Company car question...

verbyl.belch

Hello all

I've been offered a job that comes with either a company car or cash option.

I've never had a company car and therefore oblivious to the costs involved. I've read that I will have to pay company car tax, is there anything else?

To give you an idea, I've been told im entitled to a VW Golf - what would my monthly expenditure likely to be? (piece of string comes to mind, but any ballpark figures would be good)

Want to get an idea if the cash option is a better choice or not...

Gertie_Walker

This link shows how company car tax is worked out - as you will see you need the list price of the car to proceed:http://www.hmrc.gov.uk/paye/exb/a-z/c/cars-value.htm

Your tax liability on this sum will be either 20% or 40% depending on your highest marginal rate.
Against this liability you need to wiegh up the cost of you actually providing a car - loss of capital, loan interest, tax, insurance, repairs, etc.

verbyl.belch

Gertie_Walker wrote: »

This link shows how company car tax is worked out - as you will see you need the list price of the car to proceed:http://www.hmrc.gov.uk/paye/exb/a-z/c/cars-value.htm

Your tax liability on this sum will be either 20% or 40% depending on your highest marginal rate.
Against this liability you need to wiegh up the cost of you actually providing a car - loss of capital, loan interest, tax, insurance, repairs, etc.

Thanks for your reply.
OK - So are the only costs with a company car (excl. fuel) the company car tax? Are things like roadtax, insurance and servicing costs?

Or are these factored into the company car tax value to reflect the "benefit in kind"?

Cheers

bap98189

You should check whether or not the cash option is just cash or a vehicle allowance. It's not normal for you just to be given more money in place of a company car as presumably the car is required to do the job. You may find your employer expects you to buy a car of the same standard (ie new) with the money, not just pocket it and run around in a banger.

bap98189

verbyl.belch wrote: »

Thanks for your reply.
OK - So are the only costs with a company car (excl. fuel) the company car tax? Are things like roadtax, insurance and servicing costs?

Or are these factored into the company car tax value to reflect the "benefit in kind"?

Cheers

Company cars are usually leased so all tax, and servicing is paid for by the leasing company and insurance if paid by the employer. If your employer actually buys their vehicles, then they would pay all associated costs such as servicing, insurance, tax etc. You will not normally pay for any of this, although if you want your OH to be insured they may ask you to pay for this.

The costs to you are in tax as it is a taxable benefit. You will have to pay a percentage of the full price of the car + any extras (stereo, satnav etc.).

There may also be costs if your employer asks you to pay a contribution for private use of the vehicle or if they provide you with fuel for private use, in which case that too is taxable.

We can't tell you how much that will be as it depends on the agreement with your employer, and on the make/model of the car, but if you have all the information, you should be able to work it out using the HMRC calculator.

maninthestreet

How much is the cash option?

sweetilemon

The tax is a lot more i think. It depends on your work but i get 40p per mile back because i use my own car if i was to take the company car i would only get 10p back per mile.

caz2703

Tis a while since I've had a company car but I did have the option of extra money in my salary of the company car and no stipulation as to what I had to drive. Most of us opted for the company car as the cars were changed every 2 years and apart from benefit in kind there were no associated costs other than fuel. Got a puncture - repaired for free; someone drove into your car - here's a hire car and we'll fix your car for free; put the wrong fuel in the car - well there's a limit so I'm afraid the guy who did that had to pay himself!

It depends on your personal preference. I took the car as my own personal car was too identifiable given where I was going to work. The disadvantage was then trying to get a new personal car when I resigned as some insurance companies can be funny about no claims bonus on company insurance.

verbyl.belch

Hi all.

Thanks for your replies.

bap98189 wrote: »

You should check whether or not the cash option is just cash or a vehicle allowance. It's not normal for you just to be given more money in place of a company car as presumably the car is required to do the job. You may find your employer expects you to buy a car of the same standard (ie new) with the money, not just pocket it and run around in a banger.

Yes, you are correct. It is a car allowance enabling me to buy my own car with several caveats; eg, no more than 5 yrs old, must be 5 door.

maninthestreet wrote: »

How much is the cash option?

As above, its an allowance that works out at £450 per month.

I've calculated the car tax on the car they are offering me as:

£85 (with fuel benefit included) or
£45 (without fuel benefit)

Is the fuel benefit akin to me using a company fuel card for both my personal and business miles?

Thanks