HELP PLEASE! explanation needed company car tax for dummies(me!)

chalky2011

Hi ,forgive me for being a bit dim I have been offered a new job that comes with a company car or a car allowance but I don't know which to take, I have been given conflicting advice by all and sundry but I feel the company is pushing me towards taking a company car so here are the figures:

salary £36,000

if I go for a company car the limit £17,500 with fuel card.

if I go for car allowance it will be about £4500 per year and a fuel allowance of about £4500 per year obviously I will have additional running costs and insurance on top.

the car co2 will be about 119kg.

will I be taxed on the co2 if I go for the car allowance and buy my own?

I am a real rookie at this so if any one can help in plain english please I would be most grateful as I don't want to make the wrong choice. I have been told all sorts, from you lose your full personal allowance to you get taxed twice on the company car!! I don't know if I am thick or just confused!!

thanks in advance:)

CLAPTON

what do you mean a fuel allowance of 4500? is that the benefit in kind or a mileage allowance or a fuel card or a cash allowance or what

zygurat789

The BIK on the car is 10% ie £1750 this year next year it is 14% and the year after 15%, you see the way it's going.
I presume the fuel card means that your employer will pay for your private fuel in which case the BIK is £1880 this year, and at least £2632 next year and £2820 for the year after.
If you take the car and fuel allowance you will be taxed on the £9000 as if it were salary, which it is, ie £45,000 pa. You should be able to claim, as a deductible expense before tax, your business mileage at 45p per mile for the first 10,000 miles pa and 25p per mile thereafter.
You will, of course, have to pay for the car, RFT Ins petrol and repairs.

suso

zygurat789 wrote: »

I presume the fuel card means that your employer will pay for your private fuel in which case the BIK is £1880 this year, and at least £2632 next year and £2820 for the year after.

Can you quote where you get these figures from, I can not find any source for them, but I might be looking in the wrong place.

Sambucus_Nigra

zygurat789 wrote: »

The BIK on the car is 10% ie £1750 this year next year it is 14% and the year after 15%, you see the way it's going.
I presume the fuel card means that your employer will pay for your private fuel in which case the BIK is £1880 this year, and at least £2632 next year and £2820 for the year after.
If you take the car and fuel allowance you will be taxed on the £9000 as if it were salary, which it is, ie £45,000 pa. You should be able to claim, as a deductible expense before tax, your business mileage at 45p per mile for the first 10,000 miles pa and 25p per mile thereafter.
You will, of course, have to pay for the car, RFT Ins petrol and repairs.

Both at the same time? If the company are paying for the fuel, then the OP will not have any business miles to claim back as the fuel has been paid for, surely?

chalky2011

zygurat789 wrote: »

The BIK on the car is 10% ie £1750 this year next year it is 14% and the year after 15%, you see the way it's going.
I presume the fuel card means that your employer will pay for your private fuel in which case the BIK is £1880 this year, and at least £2632 next year and £2820 for the year after.
If you take the car and fuel allowance you will be taxed on the £9000 as if it were salary, which it is, ie £45,000 pa. You should be able to claim, as a deductible expense before tax, your business mileage at 45p per mile for the first 10,000 miles pa and 25p per mile thereafter.
You will, of course, have to pay for the car, RFT Ins petrol and repairs.

I kind of thought this was the case, am I right in saying that if I go for the company car the BIK for the fuel and car will be offset against my personal allowance for the year therefore reducing it or even negating it altogether so I would be liable for tax on my full £36000 salary at 20% ? and that if I go for the allowance then I will retain my personal allowance (£6745? I think) which would be deducted from the £45000 leaving £38255, which would be taxable as £36000 at 20% and £2825 at 40% ?
Interestingly though I did not realise I would be able to claim back any business mileage, I'll need to find out more about this would I then need to keep keep records of business miles and private miles?I can feel another thread coming on!! lol.
a very big thankyou for your help in this I think I am beginning to understand a bit more about the "mysteries" of company car tax!!
hope you can answer my final questions.

chalky2011

CLAPTON wrote: »

what do you mean a fuel allowance of 4500? is that the benefit in kind or a mileage allowance or a fuel card or a cash allowance or what

it is a fuel card clapton. but I think they add £4500 to your salary so they can tax you on it!?

Sambucus_Nigra

chalky2011 wrote: »

Interestingly though I did not realise I would be able to claim back any business mileage, I'll need to find out more about this would I then need to keep keep records of business miles and private miles?I can feel another thread coming on!! lol.

If your fuel is paid for, what business mileage exactly are you claiming for?

chalky2011

Sambucus_Nigra wrote: »

If your fuel is paid for, what business mileage exactly are you claiming for?

true Sambucus hadn't thought of that.

jimmo

suso wrote: »

Can you quote where you get these figures from, I can not find any source for them, but I might be looking in the wrong place.

I put list price £17500 and CO2 emissions 119 into the HMRC calculator and came up with exactly the same figures.

jimmo

One way or another your tax affairs are going to become complicated and you have a fair bit of homework to do because you need to consider what is right for you.
In my younger days I spent a few years on the road for what was then the Inland Revenue, driving an old banger and being paid a mileage rate appropriate for a much newer car and made quite a bit of money in doing so. However when the clutch started slipping I bought a new one and fitted it the same day in order to ensure that I was back on the road the next day.
If you can get away with driving an old banger you will probably be quids in taking the car allowance and fuel allowance.
If your employer imposes conditions such as if you provide your own car it must be less than 3 years old then only you know whether you have to buy or lease and you need to consider how much that will cost you.
Then what happens if you lose your job? Will you have an outstanding loan or lease contract that you can no longer afford? Or will you suddenly find yourself car less because your former employer has taken your company car back?
I chose not to have a company car when the opportunities arose and I think I made the right choices for me. However, a friend and colleague who opted for a company car probably made the right choice for him.
Inland Revenue company cars were provided by a major leasing company and, on the one occasion that my friend’s company car broke down (on a motorway), he made one phone call and, within 25 minutes, a rep from the leasing company turned up with a replacement car allowing my friend to continue on his business journey.
Not having a company car worked for me. Having a company car worked for my friend. However, despite us both working for what is now HMRC, tax was not a consideration in reaching our respective decisions.