company cars

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Sun 12 Aug 2001 13:36
company cars - roger hunt
in view of the tax changes next year, what are the pros and cons of having a company car verses buying your own and claiming back from your company business mileage.
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Mon 13 Aug 2001 08:51
Re: company cars - simon
I used to have an Audi A4 1.9 tdi Quattro as a company car & got stung by the taxman for benefit-in-kind. It cost me a fortune in tax, although my company paid for all of the other costs (monthly payments on the car, insurance, diesel, servicing etc). I've just changed it, after 3 years, for another A4 - this time a 2.5 tdi Quattro. My accountant suggested that I give up the "company car" perk, and buy the new one as my own, but charge the expenses to the company. I can claim 63p per mile, up to 4000 miles, and then 36p per mile thereafter. My taxcode has now gone positive, previously it was negative, and I'm better off by about £600 per month (including the above costs).

It depends upon how much mileage you do in your work, and how much the car costs. If you've got a Vectra/Mondeo then there might not be much in it. Look at the Lex Vehicle Leasing website www.lvl.co.uk or the Inland Revenue website www.inlandrevenue.gov.uk for more help.

Happy hunting.
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Mon 13 Aug 2001 09:27
Re: company cars - Michael
Simon is right for the old tax rules, but i read an article which quoted the inland revenue as saying they expect 200,000 extra company cars on the road as a result of the "new" company car tax rules. The new rules no longer penalise low mileage (under 2500) drivers. As a result they expect drivers, who have the option, to switch from cash to car.
As someone who used to have a company car until the company scrapped the system and now have cash instead and claim direct from the inland revenue at 63p/mile for first 4000 then 36p/mile thereafter, I would take the company car every time. Note this allowance also changes next year (reduced to 45p/mile and 25p/mile)

Depending on your circumstances, the hidden benefits are
1, car replaced every 3 years (varies with company) and you do not have to find the cash or deposit.
2, taxed by company
3, insured by company,
4, serviced at company's expense
5 maintained at company's expense
6 routine items replaced (tyres, etc) at company's expense
7 you may have the option to buy the car at the end of its 3/4 year life at a knock down price.

The downside
1 limited choice of car
2 ?
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