I know, I know, this has been discuused before though it is a constantly changing situation.
As mentioned I have an attractive job offer with a company car element, I am still not sure of the value of the scheme though it features a cash option.
To measure this I reckon I should calculate:
A/ Take home pay based on salary + the cash allowance.
B/ Take home pay based on salary - car BiK (typical car).
A - B = what I can spend on running a car (finance, depreciation, servicing, parts, insurance etc) without being worse off by not taking a company car.
Anything I have missed?
Thanks.
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>>>Anything I have missed?
Mileage rate.
Running your own car?
HMRC payment by your employer allows a up to 40p for 10K business miles
25p thereafter
If your mileage rate is less you can claim the difference X your tax rate of 40% or 20%
When I worked it was a welcome cheque @ mid-summer (assumes sending in your self assessment promptly in April/May!)
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Thank FB!
So if the employer pays, say, 15p/mile and I do 30,000 business miles I can claim (25p x 30,000) x 40% = £3000?
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Not how it works. If you get 15p/mile and do 30,000 miles you can claim back the tax on the difference.
So for first 10,000 miles get the tax back on (40p - 15p) x 10,000
On the next 20,000 miles get back the tax for (25p - 15p) x 20,000
For a higher rate tax payer that's about £1800. Not to be sniffed at.
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Thanks rtj!
I should have know that, being aware of the 10,000 mile 40p limit.
Does my first post A - B make sense?
Thanks!
EDIT: Thanks Gordon!
Edited by cheddar on 01/10/2009 at 15:17
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Does my first post A - B make sense?
Yes. When I last did the calculations (and based on much lower annual mileage for business) I worked out the cost difference was minimal so took the car.
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But the cost of running a cat up to 30k miles per annum may make the company car an attractive options. There may also be restrictions on the age of car you are allowed to use if you take the allowance.
With my employer, the rate you get is based on car grade and not the car you provide yourself. So I'd get the same pence per mile driving a FIAT 500 1.2 as I would an Audi A4 3.0d Quattro for example. Cost to me may differ between those. I know someone who drives an M3!
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But the cost of running a cat up to 30k miles per annum may make the company car an attractive options. >>
I agree however the scheme is lease based so accounting for mileage I might not get much for my money (that being said I dont have the lease figure yet).
Whereas as I have been made a very tidy offer in respect of salary topped up by a car allowance meaning I could afford to run the car I would want.
There may also be restrictions on the age of car you are allowed to use if you take the allowance.>>
Five years apparently.
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Not quite.
You could claim ((25p x 10,000) + (10p x 20,000)) x 40% = £1,800
EDIT: Sorry, beaten to it.
Edited by Gordon M on 01/10/2009 at 15:15
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Use www.cashorcar.co.uk to do the calculations.
But 30K/yr business (plus private) miles is hard on a car. Allow £100 per month for the "peace of mind" benefit of having a company car. Headlamp smashing, door denting etc takes its toll with heavy use. It's always a worry leaving your own car parked outside a hotel or business in a dodgy area.
Take the company car unless there's a *very* good reason not to.
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Are you really going to be doing 30k miles a year business?
If so, then take the company car. On 30k a year you will need to depreciate the entire cost of your car over 4 years.
It needs to be a comfy car, 30k miles a year is 600 hours in the seat.
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Difficult to estimate, I was being pessimistic perhaps, maybe 20 to 25k + 5 to 6k private.
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Because you're working out how much tax you might get back, you could argue you're being optimistic money wise.
Something colleagues of mine have not factored in on occasion is replacement car if yours is off the road. If you're doing high mileage then services will be frequent and if you need to fit that in on a day the car is needed you might need to hire.
To my disbelief a colleague once missed and important meeting because he had car problems. Well he's opted out and took the money, bought on oldish car and it let him down. He should have used public transport or hired a car to get to the meeting as he took the allowance and thought he could get away with an older car and pocket some money.
