Hi Room
I am considering taking up the company car option with my new job. I havent had a company car since the law was changed basing it on price & co2. I am expecting to cover 20,000 miles per year and will also have a fuel card.
Question ; I need to do my homework to ensure the extra tax I will pay will still be less than the reidual value loss and other costs associated with owning my own car. Does anyone know of any good web sites or guides I can use to calculate the best options based on my personal circumstances?
Thanks
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www.cashorcar.co.uk
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I sat down for ages and worked out all the figures myself, took the option of 25p per mile and 40p per mile for the first 10k. this is a tax free allowance. You need a car that does 40mpg, 10p per mile on fuel, the other 15p x 20k per year eg 3 gives you a good idea of the car value you are looking at. £9k this is the depreciation covered, eg. you can buy a £20k car if you are only going to loose £9k over the 3 years. Servicing, tax and Business insurance (no extra cost with the telephone insurers) will be taken care of with the extra 15p/mile you get in the 40p range of miles, then you will save your tax you would have been paying.
Can i say though if you are not in the 40% tax bracket don't bother you won't save enough.
Also get a car with a very good warranty to stop the unexpected bills, i had a Saab and lost £'s on out of warranty repairs, also the drepeciation on them is horrendous.
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flatfour - you've quoted your own situation, but, while there's not a limitless number of possibilities, there are quite a lot of them.
15p & 40p rates are the *max* taxfree amounts an employer can pay - most pay less than this, but you can claim back tax relief on the difference (and note it's only the tax you get back, ie 40% of the difference, not the whole amount).
In TheGrocer's case, I'm not sure how it works having your own car, but with a fuel card? Do employers still pay a mileage rate to cover servicing etc, or is that all taken care of in a monthly allowance?
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You don't say if the 20k per year is business only or includes personal miles.
I know of people who get loads back from tax man each year due to high (25-30k+ miles) miles per year. October 2003 I decided to stick with company scheme but took a Euro IV Mondeo diesel (doesn't get the 3% BIK charge for diesels). As it turns out the last twelve months done less than 4000 business miles because of use of train for work. So better off with company car IMHO.
If you get car before the 3% BIK charge is reapplied to Euro IV diesels, definately think about a Euro IV diesel.
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This is the Inland Revenue's website guide to company cars and taxation:
www.inlandrevenue.gov.uk/pdfs/ir172.htm
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What\'s for you won\'t pass you by
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Also, if your're thinking of providing your own car:
www.inlandrevenue.gov.uk/pdfs/ir124.htm
I've probably mis-read TheGrocer's original post - I don't think the fuel card is relevant to opting out.
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As ever you guys have been really helpfull.
I will be in the 40% band and expect to do at least 25,000 business miles a year. I will let you know how I get on
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Pardon my ignorance but what is the relevance of business milage these days? I though it was all down to CO2 emissions & not much else?
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Business mileage comes into the equation when deciding on whether you take the car or the allowance. If you take the money then you can claim back tax on the money you get per mile vs. what the tax man actually allows.
If I recall correctly, Inland Revenue would allow 40p for first 10,000 miles and 25p thereafter. So if you only get say 12p a mile and do 25,000 business miles and are higher rate tax payer:
1. You claim back tax for 28p x 10,000 miles
2. You claim back tax for 13p x 15,000 miles
Which comes close to £2000 per annum! Think I've got this right.
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£14,420was £14,857Details
£20,405was £20,888Details
£12,250was £12,900Details
£14,800was £15,000Details
