About to change jobs and being offfered a car upto value of £12k which i can pick or £3k opt out package. Mileage allowance is 12p per mile regardless of company or private car. 40% tax payer, no idea how many business miles i will do.
Currently in audi a3 2.0tdi which is fully expensed inc fuel
Any suggestions on which way to go would be much appreciated
cheers pb
|
Change to a job with a better deal ?
12p/mile isnt going to come close to covering your costs on a private car. Its barely petrol cost. £3K less 40% isnt going to get much after tax/insurance/servicing let alone depreciation.
Unusual to offer a car value rather than lease rate - does that mean you can go for something used ?
|
Change to a job with a better deal ? 12p/mile isnt going to come close to covering your costs on a private car. Its barely petrol cost. £3K less 40% isnt going to get much after tax/insurance/servicing let alone depreciation.
I assume the 12p is just for that - to cover fuel. The other car expenses would be covered (or not, depending on choice of own car)by the £3000 less tax and NI plus the saving on BIK tax from not having the company car.
There's also tax relief on business mileage at 40p per mile, for the first 10,000 miles IIRC, worth 16p per mile to a 40% tax payer.
The BIK depends on the car so some assumptions will have to be made about that - the easiest way is to use an up to date ready made calculator.
|
Manatee There's also tax relief on business mileage at 40p per mile, for the first 10,000 miles IIRC, worth 16p per mile to a 40% tax payer.
More accurately, only on the difference between 40p &^ the 12p per mile you ARE paid... so at 40% it's about 11p.
|
|
Thanks, I was wondering whether I should correct my post - I had forgotten the 12p is taxable! I take an opt out payment (on which I am taxed) and get all my fuel paid for (taxed on actual cost) then relief for business miles at 40p (I never reach 10,000)
|
|
|
|
mark>12p is barely petrol cost.
That's exactly what it is. The company is giving you either a car, or 3k pa to pay for the car. The extra is for petrol only. You will get tax relief on the difference between the 12p and iirc 40p per mile... so that's 40% of 28p which is about another 12p per mile.
If you can spend the 12k cash on anything you like, then go for a MKii Jaguar and put your own money to take it up to what it costs - up to 15k. Because it's worth under 15k and old, the BIK is calculated on the basis of the 1965 list price. (I don't think the Chancellor has changed that rule, but better check first.)
Remember that you'll have to pay tax as a bik on the 12k (and remember that's list price, not cost to the company, so if you do get a second hand car for 12k you will be hammered on the tax). If we say 40% tax on guessing 35% (depending on CO2) of 12k, that's maybe an extra £1,600 per annum tax you have to pay - and that's out of taxed income - so that's nearly another 3k of gross income pa that you are losing.
If you're happy not to run a new car, then I'll put money on the fact that you're better off taking the cash. pwc used to have a good free cash-or-car calculator. If you want to run a new car then it probably won't make much difference as the bean counters will have done their sums.
|
|
|
|
The AA has a cash for car calculator that is useful for the financial aspect.
snipurl.com/dmoa
There's also the risk angle - other things being more or less equal it's nice when it's someone else's problem when an expensive fualt comes along.
|
|
|
£3,000 / yr - after tax = £1800 - £150 / mth - not a lot for car.
You will however be able to claim back a refund of tax the difference between the allowed rates of 40p & 25p and the miserly 12p
First 10K mls are @ 40p less your 12p = tax on 28p = 7.2p/mile or £720 for 10,000 mls
Then it is tax reclaim on balace miles @ 25p-12p= 13p @ 40% = 5.2p
Claim with tax return 1 x / yr and turnaround varies - on-line it is almost instant - typically money in your bank in 1/2 weeks.
By paper can take a bit longer - a few weeks to a few months I believe.
|
Falkirk >>£3,000 / yr - after tax = £1800 - £150 / mth - not a lot for car.
But don't forget the other £1600 tax you don't have to pay - giving you nearly £300 / month.
Falkirk>> First 10K mls are @ 40p less your 12p = tax on 28p = 7.2p/mile or £720 for 10,000 mls
At 40% it's more like 11p/mile.
Sorry to clutter up this thread.
|
|
|
Or you can get the amount included in your tax code as an estimate and get the money back over the tax year.
|
Thanks to everyone who has replied. Financially it isn't a very good opt out package, but i am moving from the commercial world into the not for profit sector so i don't mind. Whichever way i go i'll have to get used to having a worse car than my A3.
It basically seems to be a choice of a £12k car or £300 per month (ish) to get my own car including insurance, maintenance, repairs etc plus i'll get a bit of tax relief on the mileage allowance if i run my own car.
Cheers to everyone pb
|
>'worse' car.
Ah, but think of the more exciting things you could run. An audi 90 coupe quattro. an XJS jag. Fun, sub-£1,000 cars that are never (probably) going to cost you as much in maintenance and insurance as your 3k pa budget.
You need to check the £300/month figure - I haven't even used the back of a fag packet regarding the bik tax... some cars with lower emissions will cost you much less tax.
Also have a good read of Polo Girl's recent thread entitled something like 'Should I let my heart rule my head over company car'.
|
|
|
|
|
![2018 Vauxhall Crossland X 1.2T [130] Elite Nav 5dr [Start Stop]](http://images.honestjohn.co.uk/imagecache/url/crop/90x60/https/assets.heycar.co.uk/t_default-export/f_auto/application_assets/vehicles/pictures/2bea58a6d463c4ef08265c6832b0416d/99dc06cb97e0e43d51cdb32a8f17cdd1.jpg)
