We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide
Does this make sense? Non P11D car?
real1314
Posts: 4,432 Forumite
Employee is low wage, typically £2k per year (so £1600 after 20% tax).
They run their own car, costs inc fuel and depreciation approx £3.7k
Considering a <100g/km car through the company; Tax rating at 10% + 3% (Diesel).
Car Cost/List approx £11k ; would presumably get full First Year Allowance against Profits as Capital Allowance.
Employee would get car, insurance (£450), running costs (£100pa servicing) and fuel at approx £1300pa.
They would forgo their £2k wages for this. No tax liability as (£11k x 13%) + (Fuel Rate x 13%) = £3770 ; still under P11D
Director is on 40% tax.
I reckon employee has "free" car; saves them £3.7k, offset lost £1.6k wage = £2.1k saved after tax effects.
Company pays running costs of £1850 pa rather than £2k wage. Company pays £11k for car ; Based on 7 years use, the £150 pa saving equates to £1050, so the car comes down to £9950.
effective cost then is really £9950 x 60% I think?
i.e £5970.
Equates to £852pa actual cost? Ignoring the upfront cash vs yearly cost.
Does that make sense? Or does the Director lose more than £852?, and if so, how much?
They run their own car, costs inc fuel and depreciation approx £3.7k
Considering a <100g/km car through the company; Tax rating at 10% + 3% (Diesel).
Car Cost/List approx £11k ; would presumably get full First Year Allowance against Profits as Capital Allowance.
Employee would get car, insurance (£450), running costs (£100pa servicing) and fuel at approx £1300pa.
They would forgo their £2k wages for this. No tax liability as (£11k x 13%) + (Fuel Rate x 13%) = £3770 ; still under P11D
Director is on 40% tax.
I reckon employee has "free" car; saves them £3.7k, offset lost £1.6k wage = £2.1k saved after tax effects.
Company pays running costs of £1850 pa rather than £2k wage. Company pays £11k for car ; Based on 7 years use, the £150 pa saving equates to £1050, so the car comes down to £9950.
effective cost then is really £9950 x 60% I think?
i.e £5970.
Equates to £852pa actual cost? Ignoring the upfront cash vs yearly cost.
Does that make sense? Or does the Director lose more than £852?, and if so, how much?
0
Comments
-
Equates to £852pa actual cost? Ignoring the upfront cash vs yearly cost.
Does that make sense? Or does the Director lose more than £852?, and if so, how much?
Servicing seems optimistic.
Tyres, wipers, new battery, ...
Insurance, insurance excesses, what are the costs if the car is written off, ...0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 353.6K Banking & Borrowing
- 254.2K Reduce Debt & Boost Income
- 455.1K Spending & Discounts
- 246.7K Work, Benefits & Business
- 603.1K Mortgages, Homes & Bills
- 178.1K Life & Family
- 260.7K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards