It does depend on the size of company and how they operate their company cars. Ours are managed by a third party but once was self managed and one of the largest fleets in the UK apparently.
When I did the maths last year and four years before that.... taking the money would not make me better or worse off. At the end I'd have a car but the new one would need financing. So my calculations took that into account. If you already have a car then that is different. But I'd got a company car back in 1997.
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We get 1/12 of our salary for our car allowance. As nobody gets a car, don't see why they don't put our salary up by 1/12...
Anyway!
>taking the money would not make me better or worse off
It depends on how many miles you do, and how old a car you drive. If you're happy running a 6 year old car, then bargain! If you like to (insist on!) running a new car, probably the company car is often better value as they can negotiate better discounts - on a big fleet - than you can.
www.theaa.com/allaboutcars/companycartax/index.jsp will allow you to plug numbers in.
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Depends what the salary is - if he's a higher rate tax payer, far better to take the allowance, which is what we've done for the last few years.
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But in this example, the employee is a basic rate tax payer. So company car could work out better.
Edited by rtj70 on 17/12/2008 at 20:54
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Mapmaker's point of age of vehicle is key - if we opt out it cannot be more than 4 years old I think. And if you buy at 4 years old it needs replacing in twelve months.
Another thing to enquire about is fuel reimbursement. I get a fuel card and pay back for private miles. Some get all fuel paid (but you pay tax on that). But opt out and you get paid a fixed rate in my company based on car category.... you could run a Bentley but never cover running costs.
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Mrs PU has done the car-allowance thing for many years, I was a recent convert - its a lot more liberating in many ways. Not having to worry about every little mark on the car was another.
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If it's a fairly basic Focus / Golf and the mileage is low then the company can probably lease one with full maint for £250/mth. Add insurance (companies pay next to nothing per car) so let's say £300/mth all in. They're therefore unlikely to be keen to pay £5K/yr instead.
Bear in mind that it's generally a no-brainer for lower tax rate employees to take the car - if it's lowish CO2 and P11D value then the monthly tax will be next to nothing, perhaps £40/mth or so. If the employer provides fuel for private use then there's extra tax but, again, at 20%, it wouldn't take much to be on right side of that.
Run some sample figures through www.cashorcar.co.uk
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>>it's generally a no-brainer for lower tax rate employees to take the car
Unless: if you get that £300 a month, less tax & NI 32% = £2,448. And the monthly tax "next to nothing"* is £500 - so total cash cost of taking a car is £3,000.
My annual running costs: insurance £250, tax £200, Depreciation £200-£500 ; MOT £45; Servicing/parts/tyres/wipers £200-£500; so a total £1,000 to £1,500.
If you're a lower tax rate employee, then an extra 1,500 to 2,000 cash per annum is a dickens of a pay rise.
>>went up a couple of grades in the car scheme
It always strikes me as very unfair that if you're promoted after choosing a car, you're stuck with your car for the full 4 years, and you don't get the benefit of the additional cash-or-car cash if there is a surplus.
And who wants to be stuck with a car for 4 years??? With the current prices of second hand cars, why anybody would choose a company car at the moment is beyond me. 5 years hence, when they're all used up, I guess it will change...
____________________________________________________
*It's perfectly possible to run your own car on less than £500 a year, so to describe the income tax as "next to nothing" misses the point, doesn't it?
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*It's perfectly possible to run your own car on less than £500 a year so to describe the income tax as "next to nothing" misses the point doesn't it?
It might be perfectly possible for you, but it isn't for the average person. If the car is replacing a company car then there are often rules about how old it is etc, and a newer car is going to suffer much greater depreciation than you indicate.
The "cash or car" decision looks simple, but in practice there are a huge number of variables. While 20% tax payers pay less on any allowance given, they also lose out on half the mileage rebate that HMRC gives on business mileage.
There's no right or wrong answer, but I don't know why anyone would turn down a worry free, fully expensed car for £50/mth. Sure they might get £200/mth extra in allowance but that £1000-£1500 you talk about (which is *very* light) wipes out a good deal of it. One extra bill and you're out of pocket.
