Company Car moving to PCP

maisie1234

Hello, I wonder if someone could advise. I have had company cars for years and have a Merc B class (approx £23k). It is due to be given back at the end of 2011. I am fed up of paying huge amounts of tax and a couple of motor dealers have recommended a PCP to save tax etc.

I dont do huge amounts of business miles these days (approx 3,000). I am looking at a Audi A3 or possible a Honda Civic. Need 4 doors and a hatchback/estate.

Could someone tell me whether it is true regarding the PCP. Dealers have recommended a 10-15% deposit and a 3 year contract. I get a car allowance of £450 in lieu of a company car should I come out of the car scheme but this is of course taxable. I will need to fund road tax, insurance and annual servicing.

spiro

I think you will have been hit on tax for the company car because you did less that 10k business miles per year. In terms of PCP what is your total annual mileage as I believe this impacts it?
Also you need to rememeber that you will need class 2 (business) car insurance.

maisie1234

Total mileage will be 11-12,000 per year with 3,000 being business miles. I'm in the 40% tax band as well.

JQ.

spiro wrote: »

I think you will have been hit on tax for the company car because you did less that 10k business miles per year.

Wow, that form of taxation disppeared about 10 years ago. Company car tax is solely based on emmisions, the number of miles is irrelevant.

You need to work this out very carefully, as I doubt it will really save you any money. Don't calculate the cost based on your Mercedes, find out what cars are now available to you as a company car. There are some very efficient engines out there which cost very little in Company Car Tax - BMW 116d, VW Golf Bluemotion, BMW 316d.

For example a BMW 116d ES will cost circa £84 pcm in Car Tax for a 40% taxpayer. That would therefore give you £305 pcm to buy a new car and run it on a PCP (£221+£84). Say it costs £75pcm to run your new car (tax, insurance, servicing, consumables, breakdown) that leaves you £230pcm to put towards the car. And if you do put £230pcm towards the new car then you will not be saving any money, but will have the responsibility of a car and all those hastles that go with it. Plus £230pcm will get you a new Fiesta or Corsa.


The reasons for opting out are :

• Want something different, that's not on the list - Sports car, 4x4, people carrier
• Save money - however, that involves dropping your car expectations significantly - I've gone from a £35k company car to a £3k personal car and save a fortune.

So, if you're prepared to buy a 4 or 5 year old car, then there could be some money to save, but you need to work it out carefully as it may not be as much as you think. However, if you're planning to go and buy a new similar car on PCP then it's definately better to take the company car.

maisie1234

Sorry, I'm confused now. I thought running a Merc 180 B class as a 40% rate tax payer was costing me loads in tax every month. My tax allowance before I pay tax is peanuts so I have assumed that the company car is taking MOST of my tax allowance.

Are you saying that staying in the company car scheme and ordering for instance a BMW 1 series with the lowest omissions would be the way to go? One of dealers said I was probably paying about £300 per month in tax for the priviledge of having a company car.

Sorry, I knew this wasnt simple. The four different dealers I went to said that PCP was going to be cheaper than company car. Are they all fibbing....

spiro

Looks like you will find loads of info here http://www.hmrc.gov.uk/cars/ there is also a calculator here http://cccfcalculator.hmrc.gov.uk/CCF0.aspx which would allow you to compare cars.

Comment about 10k was from someone who had one but got rid of it.

JQ.

Mercedes B180 SE Auto (Petrol) £173pcm tax
Mercedes B180 CDi SE (Diesel) £140pcm tax

Yes they are costing alot, but if you have the opportunity to swap to a more efficient engined car on the company scheme you can save a fortune. Swapping from the Petrol Mercedes above to the Diesel BMW 116 would increase your net pay by £89 per month.

The best thing to do is get a copy of the magazine Whatcar and look at the back - they list the CO2 emissions of all the cars available today - the lower the percentage the better. Then just cross reference that to your company car list. Then if you want to find the actual cost for company car tax of a specific car then try http://www.comcar.co.uk/newcar/companycar/taxcalc/g1select.cfm

I guess the salesman was just trying to get a sale - although my last company car was costing me £260pcm in tax, although it did have a rather large engine, so the emmissions were pretty bad.

MX5huggy

The BMW 320d Efficient Dynamics is the only BMW below the 110 CO2 level the 1 series are all above this. I don't understand why this is significant (not a tax expert) but I know BMW designed this car especially so it would be attractive as a company car.

What Car Article

JQ.

BMW have been way ahead of the game for years. All the other manufacturers are only now starting to catch up.