thats very very very good value
the cheapest cc where i work is about £300 a month, plus the tax on that, probably another £80 per month.
£100 is remarkable
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well that is actually how much it costs me. The tax. Thats actually all I have to pay.
(personal fuel is of course extra)
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i see, you dont you have a cash option then?
if that's the case it would be stupid not to take the car!!
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i see you dont you have a cash option then?
I don't think it's really valid tp say that taking the company car is costing you whatever the cash option is! Most people would have to spend most of that on a suitable car, so it's a zero sum game.
Of course there are some people who can make money - in my last company middle managers mainly drove 5 Series BMW's and were offered £750/mth to opt out. Many did, and then went out and bought Peugeot 307's, Astra's etc! The company went mad. :-)
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I think the point of this thread is to see if it is a zero sum game or not.
I think the consensus here is that is cheaper to run a car privately and keep the cash, than to go down the company car route these days.
My point generally was that for ?heavy metal? the sums need a bit more thought.
My specific point to AE was in respect to his comment that his cost is ?only? the tax. This is only the case if he cannot take cash. If he can take the cash obviously his monthly cost should include the cash he has scarified (after tax to be accurate).
Hope that helps! It?s a very interesting topic for an accountant;-)
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I think the point of this thread is to see if it is a zero sum game or not. I think the consensus here is that is cheaper to run a car privately and keep the cash than to go down the company car route these days.
I don't think it's possible to make any generalisations. You'd think it was pretty obvious, without too many variables, but there really are an amazing variety of scenarios.
Apart from the pure cost, the other thing that I took into account was the "peace of mind" benefit of having a company car - a headlamp smashes, someone dents it in the car park etc - is worth £100/mth to me. So I wouldn't have opted out unless I was at least that much better off. Other people may attach a different, or no, value to that.
In my case it was fairy easy - our car allowance is generous and we get the full 40p/25p mileage allowance. I do no commuting (work from home) so the vast majority of my mileage is business, and it's in car whose tax bill would be horrendous.
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I wonder in the pressure to encourage green behaviour that there might be an encouragement from the Govt that all types of remuneration that appear to support "car use" ie car allowances/car schemes etc" will be taxed further such that car use for a business is actively discouraged and less carbon intensive business travel is encouraged?
I've read evidence in academia that those with expensed company cars generally live further from their workplace than those paying their own way. Hence a co with a company car scheme is effectively encouraging longer distance commuting. I wonder if going forward if the carbon footprint concept gets more integrated into company strategy that firms will be looking more closely at where their employees live and doing more to not encourage very long distance commuting (eg perhaps offering jobs contingent on living closer to work or on a public transport route to make the travel plan more "green")...
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Very delicate area this ! As someone who has looked at the subject from two very different standpoints ( employed and self-employed ) I recognise that emotions, financial packages, status issues and many other complex rational and indeed irrational factors are at work here.
For many years I was employed and enjoyed the benefits of company car packages and can remember poring over brochures and car mags for hours if not days on end, trying to decide upon the minutest details of what to specify on the next car request form. I was very fortunate in the level of generousity of some of those packages. I can empathise with those still enjoying those sorts of benefits. After all, it has long been regarded as an integral part of many employment contracts. It would now be very difficult for any employer to suddenly remove that benefit from the workers who currently have it. Controversially though, I think they probably should. Not because I believe it's unfair or immoral or through any sense of envy, but because one of the things I have learned since funding my own transport is a heightened sense of responsibility. What I mean by that is that I now think very much harder about whether certain journeys are necessary or whether there are alternative means of completing a task. I voluntarily keep fairly much to the speed limits because tooling around at 90mph costs a lot more for one thing. Don't get me wrong, I still do a high mileage because it is necessary to do so but I just think a bit harder about it. I would be in favour of a return to the basic principle that if an employee requires constant access to a suitable vehicle, for example sales reps or field service personnel or whatever, then fine, issue them with a car or van or whatever they need. As for those who enjoy car allowances or company cars merely as a top up to their salary then I would be in favour of a one time package adjustment to compensate the loss of that and its subsequent removal. I just think that we seem to live in a society which actively discourages people from taking individual responsibility for themselves and any action which helps to redress that balance should be encouraged.
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I've read evidence in academia that those with expensed company cars generally live further from their workplace than those paying their own way. Hence a co with a company car scheme is effectively encouraging longer distance commuting. I wonder if going forward if the carbon
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I dont think it takes a post-graduate degree from Oxbridge to work that one out !!
I work for a company that is a living model of this scenario, as I think are many companies in the technology sector. It is sad that this is the fact, but how do you change it even if you remove the company cars. The only other way to change this is to make salaries so unattractive, peop,le will finaly not bother commuting from Shropshire to the Thames Valley ! Alternatively the government could force the TV companies to shop showing programmes about building a new life in the country, and start showing programmes about renovating houses in Slough and Maidenhead instead. I'm not sure if this suggestion would work but it might be worth a try !
