Company car tax

ali_drisc0

try this site it will give you an idea on how much tax you may have to pay

https://www.comcar.co.uk

JC4LAB

Unless you are a director you may not have much say in the matter..Your employer informs the tax office of your car benefit as a year end procedure..Are there others in the company with company cars who can inform how it is in your particular firm.?.

Jockthearab

My boss mentioned today that he was thinking of "doing away" with the company car that I have! (Obviously saves him servicing, road tax, insurance etc) It's a W reg Golf & on my new tax code it is a benefit of 3183 (I therefore pay £700 tax for this as I am a 22% rate taxpayer). He mentioned that he'd look at paying an allowance instead if he did decide to do this (& could offer to sell it to me 1st at a very reasonable price!). What level of allowance should I hope to receive if I lose this benefit? Had a look at the cash or car link posted previously...by my reckoning I could afford a mountain bike on the tax 'saved' unless he offers me a generous package.

The timing of this is unfortunate as it coincides with my annual pay review. I've got a feeling he's gonna propose a wage increase of slightly more than I would be entitled to get, as the allowance for losing the company car

Any thoughts appreciated!

adjests

Whilst the car option always looks good, sometimes the cash alternative (if one is offered) sometimes works out even better. say for example take the following fact pattern
company cost £20000
company car tax 24% bracket
tax rate is 40%
business mileage reimbursed at 40p per mile for first 10000 mile
business mile 10000
cash alternative £6000
value of car after 3 years 50%
cost of borrowing 7% for a 3 year loan

cost of company car (20000*24*40) = 1920

opting out and taking the cash

cash received (6000*.59) = 3540
car loan = (7620)
say car running costs (ins, rfl, servicing etc) = (1500)
mile received = 4000
fuel cost say (1300)

adjests

oops pressed send to early
net cost per year (2880)

but after three years you still have a car worth 10000.

therefore cost of company car for 3 years = 1920 *3 =5760

taking cash alternative (10000-(2880*3) = 1360

so overall a saving about 7000 over 3 years

Murphy_The_Cat

adjests wrote:

Whilst the car option always looks good, sometimes the cash alternative (if one is offered) sometimes works out even better. say for example take the following fact pattern
company cost £20000
company car tax 24% bracket
tax rate is 40%
business mileage reimbursed at 40p per mile for first 10000 mile
business mile 10000
cash alternative £6000
value of car after 3 years 50%
cost of borrowing 7% for a 3 year loan

cost of company car (20000*24*40) = 1920

opting out and taking the cash

cash received (6000*.59) = 3540
car loan = (7620)
say car running costs (ins, rfl, servicing etc) = (1500)
mile received = 4000
fuel cost say (1300)

pmsl when i saw your figure of 1500 for running costs.
For fully comp insurance for company use (repping) you could be looking at £1500 per year, always assuming that your driving record is not to bad (and before anyone accuses me of talking pants - my experience was 1st hand. Most insurers (especially the internet shopbots) are just not set up or interested in covering for business use and need to be approached on a one by one basis to get a quote).

Try to persuade your boss that retaining your company car would be a good thing to do !!

MTC

p.s. if you visit www.confused.com and put in all of your details, it will give you a guide to how much your insurance may cost. I put in for a W reg'd Golf with a 37 year old driver doing 18000 miles a year (12000 on business) with 3 years NCB from a comapny car with £150 excess and i got figures back from £442 - £905. But be aware that when you try to take them up on the offer the prices may/will increase.

If you get the chance, please let me know how you get on.

p.p.s. also bear in mind that running costs will increase dramatically with the age/mileage of the car.

adjests

the 1500 was to represent a number of costs of running hence the stuff in brackets. however the figure is broken down as follows

insurance say 600
road fund licence 160
annual servicing 250
other maintenance eg oil, tyres etc 150
and some extra just in case 340

stripping out some of this cost actually make the cash option more beneficial.

the point I was trying to make is that in some cases, it actually doesn't make sense to take the company car option.

Murphy_The_Cat

hi adjests


please don't think i was being overly critical of your (well thought out) figures.

I recently went through the exersize for myself and the difference in insurance figures was huge. Also I wanted to point out to jockthearab that the maintainence costs or his W reg'd Golf (especially if it is high mileage) are likely to be considerable.

MTC

p.s don't forget breakdown recovery costs as well

adjests

MTC

I didn't take the post as being critical at all. valid point about the insurance and i suppose dont underestimate the dealer servicing and repair costs when something goes wrong. Having said that, one of the benefits of having a copmpany car is there is no hassle - its taxed, insured, repaired and you dont have to look after it.

The point i was trying to make is that when one gets offered a company car, it is too easy to look at just the car tax and think that youre getting a very nice car for little cost in comparison. the other point i was trying to make is don't just look at it over one year, think about what it costs over say three or six years. using my example above the savings taking the cash would be 7000 for the first three years and then for the following three years theres no car to pay so the saving is greater.

whilst i'm here - a couple of other points the 40p mileage is tax free, and if your company don't pay the full 40p you can claim the difference on your tax return.

Jockthearab

Cheers for the above info! I had started thinking about the costs of 'running my own car' which I haven't had to do now for 9 years. Spoiled or what?! I am a Restaurant Manager for a franchise of a "Scottish named" Quick Service Restaurant so I have very little business mileage. I couldn't see my boss paying me 40p per mile anyway (I'm sure company owned Mgrs get approx 15p per mile) so it would be nice to claim the difference on my tax return. I also did some research at work today & again discovered 'Company owned restaurants' are offered a cash altenative of £3600 per year...Hmmm enough to get a Clio/Mini/Basic Golf on a leasing scheme

As I mentioned, my personal pay review is due along with the National Review the parent company are implementing. I'd 'expected' 3% & 3% which is approx £1500. I therefore cannot see him offering me £1500 AND £3600...if he does, I'll bite his hand off, either buy the Golf from him (at a reasonable price I'd hope (it's only done 32k!)) or get myself a nice 2nd hand BMW & get it repaired at my local garage!

On a different note, will my 'no claims' from driving this company car, be taken into account if I go for private insurance? I hope so, as I've no claims for over 4 years now!

Thanks again,

JtA