Business Use Car

amf

You also need to consider car fuel benefit http://www.hmrc.gov.uk/employers/ebik/ebik2/car-fuel.htm

If your employer supplies any fuel for the car this applies automatically unless you can prove by means of paper records that either;-

1. The employer provides fuel for business mileage only.

or

2. You have reimbursed in full the cost of all fuel used for private travel (this includes home to/from normal workplace)

One way of proving the above is the use of approved mileage rates http://www.hmrc.gov.uk/employers/ebik/ebik2/car-fuel.htm Note that detailed business and total mileage records will need to be kept.

basill

If you find the car is a taxable benefit make sure your tax code is changed as soon as possible.

Its worth ringing your tax office to get this done as companies usually only update the revenue once per year at P11 time. If you miss this or they overlook it you may end up with a free year or more. This is of course fine untill you get a giant tax bill and/or a rubbish tax code until you have paid it all back.

B

( got a big tax bill!)

amc1

Thx for all your replies.

What I'm trying to work out is whether it's worth me accepting this offer or will I actually be worse off.

Lets assume that the business use car will cost me £90 a month tax, that's £1080 a year. That's all in (insurance, tax, service, mot, breakdown) except petrol. I would be able to sell my private car and earn a couple of hundred quid a year saving interest.

Using my current private car, I reckon the above bits would cost around £800.

So is it worth it or am I missing something ?

JasonLVC

You're not missing anything, as per my ealier posts, you need to do the maths and see what is best. All those people jealous of those with company cars don't realise that there are big tax deductions and so are not quite the 'freebie' they think it is.

Look, £90 a month tax (£1,080) per annum company car as against £800 private car. You also need to factor in wear and tear and mileage. Whilst your car will be cheaper on your pay packet by £200 per year (£1,080 less £800) the extra mileage will mean your car has a higher depreciation value over a shorter period of time, plus you'll need tyres, more oil, more servicing (most cars are every 10k miles, so if you do a lot more miles now you'll be doing more services, more tyres, etc). You'll need to buy a new car at some point in the future and if you've devalued your car as a result of your work then you'll need a bigger despoit to buy a new one.

If you've got an old rust bucket then keep the car but if you've got a newish car of any value it will be worth much less three years from now. In that case, get the company car and let the leaser worry about the depreciation, repairs, tyres, etc.

But still depends upon your current car (ie, if you have a Golf GTi, the trade down may kill you!), your intended mileage (20k per annum will dent your cars worth over three years) as to what to do but think a little longer term rather than just the excitement of being offered a pay rise and car.

amc1

Would someone please confirm that my take-home pay would be reduced by approx. £80 - £90 for the following car :-

Vauxhall Astra 1.7 CDTi LIFE 5 Door Manual (list price £ 14,587.00)

I'm pretty sure the CO2 emissions are 18% and I am a 40% taxpayer.

Thanks a lot.

JasonLVC

Annual tax will be £1,093 until 2008/09 (pending any changes in law).

That equates to £91.00 per month tax. It is 18% co2 with a value of £15,330

May I suggest you (and anyone else interested in car tax) visit this website if you want to double check and/or find out what you're potential car is worth :-

http://www.comcar.co.uk/newcar/companycar/taxcalc/g1select.cfm

Hope that helps folks!.

amc1

JasonLVC wrote:

Annual tax will be £1,093 until 2008/09 (pending any changes in law).

That equates to £91.00 per month tax. It is 18% co2 with a value of £15,330

May I suggest you (and anyone else interested in car tax) visit this website if you want to double check and/or find out what you're potential car is worth :-

http://www.comcar.co.uk/newcar/companycar/taxcalc/g1select.cfm

Hope that helps folks!.

Thanks Jason. Just to confirm - I would actually see my monthly net pay reduce by approx £91.

JasonLVC

No worries, you've got to get the decision right.

You will receive approx £91 less in your pay packet. This will be done via a reduced tax code (ie, if you're on 474L now, you'll see it go down to 374L or something similar) meaning that you will not see a deduction for company car on your payslip, merely your tax allowance reduced and £91 more tax paid than someone on the same pay as you but without a car.

You may wish to inform your local tax office that you'll be getting a car so that they can adjust your code now, otherwise they'll wait for your employers P11D form which may not be submitted until June/July time and then the taxman will reduce your taxcode even more as they'll want the same amount of tax (£1,093) but still within the 12 months so if you don't tell them until say October, they'll want the full amount between November and March's pay (5 months = £218 per month) - so tell them (call or write) sooner than later.

jennifernil

Does your company not offer the alternative of cash in lieu of company car?
The cash is taxable, and you pay your own costs, but it lets you stay in charge of your choice of car.

amc1

one scheme does but unfortunately they have not offered me the choice of that scheme - just the one described above.