Company Car or keep old one

rjenk74

Hello all,

This is just a sanity check of my maths and thoughts on getting a company car as opposed to keeping the cash (I get a car allowance) and running my own car.

The company car option uses a leasing company so we get to chose loads of different makes and models, for a really good rate, and the monthly fee comes out of my wage before tax, with car tax based on emissions/value adding on after. Therefore a low powered diesel will be a lot cheaper than a regular powered Petrol. Luckily, it’s for the wife to use and she is not bothered about any power at all J

The wife currently has a Honda Civic Imagine 03 plate, which is in good condition with 58000 miles on the clock, but really likes the look and feel of the Skoda Fabia Estate (test driven). Over 4 years I worked the details are as follows:

Skoda Fabia top of range (air con, parking sensors etc) =
£175 per month (net reduction in salary after all tax taken off and added back on!)
This includes everything, I.e., insurance (inc 4 named drivers), tax, servicing, breakdown etc. We have a specific helpdesk at work and they basically sort everything out, even if I scratch the car, they sort it and I get a courtesy car in the meantime.

Honda Civic (based on last two years owned it) with a current value of = £3000-3200
Depreciation = £500 p/y
Tax = £150 p/y
Insurance = £250 p/y
Mot/Service = £350 (though had tyres done last year and air con year before)
Breakdown = £36
Total = 1286 = £107 per month

Now of course the cost of the wife’s car could be cheaper (if nothing needs doing) and maybe more (if something major needs doing)

So by my reckoning, it’s about £70 per month to have a brand new car with no hassles, or have I missed something in my maths. If not does this seem like a good deal?

Thanks for your time
Rich

AdrianHi

I do this excercise quite frequently for a number of cars.
What about the difference in fuel costs?
Probably wouldn't change the end result much especially for a low annual maileage.

Anyway, I think your figures are "sane" .
If £70 a month is worth it to you to have the newer car go for it.

rjenk74

Thanks for the reply, glad my maths isn't too bad :-)

And yeah the funny thing is i forgot about the fuel, but doing about 10000 miles a year, i just stuck the fuel prices and average mpg into a calculater and worked out it will save me about £35 per month.

So that now means the gap is down to about £35 for the newer, less hassle car, which does seem rather attractive to me :-)

thanks again

ukjoel

Only things I would add is an increase in breakdown as the leased alternative will include courtesy car while yours is off the road. Your £36 probably is a lower level package.

I would also add more to maintaince. Appreciate the car has been good so far but its now 6 or 7 years old and things like clutches can start going. I think your lookink at £400-£500 for an aftermarket warranty on the Honda to do a comparison with the Skoda warranty on the new car.

Both the above put more weight behind your decision to go for the lease car.

One last piece of advice - Stick the money you get from selling your car in a savings account and add £50-£100 a month to the fund. That way if the job falls to pieces you can still go and buy a decent motor to replace the company car.

rjenk74

thanks ukjoel great points there too!

me thinks its time to let the misses choose a colour :-)

regards

bap98189

Am I missing something. It's a company car, which is provided for the employee, not for your wife. Whilst your wife may be insured to drive it, I would be surprised if your employer were to permit your wife to run about in it whilst you are at work.

mackemdave

Are there no tax (PAYE) implications with regards to this....Who will pay for the fuel you or the company?

I had a company car for a good few years with a number of companies and it is what it says it is a COMPANY car....Id be very suprised if the company would be agreeable to it not being available during business hours....The majority of my colleagues dropped out of the scheme and took the money as the tax implications of having a car made it benefical for them to run their own non company car...Give your tax office a ring prior to making your decision

rjenk74

Hi Mackemdave,

Its not a company car in the old fashioned sense, its a leaseing company that provide the car to employees which our company deals with and so long as you are a certain grade within the company, you get an allowance and can use them if you wish.

The company and lease people have no issue with my wife been the main driver if is so wish, its sort of like a perk to me. And yes there are tax implications, i pay tax as a % against the P11D value of the car, not too much as a low powered deisal!

regards
Rich

vikingaero

bap98189 wrote: »

Am I missing something. It's a company car, which is provided for the employee, not for your wife. Whilst your wife may be insured to drive it, I would be surprised if your employer were to permit your wife to run about in it whilst you are at work.

Most companies I know allow spouses to drive their company cars as the main driver and the husband commutes by train.

In fact my company car is given to my father (with permission from the firm) as I work from home 4 days a week and rarely use it.