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>>but I don't know why anyone would turn down a worry free, fully expensed car for £50/mth. Sure they might get £200/mth extra in allowance
Such muddled thinking - typical of the average Briton. It's £250 per month, not £50 per month.
>>One extra bill and you're out of pocket
A £1,500 bill on a £500 car.... you've got to be joking, right? In the current climate, that extra £1,500 will allow you to buy between TWO and FOUR cars a year.
IME many people on basic rate tax rates can barely afford to exist, once they've paid council tax, utilities etc. £1,500 a year is as much as they have to pay for living, once the direct debits have left their account.
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Such muddled thinking - typical of the average Briton. It's £250 per month not £50 per month.
I'm not muddled at all - the tax would be £50/mth. I agreed that the allowance might pay the person an extra £200 per month but a goodly proportion of that, if not all of it, would be spent running the car.
A £1 500 bill on a £500 car.... you've got to be joking right?
No, I said more realistic would be £1000-£1500 per year but even that is light.
Running a £500 car is not a realistic scenario for the average person running a car that has to be available for business use. They won't be able to run a £500 car and the chances are it will cost a heck of a lot more to run than the £500/yr you can run a car for.
Look at the stories on here at the moment at the poor people who are looking at a grand (and *huge* stress) to fix their 3-4yr old Corsa's - I bet they wish they could have a fully expensed car for £50/mth.
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Had one car stolen (Golf GTI) and had one accident in a Passat (thus affecting insurance quotes). At the moment the Mazda6 oil level is going up (a few threads in technical on this)... so there is another side to it.
Next car replacement time (if I stay with employer) might be different though but that will be 2011!). My car grade went up a few not long after I ordered the Mazda which may have made my calculations different though.
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In the past I worked for a number of Cos - they all varied in car allowances /Co.car etc.
Often there are 3 schemes
1) Casual - use your car for a few thousand miles per year - HMRC 40p/mile for up to 10K - non taxable expense claim.
2) Essential users - on road most days - Co Car or allowance - both taxable
3) Perk car - car provided fully funded sometimes inc fuel - taxable
2) car or allowance - I found allowance the most beneficial - buy a good car (newish) and run it for say 100K miles.
Last car (£10K new Honda/old model) the employers bought it 2 x over (even after expenses and tax) and I even got £2,000 T/I after 7 years.
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Never having had a company car, I have no knowledge on this but with the current economic climate, when you get a company car are you in any way "personally" liable for anything?
I remember a friend worked in the NHS a few years back and she left her job and she had to make some sort of payment for her car as it was on lease, but can't remember the finer details.
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It's in my T&Cs that if I leave the company of my own free will then I'm liable to keep up the lease agreement on a company car, if made redundant the keys are handed back and that's that.
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It's in my T&Cs that if made redundant the keys are handed back and that's that.
So if you have a company car you are more expensive to sack than somebody without one...
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Yes, maybe I should stop driving my bangernomics Vauxhalls after all ... :-/
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This would never be allowed I don't suppose, mainly because it would scare the carp out of most people and probably be seen as grossly unfair or something.
I used to be employed and enjoyed the benefits of a regular income, pay rises, pension schemes, paid holidays, sick pay, company cars or allowances, bonuses etc etc
A few years ago now I decided to become self-employed. Overnight all those priveleges ceased. Quite scary at first. Not complaining mind, it works for me.
Now though, I am quite used to taking a pay rise when things are good or a pay cut when they aren't. I can allow myself a decent car if I want when times are good or not if they are hard.
If employers were permitted to re-negotiate pay/benefits contracts with their employees on an annual basis to reflect the fortunes of the company then two things might happen.
One is that those employees might concentrate a bit harder on making sure the business was doing well rather than seeing how little they could do for the most reward and secondly there might be a greatly reduced danger of redundancy as the payroll budget would automatically reflect the businesses ability to pay.
It'll never happen so on we bumble, but it might just be the radical sort of measure needed to address the very different set of financial circumstances we are entering into.
