Company Car Vs Cash in Lieu on new job.

jamieandthemagictorch

I just completed my 6 month probation, so now am in my job.

as part of the offer I have a company car Golf TDI 2.0 SE (602/1205 which car company car tax levels)

Now 1st things 1st, I understand the 22/40% tax break. however this is where it gets confusing.

I am currently paid £34000 (under the 40% marker) plus a co 6% paid into stakeholder pension & another 6% into bupa (these are on top of my salery), but I have been offered £4400 cash in lieu of a company car. Is my theory right that this would take me over the 40% tax threshold & therefore £4400 taxed at 40% ?

I currently do about 30,000 private miles a year (110mile round trip to work) in a 8 year old 140,000 mile 32mpg car (so its going to need replacing very soon anyway). & I expect to do around another 10,000miles for the company.

they say they will pay £0.13ppm for the fuel in my own car (so would need to claim the difference back).

because this cash in lieu takes me over the 40% marker, I am really confused as to how to go about calculting if this is worth while or not.

& on top of that I'm also confused as to how the BIK & P11D is worked out, as there seem to be 2 rates (as metioned above for the golf)..........so if my salery just creeps over the £34800 40% bracket, at say 34801 I will pay £1205pa for the golf. Yet if it stays at £34000 it will cost me just £602 pa


Heeeeeeelp

bookduck

Do you travel a lot in London, what type of job do you do - lots of traveling? How long do you see yourself at this company?

If you leave, get fired, made redundant you loose the car. Last time I looked at the car tax it was charged on how many business miles you do, not private miles. If you travel in London, a Honda civic, Toyota Prius, and ??? have models which are considered green and so congestion charge exempt.

I understood they add your car perk onto the top of your salery and that too will be taxed at 40% - depending on company miles. Last time I looked was a good few years ago and the amount of tax was split up into 3 different mileage bands.

Some companies give you a choice of cars and if you want a better one you have to contribute more and or it is valued more and hence pay more tax. However if you choose the basic model of say ford, you may get some money back from the hiring company and the perk is worth less, so pay less tax.

Lots of people leave the company and loose their car and company mobile phone. In many circumstances it might be good to have your own. Personally I'd take the money nearly every time rather than paying tax on something that is not yours.

If you find your old banger fuel efficient (more or less), take out RAC break down cover - it is cheaper than a new car and pocket the cash

jamieandthemagictorch

not too many miles in London, & anyway the company picks up the tab for the congestion zone.

I've already got RAC cover, but the cars blowing oil past the pistons at a rate of 2 litres every 1000 miles - so its not got long for this world.

the job & Co. seem fairly secure, & I see myself here for a while.

cazziebo

Tax is no longer based on mileage - hasn't been for some time.

Company cars are certainly not the perk they once were, however you do have to weigh up the pros and cons. I'm not an expert in the remuneration side, but there are some people here who are so hopefully they'll be along at some point.

The car allowance will take you over the 40% tax bracket so you will be taxed at the higher rate. Bear in mind that it's not just the cost of the car, if it's a company car then servicing, maintenance, tax, insurance will all be covered by the company. It's all someone else's problem. Balance that against owning and paying for something that depreciates very quickly, especially if mileage is high.

There will be better advice coming...and you might want to post over on the motoring board

Zazen999

Hi

About the 13p/mile. You don't claim the difference back, you claim the tax on the difference back.

The only thing to do in this situation is to sit down with a calculator and work out what you'd spend and get back on both options using the mileages you have mentioned.

Unless someone has a website that does this for you...