Car allowance

timbotambo

Don't forget if you take an allowance you can claim the Mileage Allowance Relief. So the Government rate being 45ppm (varies depending on what car your drive) you can claim the difference between what your company pays and the Gov pays, but only the taxable element. i.e. If your company pays 15ppm and you are a 20% rate tax payer then you claim back 20% of 30p for every business mile you do - so an extra 6p.

miraclebuyer

A this thread is close to the issues I am having, I am wondering if anyone can also help me?
I have bought a 1997 mercedes GL 4.0l whose second hand current value is £20,000 (was £24,500 when bought last year). I do 20,000 miles per year and this car is doing 23/gal deisel
I am this year, self employed from 1st April.
Can anyone guide me how I calculate the difference to make an informed-judgement on recovering .45/m for 5000miles then the lower rate for 15000 remaining miles VS making this a company car and being liable for tax? I do very few private miles (1000-2000pa) as I have another car (mini) which I dont want to use for business travel. My workbase is home and I travel to client locations - I have had three clients so far since April and project 5 clients per year.
I project annual depreciation of £5000 pa. My tax code is 944L.
Any help to understand the calculations would really be appreciated. Thank you.

AdrianC

miraclebuyer wrote: »

Can anyone guide me how I calculate the difference to make an informed-judgement on recovering .45/m for 5000miles then the lower rate for 15000 remaining miles VS making this a company car and being liable for tax?

Co.Car tax is based on the original list price - which, for that, will be hair-raising... £60k or so, depending on how badly the original purchaser hammered the options list. With it being in the 35% BiK band - that, alone, is almost certain to make taking the mileage money worthwhile.

miraclebuyer

Thank you for taking time on a Sunday, to reply to my thread.

I still wondered how the calculation would work, so I can know for the future - but for the record, it was £70,455 basic with £6750 extra's.

I was hoping that it being second-hand, I could have used my purchase price as the value?

I am toying with a 3rd car being all-electric i3 @ £25,680 (inlusive of £5,000 government electric car grant). So I'd be pleased if you can help me calculate this using the same formula??

I used What-car guide and it struggles:

And I do appreciate your help - whomever you are?

AdrianC

miraclebuyer wrote: »

I still wondered how the calculation would work, so I can know for the future - but for the record, it was £70,455 basic with £6750 extra's.

<wince> And you pay your tax rate on 35% of that... So somewhere north of £10k of tax, assuming 40%.

I was hoping that it being second-hand, I could have used my purchase price as the value?

No such luck! Even if you bought it new, but at a discount from list, it's based on %age of list...

I am toying with a 3rd car being all-electric i3 @ £25,680 (inlusive of £5,000 government electric car grant). So I'd be pleased if you can help me calculate this using the same formula??

Horse's mouth...

http://www.hmrc.gov.uk/calcs/cars.htm

Not sure whether the co.car tax takes account of the Gov't £5k rebate or not - your accountant should know, or the BMW dealer.

miraclebuyer

A really good set of answers - and sorry I made you wince - but I really was trying to understand.

: - )

Thank you

AdrianC

miraclebuyer wrote: »

and sorry I made you wince

No, it was the guy who set Merc's pricelist that did that...

Seventy seven and a half grand list...
Nearly £50k of depreciation in six years...

Zero_Gravitas

AdrianC wrote: »

No, it was the guy who set Merc's pricelist that did that...

Seventy seven and a half grand list...
Nearly £50k of depreciation in six years...

If it's a 97 car then that would be 16 years... However, that's still a lot of depreciation...

Best Regards,

ZG.

SLITHER99

Thanks for all the great answers. What swung it for me was the fact the full amount will show on my credit report. That was a full deal breaker.

I just picked up a 2000 Ford Fiesta 1.25 with a years MOT for £430 and intend to use that. It's not as comfortable or fashionable as my old Mercedes A Class but I just drove it home from Yorkshire to London and got 34mpg out of it! Plus it has air con and an MP3 head unit.

If it breaks, I've lost nothing but the difference to scrap value.

AdrianC

Zero_Gravitas wrote: »

If it's a 97 car then that would be 16 years...

They didn't launch the GL until 2006, so it's clearly a typo.