We have already seen the best of it. I hope the people who still enjoy benefits such as company cars or allowances realise and appreciate that.
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If I left my company, I just hand the keys back. It is the company that signed any leases and not me. I guess it depends on the company's fleet management.
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It's in my T&Cs that if I leave the company of my own free will then I'm liable to keep up the lease agreement on a company car
If it's a standard issue car (ie not one that you upgraded and paid extra for) then that would never in a million years be enforceable.
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Another thing to consider with a company car is the hassle free car experience which can be worth something. The level of backup you get depends on the company scheme - ours is backed by a large lease company (two actually as we switched). Example for me:
- Golf stolen - the hire car arrived before the police!
- Passat accident and I got the hire car delivered to home before I'd got back from dropping the Passat at the body shop. A few days later I managed to upgrade to an Alfa 156 for a couple of weeks ;-)
- Mondeo broke down - car towed home and then to the garage the next morning. But late at night I got a taxi to take me to Manchester airport for a hire car - all at no cost to me (it was night)
- Mondeo boot broken - leave the car with the garage (for security) and hire car within the hour.
It does depend on how much cash you have at the end of the month if you opt out though.
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>> It's in my T&Cs that if I leave the company of my own free will >> then I'm liable to keep up the lease agreement on a company car If it's a standard issue car (ie not one that you upgraded and paid extra for) then that would never in a million years be enforceable.
I did wonder about that, it's academic in my case as I take the money and run old Omegas / Vectras, but the car option is tempting at times.
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Another example from today...
My Mazda6 is now booked in for an oil change next week because of the DPF issue whereby the oil level rises. It's not worryingly high but when I asked the lease company what if there was a problem with the car due to this, would I be responsible. The lease company agreed an oil change.
Okay it's probably only £60 but this is only 3500 miles since the first service. Over four years this could be additional hundreds of pounds potentially.
If I'd chosen this car as my own (and I do still like it) I would not be happy. But the cost of some services vs a new £8000 engine.... no contest.
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>>If it's a standard issue car (ie not one that you upgraded and paid extra for) then that would never in a million years be enforceable.
More normally, you have a large penalty deducted from your final salary payment - being the cost of terminating the contract. Totally enforceable.
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Mapmaker is certainly on the right lines in the case I'm talking about. I don't yet know the precise details of the car on offer, but at present the new employee already owns a perfectly good, 100% reliable (yes, really), economical car in fuel, insurance and servicing, which is the right size and is fully paid for.
There doesn't seem much advantage in selling a good old car for not a lot that costs not a lot just so she can drive a smarter car with all the bills paid. That's why an allowance looks like the right way to go in this case. But we'll wait and see, as say a 4 year old cut off age would not be helpful.
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That's why an allowance looks like the right way to go in this case.
She can only ask, but there are a million reasons why the company might not want to do it.
On the other hand my last company virtually forced people out of company cars, but that turned out to be so that they could more easily make people redundant.
Very unlikely these days, but if they do buy their cars then they might consider buying her car off her.
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More normally you have a large penalty deducted from your final salary payment - being the cost of terminating the contract. Totally enforceable.
No chance. You would just go to tribunal for your withheld pay. The company would get spanked. How could they charge you for something that you weren't able to use?
My last employer paid astonishingly low insurance premiums, but they had £1000 excess. In the contract it said we would pay this if an accident was our fault. First time they tried to enforce it they backed down straight away on receipt of a letter from a specialist in employment law.
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>>No chance. You would just go to tribunal for your withheld pay. The company would
>>get spanked. How could they charge you for something that you weren't able to use?
Because they are provider of a service. You choose cash, or you choose car. If the latter, you tie your employer into an expensive contract... and then you choose to leave thus costing your employer a fortune. Perfectly reasonable for them to charge you.
>>Very unlikely these days, but if they do buy their cars then they might consider buying her car off her.
Not normally a good idea. Benefits in kind are calculated on the list price when new of the car when new. So OP's friend would be charged in respect of the benefit on a 10k car, driving a 1k car. This only makes sense if you are driving a classic car worth less than 15k, e.g. a MK ii Jaguar, in which case you are taxed on list cost of ?£500?
