Advantages of PCP ..?

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Sun 23 Apr 2006 23:26
Advantages of PCP ..? - ziggy
Could anyone please tell me if there are any advantages to
PCP for someone recieving cash car allowance..? I am struggling to see an advantage over taking a Co. Car. With my Co. scheme you basically choose the most expensive car within your allowance, which looks financially delinquent for low mileage drivers.

What happens with PCP if you wish to return the car before the end of the period...? Is looks like the employee would take the risk of signing to a 3 yr lease, rather than the employer, which doesn't seem so smart.

As I see it with PCP: you pay you own insurance (which is higher for business use) and have to stump up a desposit.
You have option to buy at the end but same is true with
Co. Car.
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Mon 24 Apr 2006 00:13
Advantages of PCP ..? - blue_haddock
Some companies have very limited car schemes such as single/dual badge, no convertibles/ 4x4's etc so opting out gives the driver more freedom of choice plus they are no longer taxed on the vehicle.

Yes the driver does take the risk under a PCP, usual rule of thumb is 50% of any remaining rentals to return the vehicle however early termination insurance can be purchased to cover this.
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Mon 24 Apr 2006 10:45
Advantages of PCP ..? - Bill Payer
It's all about:
1) Tax - For the same car, opting out should cost less overall (otherwise it really is pointless). My personal view is that you've got to be £100/mth or so better off or it's not worth it.

2) Choice - You might want a car, like a people carrier or an SUV, that's not on the company car list.

3) Risk - You can insure against the risk of losing (or even simply giving up) your job.

Personal contract hire (rather than PCP) is probably the least risky way of opting out.
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Mon 24 Apr 2006 14:28
Advantages of PCP ..? - ziggy
Thanks for the info.

Rough calculation shows monthly BIK liability is less than
income tax on the monthly cash car allowance.

Does it only really work for gaz guzzlers..?

regards





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Mon 24 Apr 2006 15:15
Advantages of PCP ..? - Bill Payer
Thanks for the info.
Rough calculation shows monthly BIK liability is less than
income tax on the monthly cash car allowance.
Does it only really work for gaz guzzlers..?

They would usually get the best advantage from opting out.
The other people who benefit if the company pays for all fuel are people who do high private mileages (perhaps doing a long commute to work).

I remember when the CO2 related rules were brought in, Boots thought that 500 of their 1500 drivers would probably opt back in.
If you're driving a £10,000 car, with 15% tax rating and only paying 22% tax on your income, then the car costs just £27.50/mth.

Do the sums again for a £40K car at 35% rating and 40% income tax and the tax is £467/mth.

Look at www.cashorcar.com and do your own calcuations.
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