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There's also the fact that many of us now work for a number of companies in the course of our career. And with the huge rises in stamp duty, we simply cannot afford to move each time we change job. I've just finished three years working a good 120 miles from home - I can either stay up there during the week (eg. in B&B), or commute on a daily basis - neither is ideal.
Now back to a job 20 miles from home, fortunately. But it could all change again in the future.
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£100 is remarkable
Why ? If you have a fairly modest company car with low emisions it may not cost an arm and a leg in tax. Its just in companies like mine where the company car scheme is like a 'badge snob' arms race that it gets costly.
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>>My company car costs me in real terms, £100 month.
Assuming it's mid-range mid-price sort of car - it can't be that figure. Whatever you might think, your company has to fund the running costs & depreciation on this vehicle - the true cost comes from a lower (compensating the firm) salary or very, very large company business mileage. Figures please.
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My tax is around £120/month this includes free private fuel too. I have a Focus and do around 45,000 miles per year, so Altea Ego's figures may be correct.
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Just for comparison from the other side of the world, my last employer changed from providing a company vehicle to a policy of adding a flat percentage to salary as a vehicle allowance, plus a mileage allowance for work-use, as long as your chosen vehicle was reflective of your position within the company. All costs then became your responsibility. As a reasonably senior project engineer, I certainly at least broke even on my Nissan Maxima including depreciation.
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large company business mileage. Figures please.
the car costs 16,000. It has a taxable benefit of 19% = £3040 year BIK
taxed at 40% = £1216pa = £101.33 a month
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Good Morning all, this is my first post here and also the first time on this forum. I found this post this morning as i was searching for the information on my car (official figures) to confirm the numbers used on my latest tax code adjustment.
I was really just wanting to agree with the cost of ther company car to others saying around £100 a month. Mine costs me £180 a month in extra tax on my basic salary.
car is a Skoda Octavia Estate - 2.0 TDI on a 56 Reg
Salary £30 and an bit k per year basic, and I am currently on a higher than normal negative (k) code due to underpaying last year. The difference in my salary equates to £180 per month.
I get all of my Fuel paid both business and private, Business equates to 25-30K per year with 10-12K per year private. I couldn't run this car for that much money every month, not at our local diesel £1.10 a litre!
We did look at Car allowances, however the additional costs to me didn't make it worth while.
anyhow, Good morning to you all again, and thanks for reading my 2p's worth
regards
Ian
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Ok I shall stop being so basic and say, yes in truth one has to take into account any allowance in lieu of car, and any milage that can be claimed against the inlanf revenue allowance.
BUT
I was going back to the basic premise posed by the OP in that:
As company cars are taxed beyond all reasonable levels, fewer and fewer people who do not suffer a long commute take advantage of the company car.
Far from it. As I said I get a new car fully serviced and on the road for £100 a month.
Its more than that, the tax man does not tax my free insurance, my free servicing, my free recovery, my accident management, the cost of finance to buy a new car etc. To get a new car on the road for £100 with no other expense other than personal petrol is astonishing.
for example
New car £16000. residual value ofter 3 years £8000
so
Cost to finance/purchase approx £9,000
Insurance for three years (£500 year) £1,500
Servicing (20k a year £200/service) £1,200
Road Tax £300
Total over three years £12,000
thats £333 month
Now is that heavily taxed? is that taxed ANYWHERE near its true value? not even close.
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£100 a Month ?
What a "blinkin'" liberty ! ( With a nod to Catherine Tate's Grandma character ) ;-)
Good luck to ye ! But come the revolution...............................
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>>Ok I shall stop being so basic and say, yes in truth one has to take into account any >>allowance in lieu of car, and any milage that can be claimed against the inlanf revenue >>allowance.
At that level of car its probably around £4,500 to £5,000 in gross salary that you loose out on.
If the choice was that or an Altea - sorry there isn't a choice .............. ;-)
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What? where do you get 4,500 to 5000 gross from? No good quoting gross anyway, gross is not what gets in my pay packet.
Take the 100 p/m I pay in tax
My allowance would be £290 p/m before tax = £174
= £274 month some way short of £300+ of benefit.
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Oh and as MM says the 274 month is not pensionable or calculated as part of any other benefit.
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The approximate cost of running a car, excluding fuel, is around 30% of the list price. Clearly your employer wishes to encourage you to have a company car.
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And on another tack - if you do 10,000 business miles a year and get paid 15p a mile by your employer you can add another £1,000 a year to the receipts giving you about £370 a month. If you are willing to change your car every four years the advantages of opting out become even more stark
Edited by hxj on 19/01/2008 at 15:12
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Total over three years £12 000 thats £333 month Now is that heavily taxed? is that taxed ANYWHERE near its true value? not even close.
Now just hang on a sec!