I guess being a somewhat elderly motor it will not be in a very low tax band?
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Because they are provider of a service.
No they're not. They're an employer. Entirely different relationship.
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I'll say it again about the implications of leaving a company voluntarily with a company car. The ramifications depends on the company.
Ours would not hold you responsible - you walk away. The car would go back in to the fleet pool. Then when someone else joins they get an existing car. When it comes to the end of lease they get to choose their own. You normally get a car two categories above your allowance without contributing when this happens.
If the pool of cars ever got too big... no new cars to replace existing cars until the pool depleted. Again they bribe you by allowing a car higher grade car "for free" upgrade.
If your manager agrees (I've done this) you can also swap a car for one in the fleet pool but not get the upgrade.
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I've just changed jobs and moved from a £500 allowance pcm to a fully expensed car. Now whilst the car I've got is not the one I ordered (Vectra SRI Estate ordered, Exclusive Estate delivered), its only costing me £257 pcm inc fuel. And because its the 'wrong' one, the fleet manager has offered me an upgrade when the Insignia Tourer is released next year. So its a winner for me is the company car. I used to put £250 aside to cover the running costs of the Golf, and that excluded the cost of buying the car, so it didn't save any money having the car allowance (and that £3K per year was spent on - tyres, 3-4 sets per year, £800, services 2-3/yr total of about £650 inc MOT, £650 insurance and road tax. Thats £2.1K, with a few hundred quid for odds and ends)
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Thanks all for the illuminating replies.
However it's now all of academic interest only. I have found out that the deal offered for this new job is... take the company car with work use fuel only paid for or alternatively.........don't take the car with no car allowance in-lieu, but about 40p per mile, if you use your own.
Simple - and moronic. This must be the only employer in the land with this attitude except maybe police, ambulance and fire - LOL!
Or maybe they're stuck with a lease agreement they can't get out of.
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"Simple - and moronic. This must be the only employer in the land with this attitude except maybe police, ambulance and fire - LOL!"
Nope. Very common. I can take an allowance as my car is a benefit. If you're business need then you cannot.
Rob
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Going to become much more common as Fleet Managers and MDs get prosecuted for employees who have opted out being done for no insurance, lack of maintenance and the duty of care claims from other employees injured when travelling in an employee owned car which may not be suitable (e.g. four adults in a Mini involved in an accident at 70mph - it does have four seats but they would be safer in a Mondeo)
Our business needs users cannot opt out.
Our bottom of scale benefit users get around £400 a month for opting out but . . .
They are required to run a suitable car with full franchised dealer service history (the company is not going to start assessing independents for quality of their work/facilities) and must be <4 years old at start of year and have to provide evidence of appropriate class of business use insurance plus evidence of tax and MOT or allowance is stopped.
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>>.......don't take the car with no car allowance in-lieu but about 40p per mile if you use your own.
doing about 30k miles on business, that system would work for me.
currently get 350pcm (about £2100 after tax/NI) plus mileage returns on 30k of £6840 = £8940.
Even adding in the IR tax rebate of £864 makes a total of £9804.
30k miles at 40ppm would give me £12000, less IR benefit in kind tax on the excess mileage totalling £1200 = £10800.
A grand in pocket - wish my employer would come up with a system that moronic. :)
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Mile-Muncher
The 40p allowance will be mileage limited to the first 10k then the rest at a much lower rate. Tax man dictates this.
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Ah, I see. Although I thought it was possible for a company to pay more than the tax allowances, but the excess is treated as a benefit in kind and taxed.
In the same way that the fixed monthly car allowance that is normal practise is also taxed.
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I was right again to take the car. The allowance was quite big but I'd have to get/finance a car and in 5 months have driven 3200 miles! And the Mazda6 diesel needed an oil change today to be safe.
.. try to use the train for work or work from local office or home if I can. Saves the miles, pollution, costs, my time... the list goes on. You can also work on a train and moderate this forum.
