Company Car Tax

mj2000uk

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.

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!!

:beer:

nearlyrich

mj2000uk wrote:

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???

Our fleet manager produces a spreadsheet in Excel with every model of the cars in the range for each band in the car scheme, the bands are based on the cost per month for the lease, not always related to purchase price of the car. He has emissions and list price as columns in the sheet so you cn sort by them.

I picked out the models I liked and rated them by the emissions and list price, as both of them effect the tax, then I called the tax office who worked out how much tax I would pay on each model on the shortlist. I then drove the 3 or 4 cars I liked the most for a week to ensure that they were suitable, I spend a lot of time driving, (most car manufacturer's will happily arrange this for fleet drivers, make sure you get the car that you will having, same engine number of doors etc).

I got my new tax code for next year yesterday, it's gone up to 195 from 105, I used to have an Audi A3 1.6 sport, now I have a Seat Altea 2.0 DSG which was about £18800 list price and I love it.

Hope that helps;)

Han_naH

I suggest you don't take the employer's fuel if you are low mileage. The tax is too high (benefit in kind)!

As for working out car tax, just takes the tax bracket it is in (What Car magazine has all the models in the back) and multiply by the new list price. This gives you a "scale figure".

Then if you are a lower rate tax payer, take 22% of the scale charge. If you are a higher rate taxpayer, take 40%.

E.g., Audi A3 1.6 Sport FSi. List price £18,017. Emissions tax bracket is 18%.
18% of 18K is 3275. Basic rate tax payer = 22% of this is £710, or £60 / month company car tax.

Cumbrian_Male

leejp wrote:

I suggest you don't take the employer's fuel if you are low mileage. The tax is too high (benefit in kind)!

As for working out car tax, just takes the tax bracket it is in (What Car magazine has all the models in the back) and multiply by the new list price. This gives you a "scale figure".

Then if you are a lower rate tax payer, take 22% of the scale charge. If you are a higher rate taxpayer, take 40%.

E.g., Audi A3 1.6 Sport FSi. List price £18,017. Emissions tax bracket is 18%.
18% of 18K is 3275. Basic rate tax payer = 22% of this is £710, or £60 / month company car tax.

Also bear in mind private fuel will be taxed at same % on notional 14400 miles and non EURO IV diesel engines have 3% surcharge.

quixote_2

My wife has heard about a way of reducing company car tax. It was described as the "alto scheme". Does anybody know anything about this?

Murphy_The_Cat

quixote wrote:

My wife has heard about a way of reducing company car tax. It was described as the "alto scheme". Does anybody know anything about this?

Hi quixote

welcome to MSE.

I'm not 100% positive about this but I'll give you my best guess.

I think that the suggestion involves buying a Suzuki Alto as your company car.

The advatages would be VERY, VERY, low list price (about £6000) to be taxed on. Also VERY, VERY low CO2 emissions 119g/km which would put it in a very low banding for the percentage of list price to charge.
You would have a VERY, VERY, low company car tax charge.

The Disadvantage - you would be driving a Suzuki Alto.

MTC

Murphy_The_Cat

mj2000uk wrote:

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.

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!!

:beer:

Hi mj2000uk

your employer paying for fuel is a fantastic thing as long as you use a lot of private fuel and that the emissions on your car is low/medium - if not reconsider.

One other thing to think about is the additional "benefit in kind" that will be added to your earnings for taxation purposes.

If the car + fuel tips you into the 40% tax bracket, it may be time to look again at the benefits of free fuel.

MTC

geo555

If you know how many private miles you will be travelling a year, it may be more benificial to pay your employer for the fuel used, rther than a hefty tax charge.

Murphy_The_Cat

geo555 wrote:

If you know how many private miles you will be travelling a year, it may be more benificial to pay your employer for the fuel used, rther than a hefty tax charge.

spot on advice from geo555.

MTC

Han_naH

Alto - chuckle. The SMART is a much better looking option...

Also note that small business owners can buy a low emissions vehicle, like the SMART and treat the ENTIRE cost of the car as an expense in the year it was bought. This option is available until 2007 or something.

For an £8K SMART this will save you almost £2K in Corp tax in that year @ 23.75% marginal rate (up to 50K profits).

Normally, you can only claim 25% per year, maximum 3K, then 23.75% on this. So on an 8K car you can only claim £475, not 2K.

Long live the SMART!