Cost of a company car

gifster83

Hi,

I should be due a pay rise in December and I have discussed with the option of a company car as I thought it may be more tax efficient for both the company and myself. I thought this as I would save on what I pay for car insurance, tax, MOT and maintenance now and have a nice shiny car not a 12 year old box. For the business I thought it would be cheaper as a contract hire car can be offset against the corporation tax and the VAT can be reclaimed, meaning minimal costs for the car and then just car insurance and maintenance contracts that need covering.

But our book keeper said that it will be very tax inefficient! She hasn't really explained why, so if someone could enlighten me.

The cars I have looked at are all below 160g/km.

So if anyone can give me an idea what a company car would cost the company per year (Hyundai ix35 2.0 CRDi Premium would be a great example)

Thanks in advance

Savvy_Sue

I know very little about this, but it may be tax inefficient for you: I know many people gave up their company cars when the rules changed a few years ago because they were out of pocket.

Maybeanotherday

I had a company car, kept it for a year then gave it up as it worked out cheaper to have a newer car on finance plus I got to keep it!! I would think very carefully if I were you!

gifster83

The cars I am looking at are quite cheap (green) on the company car tax front (£50 - £60 a month) which is half the price of my insurance on my current 12 year old car and also much better mpg (50-60 mpg compared to current 35 mpg) so for me personally it works out better, my concern is more if it tax efficient for the company...

Trice

Hello

I have a similar issue, I am getting a copany car but I am stuggling to calculate the Tax cost. THe HMRC website give me a benefit car charge and then examples of car tax liability at 20% and 40%. I am wondering how do I calculate the tax I will have to pay from all those numbers? This is very confusing.

Thank you,

B!a

gifster83

If you go on http://www.comcar.co.uk/ and http://www.parkers.co.uk/cars/reviews/ this explains a lot as far as you the employee goes, but not much from the employers pov...

chelle230

I'm not sure how it works, but my husband can have a company car, but he has chosen to buy his own, actually works out cheaper for him. he gets a set amount taken from his wages per month to cover the car and insurances, but has to buy his own fuel. he's done all his calculations and said it's much cheaper to buy and run his own

gifster83

chelle230 wrote: »

I'm not sure how it works, but my husband can have a company car, but he has chosen to buy his own, actually works out cheaper for him. he gets a set amount taken from his wages per month to cover the car and insurances, but has to buy his own fuel. he's done all his calculations and said it's much cheaper to buy and run his own

Does the money come out before or after tax and NI???

Duncombe

gifster83 wrote: »

The cars I am looking at are quite cheap (green) on the company car tax front (£50 - £60 a month)

My car tax is £30...A YEAR.

gifster83

Duncombe wrote: »

My car tax is £30...A YEAR.

I need a family car with a large boot, so hence the higher company car tax, but still cheaper than insuring my current car...

chelle230

gifster83 wrote: »

Does the money come out before or after tax and NI???

I'm really not sure tbh, he's not here to ask atm either