Company Car - Should I?

Longbridge

Hi all,

Hopefully someone can help. For the past 3 years I have had the option of a car or cash alternative, I have taken the cash as I already had a car. I am now thinking of getting a company car, due to the fact that my current car failed the MOT and needed a fair amount of work doing, it is after all 11 years old. It also doesn't do too well on MPG, I get about 27MPG so I am out of pocket on my milage claims as I only get 13p a mile.

I have been looking at the websites relaiting to company car tax and also looked at the website my company has but am still a bit lost?!?

Looking at the selection of cars I have picked the following:

Vauxhall Astra 1.7 CDti Sri Estate
Taxable list price £18,100.00
CO2/km 138

With that car selected I get a trade down of -£70.79 if I then go to the tax calculator and put the details in I get the following:

Tax Band 20%
Benefit in Kind Tax £54.30
Trade Down £-70.79
Company Car Cost Total -£16.49

Tax Band 40%
Benefit in Kind tax £108.60
Trade Down -£70.79
Company Car Cost total £37.81

Is the 'Company Car Cost Total' the only amount I would have to pay for the use of the car?

Also, which tax band would I be on if my base salary is £33,000

Sorry it's a bit long winded but any help would be great

Thanks

AdrianHi

Couple of things, firstly if you are on cash alternative plus 13p per mile you are entitled to claim tax relief on the difference between 13p per miles and 40p per mile first 10K business miles, 25p per mile thereafter. You can claim past years as well, contact your local HMRC office (show on your P60 and possible your payslip) for previous years P87. This years P87 here http://www.hmrc.gov.uk/forms/p87.pdf
Now that you know you can claim this back does it change your view on company car vs. privately owned?
You'll probably find it's marginal but the company car route is less hassle until you change job and are left without a car.

This will tell you if your are a 40% tax rate payer or not:
http://www.hmrc.gov.uk/rates/it.htm

> Is the 'Company Car Cost Total' the only amount I would have to pay for the use of the car?

That's the NET effect, you will see the BIK tax coming off on your payslip, your trading down to a smaller car than you could have on your allowance in order to cover the tax.
You are still entitled to claim a business miles fuel expense by HMRC rules which was 12p per mile, but might have just gone up to 13p, but you cannot claim tax relief up to 40p per mile on a company car.

The most economical way to have this Astra is to buy it privately 1 year old when it's taken it's big first year depreciation hit.

leehal

Doesn't really answer your question but can I say that you were doing well to receive a car allowance for a car that was 11 years old, the company I work for insists that any car you own must be less than 5 years old to receive any money.

chilli_dog

will your company car come with a company fuel card to?

Longbridge

Thanks for the replies, I was aware of the tax relief.

Yes the company car will come with a fuel card, but it does not cover personal fuel.

Mr_Taxtastic

The car will cost you the list price x co2 rate percentage:

So £18,100 x 18% (based on Co2 figure with 3% Diesel supplement) = £3,258 benefit in kind.

You will then pay tax on this at 20% as you are a basic rate tax payer,

Cost to you would be £651.60 in tax for 2008/09 though it will be adjusted for periods during this year you have not had the car. This will be the amount you pay no matter how much private use you have.

I have no idea what a trade down is so I can not comment on that.
As long as you have no private fuel provided you will escape the fuel benefit.

I do not have my tables with me so the Co2 percentage maybe too low as Im still working on 2007/08 rates and can not check but hopefully that helps explain the tax charge.

piggeh

bear in mind that will increase in subsequent years as the bands move slightly (so 1% more per year etc), I believe.

AdrianHi

Longbridge wrote: »

Thanks for the replies, I was aware of the tax relief.

Yes the company car will come with a fuel card, but it does not cover personal fuel.

My understanding is that if the company pays for the fuel through a fuel card you either have to log all personal and business trips and re-reimburse the company for private fuel, or pay another BIK (benefit in kind tax) on the fuel, which is very high. You have to be doing big miles for it to be worth it. When I've looked at this I've concluded it's best not to take the fuel card and claim fuel expenses pence per mile for business miles.

basill

Mr_Taxtastic wrote: »

I have no idea what a trade down is so I can not comment on that.

Our company car scheme charges an amount monthly for private use. This is £25/month for the benchmark Astra. If you go up to say a Vectra this amount increases and if you `trade down` to a Corsa the monthly amount is reduced.

The amount paid is taken taken off the benefit in kind value so tax is slightly reduced if you pay towards your company car.

B