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>>Ah, I see. Although I thought it was possible for a company to pay more than the tax allowances, but the excess is treated as a benefit in kind and taxed.
Correct.
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Ah I see. Although I thought it was possible for a company to pay more than the tax allowances but the excess is treated as a benefit in kind and taxed.
You are indeed correct. A company may pay its staff whatever it likes.
A company may NOT pay its staff whatever it likes without considering the tax implications.
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I have had a company car for the last 12 years and have this year made the decision to buy my own car instead and charge the company mileage
My circumstances are a bit different as I own my own company and was therefore paying Mr Brown twice, (via my personal tax and company taxation)
Now in roundabout terms I get approx £1k a month in allowances whereas before I was paying out £1k a month
I can afford to buy a new (though second hand) car each year and still be quids in
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I suspect that your figures are misleading.
Car v cash is rarely that different.
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>Car v cash is rarely that different.
It can be if you own the company and do a lot of company miles.
1. Run a second hand car - saves a fortune on capital costs, but if a "benefit" car, would still be taxed on new price. (Unless running a sub-£15k classic car e.g. the Mk ii Jaguar which fits so nicely into that bracket and has done for a long time).
2. Tax free 40p per mile is generally an excellent way to remunerate a company employee. Particularly if driving a 1.1 car...
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But to have a £24k a year difference?
To receive £1k a month in mileage allowances after tax and NIC you need to be doing over 40,000 miles at 40p a mile or if following HMRC's rates, which ignores any costs for running or replacement costs.
To save £1k a month you need to have has a car benefit of around £11k after net employers NIC, but again ignoring any deductions for running/replacement costs. The maximum car benefit charge (40% of 35% of £80,000) is £11,200.
Of course fuel benefit will further complicate the figures but I remain unconvinced.
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Trust me hxj
The difference in cost is massive
My personal tax cost was approx £5k, the car itself on lease was another £6k (and you only got a percentage of the VAT back) plus company NI, admin, P11D's, accountants charges, an outlay of at least £12k
I drive 40k miles+ per annum and recieve the mileage allowance TAX FREE!!! (and you can pay yourself more than the official recommended rate you know)
And on top of that the slimeballs at HMRC have finally decided to up the mileage rates after 10+ years of reducing them the pink fluffy dice (by reducing I do of course mean their sneaky stealth tax of allowing inflation to erode the benefit) :-)
Edited by Dynamic Dave on 28/12/2008 at 19:52
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Your figures don't work out.
The benefit charge implies a £43k car, and the lease costs are only £6,000 a year for 40,000 miles per annum?
You can pay any mileage you want to. But any amount over 40p a mile attracts employees and employers NIC and any amount over 40p for the first 10,000 miles and 25p thereafter attracts a personal tax charge. I hope that you haven't got this wrong, could be very expensive.
So for £12,000 you have to pay say £5,000 for fuel, say £2,000 for servicing, repairs, tyres, rfl, insurance, leaving you £5,000 a year spare, from which you have to fund the capital cost of a £43k car.
mmmmmmmmmmmmmmm
However you could have changed to a smaller greener car, but then the savings would be entirely illusory (just as they are now) ;)
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hjx I too think there is some confusion. And including company/employee costs in the same comparison. They may work for their own company but these costs need keeping separate.
I would be wary posting details like this on an open forum where HMRC staff may be members. Nobody posting to a forum is invisible - you can be traced.
