Thinking of opting out of company car scheme.

anotherbigspender

I know, sorry, another thread looking for some advice about opting out of my company car scheme. I have read a fair few though, promise

I currently drive a 2007 Volvo S40 1.6 S which I picked from a limited list of similar cars (it was the best of a bad bunch IMO). Its comfy and got a decent amount of kit for a base model but it hardly sets your heart on fire when you look at it and, most importantly, it drinks petrol like a beast. It costs me £60 to do 350 miles. I also feel like I am getting hammered by HMRC - my company car tax and benefit in kind tax comes to circa £3,200 pa. Ouch.

My car is 3 years old and I can give it back now if I want to leave the scheme, or hold on to it for another 6 months if I want to stay in the scheme and get a new car. The lack of 'decent' cars on the list and the tax situation has made me think about opting out.

Am I right in thinking that if I opt out I will stop having the £3k+ extra tax taken off my salary?

My company will give me £3k a year if I opt out of the scheme which is paid on top of my monthly salary. After PAYE tax, its roughly £200 per month. Peanuts really. However, if I am happy for my 'disposable' income to stay the same I could add the £3,200 tax that I won't be paying into this, couldn't I?

This would mean I could have between £450 - £480 per month to run a car. Yes?

If I were to opt out I'd probably lease my own car, something around £320 to leave me enough to insure and maintain it. Browsing through Ling's site this would give me quite a few options - most of which are better than my current car, less thirsty at the pump and a bit more exciting than a 1.6 S40!

I suppose, firstly, I want to know that my assumptions above are correct and, on the basis I've not missed anything crucial where, other than Ling, should I be looking for leasing deals? I'm not fixed on any one car and am happy to pick the deal and not the car, assuming the car ticks a few basic boxes in terms of size, etc.

Cheers

Hammyman

anotherbigspender wrote: »

If I were to opt out I'd probably lease my own car, something around £320 to leave me enough to insure and maintain it. Browsing through Ling's site this would give me quite a few options - most of which are better than my current car, less thirsty at the pump and a bit more exciting than a 1.6 S40!

I suppose, firstly, I want to know that my assumptions above are correct and, on the basis I've not missed anything crucial where, other than Ling, should I be looking for leasing deals? I'm not fixed on any one car and am happy to pick the deal and not the car, assuming the car ticks a few basic boxes in terms of size, etc.

Cheers

Doesn't the £320 lease include repairs?
£130 a month to insure and repair the car? Servicing is £12-£20 a month. Tyres around £10 a month. MOT £4 a month...its all eating into that £130. Insurance could be anywhere from £20-£100 or more a month depending on your history, age, NCB etc.

And if it needs a major repair?

emmell

Why can't you pick a company car with lower emissions thus lowering your tax bill, and do you use your car for company business because the insurance may be pretty high if it's for business use.
My husband has had a company car for nearly 30 years (not the same one), he's obviously looked into different schemes but has always stuck to the company car option. Cars are a very expensive commodity especially when you factor in maintenance and depreciation. How many miles a year do you do?
My husband has cut his tax bill down by picking a car with a low % emissions, have you looked on your list for efficient models, most manufacturers do a version now including volvo.
ML.

Kilty_2

Surely your company car list has it's fair share of diesels - get one :rotfl:

JQ.

To me it makes no sense to opt out of a company scheme and just go and lease a similar brand new car - you're just transfering all the risks to yourself for no actual benefit. It you're going to opt out then buy a much cheaper secondhand car and make some cash. Or buy a sports car, or a 4x4, which aren't available as company cars.

Hintza

Reading between the lines this has only to do with one thing, the OP doesn't want to drive a dull company car the rest is all flannel for the OP to be able to justify the decision they have already mentally made.

More pertinent is how many miles you will need to drive per annum for business and can you afford that. Leaseing cars is fine (but a lot more expensive than a year or two ago) but high mileage charges is the real killer.

OP if you can afford it and want a nicer car go and do it, if the costs are a worry then sit down and work it out accurately.

Bean_Counter

Depending on the mileage and the split between business and private, the OP should also do the maths as to whether it is better to pay for his own private mileage and avoid that fuel benefit in kind charge. The charge has steadily increased and as the OP seems to be a higher rate tax payer, then there is a good chance that he will be better off. This is something I did for our drivers and it turned into a win win a the company and the individual were better off.

thescouselander

Hammyman wrote: »

Doesn't the £320 lease include repairs?
£130 a month to insure and repair the car? Servicing is £12-£20 a month. Tyres around £10 a month. MOT £4 a month...its all eating into that £130. Insurance could be anywhere from £20-£100 or more a month depending on your history, age, NCB etc.

And if it needs a major repair?

It would be a new car so no MOT, servicing may be included depending on the deal and the car would be under warranty so no repair bills. So after the lease cost its just petrol, insurance, tax and tyres to pay for.


I'd say to the OP - opt out if you're not happy. What's the point in paying all that extra tax to drive a car you don't like?

maninthestreet

So what other cars are on the company car list?

anotherbigspender

Thanks for all the responses so far.

Hintza wrote: »

Reading between the lines this has only to do with one thing, the OP doesn't want to drive a dull company car the rest is all flannel for the OP to be able to justify the decision they have already mentally made.

I really haven't made up my mind. At the moment what is driving this line of thought is that I think I could do better (i.e. drive a better car or reduce my monthly costs) by opting out of the company car scheme. This is largely based on the assumptions I made in the first post and my limited research of personal lease prices.

My primary objectives are:

1. Reduce my fuel costs - I could opt for a diesel company car.
2. If I am going to be paying £3,200 to the tax man for my current car I'd rather find a more tax efficient company car, or get out of the scheme and either save some of that money or make it work in my favour by getting a nicer car on a personal lease.

All things being equal I think I could run a nicer car than a Volvo S40 for circa £6k net a year which (without fuel) is what its currently 'costing me' (in tax and in lieu of a payment from my company)

anotherbigspender

maninthestreet wrote: »

So what other cars are on the company car list?

This is one of the problems, its almost impossible to find out until its time to change the car.

When I picked the Volvo I was told that the list was based on cars with a list price (yes, list price, not monthly lease cost) of around £14k. This is what I really struggle with because I was asking to go 'off list' for cars which I found to have a similar monthly leasing cost (and were in my view better cars) only to be told that the list price was £5k+ over budget and I couldn't have it

My company runs both Leaseplan and Arval vehicles.