If you can choose any car, some of the VAG turbo petrols look interesting for BIK but maybe not if you do the sort of miles you envisage.
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Something colleagues of mine have not factored in on occasion is replacement car if yours is off the road.
Something that was quite remarkable when we went through a big opt-out push was the number of people who had driven for years with no probelms and then smashed up their own car within a few weeks of buying it.
On guy had crashed an A4 on the motorway within 2 weeks of getting and it was off the road for 4 months - the insurance company admitted they ought to have written it off. He'd bought the cheapest possible cover and didn't have any kind of courtesy vehicle, not even a Ka.
Others at least had something, but doing hundreds of miles per day in a Ford Ka is no fun.
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I had one car stolen and it took the company three months to write it off (it might have turned up)... in the meantime I borrowed a car out of the pool. In fact three different ones. So I had two Audi A4's and a Passat. Initially had a hire car and that was delivered before the police arrived!
When a car was damaged in an accident I got the hire car delivered in the time it took me to get to the local body shop and walk back.
When my Mondeo broke down I got a hire car late-ish at night and they would have opened a hire car place if necessary. And then a taxi to collect it. All hassle free.
Many years ago, when my brother's company car broke down he got a hire car on boxing day. They had to open up especially for him.
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When I smashed up the company Laguna, I had a hire car waiting for me the next morning and use of it till the replacement car was delivered.Whats more impressive is the accident management kicked in and I just gave the telephone number to the injured and affected parties whenever I contact from them and I heard no more about it.
Servicing is a dream, I phone up and someone comes and takes the car in the morning and brings it back, 4 hours later, serviced and valeted. The tax disk (Due Oct1) arrived in the post 5 days ago, my insurance letter arrives every year, I have AA cover with instant hire car.
All for 100 quid a month tax liability and the diesel I use for personal use., I shall miss it when I retire.
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All for 100 quid a month tax liability and the diesel I use for personal use., I shall miss it when I retire.
Similar thoughts to what I have. Except I'm not retiring and will have my pension seriously messed with!
Although if I worked out how much extra I'd get for an allowance... I am sure I could convince myself it makes sense. My allowance went up after I ordered the last car. Think I'd get just over £6000pa before tax now!
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Thanks guys!
Good points RF, I have run my own car for the last nearly six years, no issues, not the same mileage though also an older car.
The allowance is just under £7000, seems quite generous, I still dont know car / lease value to compare it against though.
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If it helps, my actual cost of running a new Accord Tourer diesel over 3 years / 80k miles was 33p / mile all in.
Includes the PCP and deposit on the car, fuel, servicing and consumables.
Takes no account of residuals or anything else like that.
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The allowance is just under £7000, seems quite generous, >>
After deductions (NI + tax), expect around half that in your pocket!
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The cars you might get for your grade if you don't take the money can vary company to company. We changed our supplier and the amount we got went down per month in money terms. But the cost of the cars went down.
Don't forget if you don't spend all of your allowance on a car you normally get that in your salary. My car costs about £40pm less per month than my allowance for taking a car so I get that post tax/NI in salary. Imagine how much I'd get if I say had a Ford KA though!
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OK, the company is in the middle of a policy change so I cannot get firm info re budgets, its certainly not a deal breaker though so all is moving ahead.
I have decided that a company car makes most sense for the reason you guys have given (RF sometimes talks sense ;-) ) and its seems that a 320d saloon or touring or similar will be feasible when it all shakes out.
Though in the meantime I have been given a list of available cars and have chosen a Mini Cooper S, should be great fun for a few months, lowish price and low CO2 mean it will only cost me around £140 p/m, 44mpg combined, hopefully I can get somewhere near that.
Quite looking forward to it actually!
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Make sure the Mini is temporary and you don't need to keep it until the end of its lease!
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Good point, might want to though ;-)
No, as you say it's worth checking.
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