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There is no confusion I have been over these figures many times, both with my accountant who advised that we cease leasing cars and our bookeeper who counts the pennies
I dont know where you got the £40k car figure from hjx, my last company car was nowhere near that more like £26k ish and trust me when you combined the car benefit and fuel benefit it was costing me between £5-6k a year in tax, you have to remember its all paid at the 40% rate
You also state that I end up with only £5k ish from charging mileage but what you must remember is that as long as I get a decent vehicle (touch wood) I am only buying that car once , whereas the lease car payments are the same every year they dont give you the car when the deal ends! :-)
Im saving a fortune and its all legit rtj .....the figures I quoted I mean
Edited by malden blue on 28/12/2008 at 22:53
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The 40k cost comes from the fact that the private fuel is charged at £14,400 on top of the car benefit. So £14,400 plus £26,000 is close enough for me. You must have been doing alot of private miles on top of the £40,000 business ones to make that a good deal for you :) I would get your accountant to explain that one to you ;)
The real savings are:
1. You are no longer paying the fuel scale charge - total saving personal £14400 *0.3 *0.4 = £1728 Company £14400 *0.3 *0.128 = £440, after CT tax relief. So unlesss you used more than £2k of private fuel (say £5 a gallon 40 miles a gallon 16,000 miles), it was a bit daft.
2. You are going to keep the car for longer rather than changing at the end of the lease. Keeping it for another two years will probably save you £4k a year, but cost you a £1k or so in extra repairs.
I reckon that your real saving over a 5 year period is around £12,000, or £2.5k a year. But that arises from unnecessary fuel scale charge payments and an increase in the life expectancy of the vehicle to 5 years.
A lot different from £24k a year.
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I would be wary posting details like this on an open forum where HMRC staff may be members ..
Did you have hxj in mind, perhaps? [ not really a question ;-) ]
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lol
As long as who ever it is is female, incredibly attractive and between 18 and 35 then I don't mind if they have me in mind Although given me - I'll settle for the first and reasonably attractive and under 42
Sadly I am not a member of HMRC, but I do spend most of my time at work digging people out of the messes they make with taxation :)
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hxj>>But to have a £24k a year difference?
Ah. Yes. I hadn't actually read, carefully, the extent of his claim...
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You can pay what you want - any excess over 40p is subject to NIC - and any amount over 40p for the first 10,000 miles and 25p for any extra miles is subject to tax.
Paying at 40p a mile for all mileage can be tax efficient as fixed monthly allowance attract NIC on the full amount.
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I think you being disingenuous hx in trying to make it seem I said I was making a £24k profit from the changeover, argue your case by all means there is one to be made Im sure, however many people in my position are doing the same and ditching company cars for good
As the owner providing the company car (albeit to myself) I have to pay the following, forgive the approximate figures
fuel £5k
lease car (includes servicing and car tax) £6k
insurance £1k
class 1a NI (you need to be a genius to work that one out) but lets say £500
HMRC via dreaded K tax code fuel/car benefit £5500
admin £500
£18,500 (admittedly you get some VAT back)
Going down the allowance route I pay a tax free sum of
£12,000
and get rid of the dreaded k tax code, incidentally you can buy the replacement car with your newly liberated tax allowance in the 1st year, next year you are really quids in!!
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I wasn't being disingenuous at all - you said that a company car was costing you a £1,000 a month and now without one you were getting a £1,000 a month, and that you were quids in.
£1,000 + £1,000 is £2,000 a month. Multiply this by 12 and you get £24k a year.
I am just concerned that you didn't and still don't understand the figures.
If you wanted a new car every 3 years you'd probably be better off with the company leasing the car, you paying for all the fuel and reclaiming HMRC's approved "Fuel only" rate from the company.
If you want an equivalent car, but keep it for five years, you are probably better off doing what you are doing now.
If you want a cheaper car, whether new or second hand, you will usually be better off doing what you are doing now.
The major saving arises from the behavourial change not the fact that you now own the car. Make sure your insurance covers you for business travel, not just commuting though.
I do the figures all the time at work.
Personally I drive a £22k new car , which which has a 35% benefit charge, drive around 25,000 miles a year in it, about 2/3 on business. I own it personally and receive about £250 net a month instead of using the car scheme at work, plus a lump from HMRC .
The net saving to me of working it this way is about £50 a month, over a five year cycle, over an equivalent cost, but boring diesel (which I would have under the compay scheme). Personally being a tight fisted sod I'd rather have the cash, and drive the car I want.
The saving is mainly because I got the car at a big discount off list.
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I can see this one going round and round hx!
