Hi All
After a little loose advice here please!!
I have to select a company car, I have only ever had a car allowance before so I am unsure how much it will cost and to be honest, I have never understood anything that the Inland Revenue produce.
I will choose a diesel which will be at about the 159 ommissions mark and the value will be approx 19K.
Is there a quick way to tell me what the car will cost me per year and perhaps what a car with the same ommissions priced at 17K and 20K would cost me???
My employer is also paying for all fuel.
Thanks in advance people!!
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What Car magazine has a wee bit in the back telling you how much you will be taxed for most cars on both tax rates
I think the Inland Revenue has a web site for it as well
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Even if your employer is willing to pay for all fuel, it may be to your advantage to decline their generousity and get them to only pay for your business fuel.
This is because there is a separate tax charge if your employer pays for personal fuel. You'll need to do the sums to see if it makes sense for you, but unless you do huge personal mileage, you will likely be better off turning it down.
I turned the personal fuel down, and claim my business fuel at the Inland Revenue rates (9p/mile for my 2-litre diesel).
[I'm an accountant so its in my nature to calculate everything!]
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As of 1/1/06 if you get a new diesel as a company car the removal of the 3%(of list/year) surcharge for Euro IV no longer applies, ie it will cost you more!!.
A Toyota Prius has very low company car tax due to low CO2 and a 3% (of list/year) discount.
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Get your HR or payroll department to calculate your approximate take-home pay
a. now
b. with the company car
c. with company car and fuel
Get them to include your annual home to work and private mileage
as against business mileage for the fuel calculation.
The biggest change would be if you move from 22% to 40% tax.
If you have high business over 12 or 15k per year you will also lose the benefit of the mileage rate ( up to 40p, falling to 25p/mile).
See also if you can opt out of the company car eg if your job/mileage changes in the next couple of years.
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Assuming the car is first registered after 1/1/06 :
If you are a higher rate taxpayer multiply the list price (+ £14,400 for the fuel) by 0.7% for the monthly cost
If you are a basic rate taxpayer multiply by 0.385%
Seriously consider whether you want the fuel for non business mileage. If you can persuade your company to pay you what the fuel would cost them, then even after tax and NI on this amount and with the tax saved on the fuel benefit you may find you are in profit even after buying the fuel yourself.
As a rough estimate you are better off with the fuel if you do more than 14k non-business miles, although this does depend on the price of fuel, fuel economy, your tax rate and having a sympathetic HR dept.
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