For most people the car (or allowance) is to enable them to do their job. The tax is for the private availability of the car, not the whole private and business availability.
I know people who only use their company cars on company business - it's possible (but messy) to not pay tax at all, so they're basically paying tax to be able to do their job.
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If I had opted out of the company car scheme, not paying tax on the BIK of the car and getting the allowance probably comes to £450pm which sounds great.
But not having say £14k lying around in cash to buy a car I'd have to borrow or go for PCP (and never own it)...
So costs might be:
- Loan of £14k for nearly new car with payment protection £400pm so £4800pa
- Two services per year so call it another £400pa
- Replacement for worn tyres - lets call it only £200pa
- Hire car when mine off the road for servicing etc - who knows
- Breakdown cover £80pa?
- Insurance? £500 at least
- Peace of mind...
- Road tax £135
I don't do huge business miles so the tax back won't come to much. Think I did less than £3000 business miles last year.
So that lot comes to about £6000pa or £50pm. So I'm worse off but do have the value of the car after 4 years. And staying in the scheme the £50 is less than £2.5k.
Figures different for PCP but then (a) you worry about any high mileage when handing back and (b) you don't have a car at the end anyway so no different to the company scheme. Note a colleague did huge mileage on a PCP so due to high costs he bought it at the end.
Figures will be different if I went for an older car with the allowance but I don't want a car too old. Or swap it too often. Or have the hastle or gamble of buying second hand and finding a lemon. Would not buy a CR diesel second hand but then I'd pay lots more for personal mileage for petrol.
And then there's peace of mind. My Mondeo let me down in January 2006. RAC recovered to home and then recovered to the garage next morning. This was late Saturday evening with all hire places closed and we needed a car... one phone call and a hire place was opened for me out of hours and a taxi sent to take me there. Result was a hire car within two hours of the breakdown.
Another example, car stolen.... hire car outside before the police arrived. If my own car was stolen and the insurance waited for it to be found (3 months?) I would be expected to provide a car for business wouldnt I.... they do give an allowance.
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I should have added I actually drive a brand new Mazda6 Sport diesel worth (list price) over £19k.
I also have a fuel card but pay back for personal miles each month. The great thing is a lot of my personal miles is local so not so good mpg. Business miles is motorway and A roads and so high mpg. I pay back a percentage of the cost for the previous month's fuel which means I benefit from lower pence per mile due to the business travel.
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Actually my calculations are wrong... my allowance is £40pm more than the Mazda6 costs per month so I get that back in my salary. Obviously pay tax/NI on that figure but it makes the rough difference less than £50 and I get a company car and no hastle.
And remember I was taking a figure of £14k for a near new Mondeo sized car vs. brand new Mazda6 which I have. No gambles.
I also forgot to add the wear items that went on the Mondeo - the clutch went at 47k which will be linked to a hill start near Grasmere years ago (post on here somewhere).... but an addition cost of £800 to factor in. And the injection system leaked after the warranty was up.
The Passat on the other hand had the air-con fail just before the warranty ended... And had air-bag problems, locks, etc. etc.
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For me it was a no-brainer really. I'm in middle management - earning around £50k a year and the car allowance is £5,500 a year. I'm not at all bothered by status symobls and my job doesn't require me to visit customers or have a "flash motor".
I bought a new Berlingo four and a half years ago for less than £10k with all the options. A Berlingo with a/c is the slowest depreciating Citroen. This cost me about £200 a month until it was paid for and it's now in effect "free". My insurance is less than £200 a year and it needs a service about once a year at the mileage I do. It's showing no signs of needing replacement and even if it did it would be cheaper to repair than to replace.
The (very large) company I work for make no stipulations about having to use the car for work, to the point where it's perfectly acceptable for me to hire a car for a journey if I didn't want to use my own - I guess that's because my entitlement is based on being a perk rather than a business requirement. The company is actually big on green credentials and so we tend to be persuaded toward public transport where possible - which is fine by me as I can do useful work on a train, something not possible when driving.
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Sorry to come back to this so late; I have been away. Since 27 December, my car has not moved outside the congestion charging zone by more than a few hundred metres. It has carried heavy DIY-type items, garden rubbish, other rubbish.
Why would I want a shiny new car?
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I have come to this thread late and only scanned it however in addituion tom the reasons Mapmaker mentions:
Car allowance is non pensionable, not part of salary when calculating death in service benefit etc.
The other main reason I think is to differentiate jobs that are on the same payscale/level where one job requires business travel and another doesn't.
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Car allowance is non pensionable, not part of salary when calculating death in service benefit etc
But then how is that different to opting for company lease car?
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But then how is that different to opting for company lease car?
Giving an allowance is administratively much more efficient for the company.
However H&S requirments mean that companies need to risk assess drivers who are using their own vehicles in respect of company business as well as drivers of company provided vehicles.
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