What would you do - car

mety

Hi there

Can anyone give me advice about my car?

At the moment I have my own car - it's got £12145.26 left to pay on it (with over 4 years on the loan). The What Car website said a dealer might give me £11,455 for it.

I pay £300 per month on the car loan (honda finance) plus insurance at £65 plus all road tax and maintenance stuff.

I get £4500 a year car allowance from my job and can claim 13p per mile for business use but was wondering whether to get a company car in order to become debt free but I'm totally confused.

The company car would be fully insured and maintenance free and obviously save me the loan repayments every month. I'd get a fuel card for business use but would need to pay the company 11p per mile for personal use.

I'm not sure whether paying the difference between the finance amount and what they'd give me (if they even gave me anywhere near that money) would be worth it in the long run when i get the car allowance.

I've thought it over and can't seem to see the wood for the trees.

Any advice?

Thanks

Tixy

How many business miles do you do on average? and how many personal miles?

What company car would you get and how much tax would you have to pay on that?
How much tax do you pay on the £4500 allowance?

How much does your car cost in tax & maintenace over the year?

Is your car loan HP secured on the car or just a personal loan?

mety

Tixy wrote: »

How many business miles do you do on average? and how many personal miles?

What company car would you get and how much tax would you have to pay on that?
How much tax do you pay on the £4500 allowance?

How much does your car cost in tax & maintenace over the year?

Is your car loan HP secured on the car or just a personal loan?

Hi there
I rarely do many business miles, probably only 100-200 a month. It depends but really not much. I do a lot more personal miles, probably about 20 a day on average.

Company car would be a 1.6 ford fiesta - i have a 1.8 honda civic.

They said my tax code would change but I don't know how it would affect my take home pay obviously my salary will already be dropping about 375 per month cos of the car allowance being taken away. I'm not sure how much tax i pay on it though?

It's covered by warranty so I only need to pay road tax 150 a year and servicing which is about the same.

The loan is with Honda and that's who I bought it from so it's secured on the car.

Hope that helps, sorry I'm not very knowledgable with the tax stuff...

mety

Would it be an idea to try and get a cheaper car and loan from honda finance or is that more hassle than it's worth? That way I'm getting the same car allowance but shelling out less per month?

I do want to be debt free but don't want to put myself out of pocket...

Tixy

Do you know if the £375 per month is taxable or not? can you tell from your payslip?

Also are you a basic rate tax payer (20%) or higher rate (40%)?

I've tried some rough calcs assuming that the allowance is taxed and that you pay basic rate tax.

Currently
you get in allowance £375 less tax = £300
business mileage(150m) = £19.50

You pay out
£300 finance
£65 insurance
£50 other running costs (estimated)
£18 estimated petrol for business use at 150 miles
so overall it costs you £114 per month to run the car - but at the end of it you would own your car. If you don't pay tax on the car allowance then you would have an extra £75 so would cost £39 per month.

Company Car
You would pay mileage to the employer of £66 (20 x 30 x .11)
You would pay tax on the car of estimated £33 (rough calc based on car list price of just over £15k i.e basic fiesta)

Total cost £99 per month and at the end you would not own your car, plus you would also have to find the difference between what the car is worth and what you owe on it.

Both calcs exclude personal fuel cost as you would pay them whichever option you chose.

These are just rough calcs but may give you an idea (or at least give you an idea of what to considerin making your decision).

mety

Tixy wrote: »

Do you know if the £375 per month is taxable or not? can you tell from your payslip?

Also are you a basic rate tax payer (20%) or higher rate (40%)?

I've tried some rough calcs assuming that the allowance is taxed and that you pay basic rate tax.

Currently
you get in allowance £375 less tax = £300
business mileage(150m) = £19.50

You pay out
£300 finance
£65 insurance
£50 other running costs (estimated)
£18 estimated petrol for business use at 150 miles
so overall it costs you £114 per month to run the car - but at the end of it you would own your car. If you don't pay tax on the car allowance then you would have an extra £75 so would cost £39 per month.

Company Car
You would pay mileage to the employer of £66 (20 x 30 x .11)
You would pay tax on the car of estimated £33 (rough calc based on car list price of just over £15k i.e basic fiesta)

Total cost £99 per month and at the end you would not own your car, plus you would also have to find the difference between what the car is worth and what you owe on it.

Both calcs exclude personal fuel cost as you would pay them whichever option you chose.

These are just rough calcs but may give you an idea (or at least give you an idea of what to considerin making your decision).

Thanks so much for your help. I think the ECU allowance is just added on to my salary then tax comes off (lower rate).

There really isn't a lot in it is there? Although the settlement figure and what I'd get for the car are a bit further apart than I'd like.

Perhaps I'll review the situation again when these two figures are closer together then i won't have to worry about stumping up the extra cash.

Thanks again for helping me to break it down.

Happytogetdebtfree

all the best, it seems like keeping your own car is the best bet xx

ibleedred

Also, don't forget to fill this in:

http://www.hmrc.gov.uk/forms/p87.pdf

Your business mileage isn't very good at all.

Fill in the form above and you can claim the tax back on your business fuel.

The tax claimed is up to £0.40p, so you would be able to claim tax back on the difference between what your paid - £0.11p, to the £0.40p which is £0.29p per mile.

If you did the 200 miles per month, X £0.29p = £58. You get around 20% of this, so about £11.60p which over 12 months is over £100 in yor pocket.

Not a lot I know, but still, it's your money.

mety

Thanks for that, I did do that form once before and because I was doing a lot of mileage back then I claimed loads and got some money and my tax code changed. I haven't done it since because I really don't do that much mileage compared to then and thought it might alter my tax code for the worse...

immoral_angeluk

If it's hire purchase it's not your car to sell, unless you have the written permission of the lender to sell you could land yourself in lots of trouble if you sell it.

mety

immoral_angeluk wrote: »

If it's hire purchase it's not your car to sell, unless you have the written permission of the lender to sell you could land yourself in lots of trouble if you sell it.

I was going to sell it back to honda, think they'd potentially give me more than a private sale.

However, I think I could tell them i want to buy a new car which is always what they want to hear but try and get a cheaper one... Not sure how I'd wangle that one