Groundhog Day with wheels on
I dont think you are looking at it from my point of view, not merely an employee looking at the pro's and cons, where incidentally I think its no longer a benefit at all, but as the employer who has to pay for the lease (and sign a personal guarantee) and all the other costs
Its made a huge difference especially in these days of economic woe, (unless you work for the public sector) where every penny saved is a better chance of being competitive and continuing to trade!
PS I notice you have turned down the chance of a company car yourself when given the choice ! :-)
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I am looking at it from the point of view of you and your company and I am not saying that it is a bad choice given what you want to do.
However the risks for you are:
1. The cash saving is nowhere as good as you implied;
2. A big repair bill could potentially more than wipe out any personal advantage;
3. There are additional risks to your profits in having a potentially unreliable car;
I'm happy to leave things there.
I chose not to have a company car because of my personal choices having considered all my employers' requirements, tax impact, personal finance, insurance and other issues in detail. I also went through several scenarios and understood the implications and figures. I also limited the downside by purchasing a service, repair and maintenance contract for my new car.
However my calculations were incorrect in that underestimated the number of tyres that I would use in 5 years. I've used 4 more than expected so far, with another two required shortly, so that cut my expected gain by over a £1,000. But I still have the pleasure of driving a 2.0 turbo petrol rather than the dull diesel :)
I went through all the same scenarios with my brother (who is in your situation - but does less business mileage) and he decided that it was cheaper to have the car himself. However the lease was coming to an end and so he changed to a new BMW 325 diesel estate (18% BIK calculation) which actually made it better for the company to pay for the car in cash. On my advice (free for him - but very expensive for others :) ) he always pays for all fuel personally and reclaims on approved rates.
Everyone needs to do their own personal calculations including a cash flow forward past the next expected replacement date.
Edited by hxj on 30/12/2008 at 09:40
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For £50 per month, I'd have the company car hxj. That's 3k over 5 years...
For reason (2) you mention.
Or run a nearly-new car...
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Some interesting figures. . .
The comparison I did a year ago meant that I was borderline for taking the allowance.
25-30k a year of which 5-10k is business. Company pays fuel for business miles at HMRC rate for engine size (fuel only). Company lease over 4 years and pays all maintenance. If opting out I would have bought at 6m old and changed yearly.
Main issues:
Hassle of changing the car each year.
Cost of services - Last car had 10 x 12500m services while I had it (2 1/2 a year) Duty of care risk will drive this work to franchised dealers even out of warranty.
Cost of tyres - work on 20-30k per set if you are a gentle driver. Punctures hit your pocket.
Replacement car during maintenance / repairs.
Cost of insuring a car for 30k a year including business use - Tesco will not! SP30s and minor bumps push up the premiums.
Cost of non-warranty work.
Hassle of keeping all the paperwork and claiming from HMRC.
And if all this went well I may have saved £100 per month - if not . . . .
If you do lots of business miles it can be worth opting out, if you do lots of private miles it is worth taking the car.
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And if all this went well I may have saved £100 per month - if not . . . .
I got involved in a lot of these calculations at my last employer and I used to calcualte in the "peace of mind" factor of having a company car at £100/mth.
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My questions are:
1. Do you want a nice quality new car every three or four years?
2. Do you drive less than 10,000 miles a year on business?
3. Would you rather someone else dealt with the dealership?
4. Are you a young or inexperienced driver?
5. Do you have a less than perfect drving history?
Answer yes to say two of those and it is highly likely that a company car will be beneficial
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Given your reputation on this site - I doubt it!
;)
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>>Given your reputation on this site - I doubt it!
But that was to run a brand new car like you do. I don't think £3,000 over 5 years is a price worth paying.
I don't do a huge number of miles; I don't want a brand new car. But a puncture a year could be nearly £500; it doesn't take much to spend an extra £50 a month on a car. I'm sure my finances would not notice that difference one way or the other.
(And of course there's the unpredictable depreciation that will have stung everybody who bought rather than leased recently.)
I think, though, your point was possibly that you saved £50 a month AND got a much 'nicer' car?
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