in-kind tax burden based on their original purchase price. However, if it's worth more than £15,000, your tax liability will be based on its current value (see fact file).

This purchase price conundrum is the first hurdle to clear, as misunderstanding it could be expensive. For example, a BMW M5 from 1987 would make a great classic, with models available for under £8,000. But your tax would be based on the car's new price of £34,850.

Buy a 1972 BMW 3.0 CSi, though, and it will cost £8,500, but you will be taxed on its new value of £6,399. One of the most important plus sides is the sheer cool factor of owning a classic, but even that has its downsides, as it is difficult to look cool when you have broken down at the side of the road. Maintenance and servicing costs can be higher than on a conventional vehicle, so high mileage drivers may struggle to justify the alternative option.

Spencer King, marketing manager at leasing company Velo, said: 'Maintenance of these cars is done by specialists so you will need to find a suitable repairer which could mean the parts are costly.

'Also, some classic cars may not be fit for a business purpose such as travelling 10,000 miles a year on motorways.'

On the plus side, fleets will have the benefit of removing the worry of residual values. Good classic cars never lose value and often increase in price. If purchase is out of the question, a fleet boss might consider the leasing option, with firms such as Classic Car Leasing doing as its name suggests by specialising in leasing classic cars.

Typically, an MGB will cost about £250 to £350 a month, including maintenance, for a two-year contract, based on up to 12,000 miles a year.

Richard Harley, director of Classic Car Leasing, said: 'We put together a package for a monthly fee comparable to contract hire for a modern car. We source the car, provide it and maintain it. In the battle to attract and retain top staff, there are few perks that can match a fully-maintained classic car.'

An additional bonus of owning a classic is that insurance premiums could be as much as 30% lower than conventional models.

However, costs aside, the 'wow' factor of a classic car is obvious and the privileged few that own one can rest assured they won't be passing the same model very often. A spokesman for the British Vehicle Rental and Leasing Association, said: 'A classic car is an individual. If you have an interest in classic cars it would be a valuable asset.' However, King added a note of caution: 'They are fun and everyone would like one but from a business perspective they are not practical.'

  • Classic Car Leasing GB: 01443 813041 or log on to Classic Car magazine: 01733 468219

    Classics tax

    There are special rules governing the taxation of 'company classics':

  • They must be at least 15 years old from date of registration
  • They must have a market value of at least £15,000
  • The market value must be higher than the list price at the time the car was first registered
  • Such cars are taxed on their market value and not their original list price. This rule means that the market value and age must be determined each year
  • If the car is less than 15 years old or has a market value that is less then £15,000 the list price is used even if the market value exceeds the list price
  • As cars would have been registered before January 1, 1998, the benefit-in-kind charge will depend on engine size and not CO2 emissions: up to 1,400cc is taxed at 15% of original list price, 1,401cc to 2,00cc is 22% and over 2,001cc is 32%
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