"Company cars for Dummies!" help needed

georgiac

Hi all, I am going to sound incredibly naive and stooopid but I have no idea where else to ask for help.

Having worked for the same company for 20+ years and claiming about 750 business mileage a month in my own car, they have decided to give us company cars.

At the moment I drive a decent car which I will have to sell.

They won't be new cars and they won't be the low emission ones but former rep. cars that are now redundant ( both the cars and the reps unfortunately.)

I have absolutely no idea how company cars schemes operate with regards to who pays what and how much it will cost me.

I don't know who pays for the petrol / insurance / road tax / upkeep etc and what I have to contribute and how much I will be charged for personal journeys.

I unofficially work from home but my office is 15 miles away - although I rarely go into the office there is talk that the company will charge me 150 miles a week for the journey to and from the office despite the fact I won't actually be doing it. Is that likely to be correct?

Any advice would be very gratefully received as I am becoming increasingly concerned at the prospect.

Many thanks

Caz3121

georgiac wrote: »

Hi all, I am going to sound incredibly naive and stooopid but I have no idea where else to ask for help.

Having worked for the same company for 20+ years and claiming about 750 business mileage a month in my own car, they have decided to give us company cars.

At the moment I drive a decent car which I will have to sell.

They won't be new cars and they won't be the low emission ones but former rep. cars that are now redundant ( both the cars and the reps unfortunately.)

I have absolutely no idea how company cars schemes operate with regards to who pays what and how much it will cost me.

I don't know who pays for the petrol / insurance / road tax / upkeep etc and what I have to contribute and how much I will be charged for personal journeys.

I unofficially work from home but my office is 15 miles away - although I rarely go into the office there is talk that the company will charge me 150 miles a week for the journey to and from the office despite the fact I won't actually be doing it. Is that likely to be correct?

Any advice would be very gratefully received as I am becoming increasingly concerned at the prospect.

Many thanks

I can tell you how it works for my situation

I have a company car and no fuel card
Insurance / Maintenance / Road tax are all sorted by the company (I receive tax disk through the post and if I need new tyres etc I just take the car in to an agreed place and they replace)

The company pays a set figure per business mile (which is lower than to someone using their own car)

The value of the car and the emissions level dictate the BIK value which in turn reduces your tax code so you will be walking out with less money each month

The journey from home to the office is not one that mileage would be paid for (HMRC rules) if your company were to pay you mileage for this journey then this would be a BIK and you would need to pay tax, likewise if you were visiting a location that is further away than your office they would deduct the usual commute and you would be paid the excess miles.
eg business journey from home = 50 miles
office distance 15 miles meaning you would be paid for 35 miles (I am assuming that is what they mean by deducting the 150 miles per week)

georgiac

Thanks for the detailed reply Caz, until I have some meat on the bones with regards the figures and the BIK etc I won't know how much worse off I am each year.

It still seems unfair that I will have to pay tax on a commute that I won't be making - for example if I do a call near where I live will I have to pay tax for a fictitious commute and then claim mileage from the office and back?

Sally22_2

Mine works exactly the same as Caz (do we work for the same company I wonder?!)

Do you HAVE to take their company car? I had the option of using my own car or getting a company one. I have got a brand new car though and when it is 3 years old I can either buy it from the lease company, or hand it back and get another brand new car.

As said above, Servicing, Insurance is all covered. I never have to pay a penny, its all dealt with the lease company directly and I can use the car for private use as well, I also have my partner on the insurance policy so he can drive it too. I pay £60pm out of my salary but my tax code is affected so in total It costs around 100pm. The only thing I pay is for Diesel.

I work from home (dont have a fixed office address) so I can claim all work mileage I do and dont have to deduct a home to office mileage so cant help with that part Im afraid.

Bear in mind if you can refuse the company car and use your own, you need to make sure your insurance covers you for business use.

You talk about how you dont know how much worse off you will be. Its worth considering (if you can refuse the company car this is) is how much you spend per year in servicng/tax/fuel/insurance/possible repairs etc etc. Some of my colleagues use their own personal car and actually make money back as their car is very cheap to run, but then if they have an accident or need new tyres etc, they have to pay for that themselves so its swings and roundabouts really.

Just to also add, my partner has had a company van before and he had a fuel card. In this case he was not allowed to use the van for private use unless he got prior permission from the company for each journey. You also dont pay for fuel, you take the fuel card into the garage and they ask for your vehicle reg and current mileage everytime. This didnt affect his tax code, He didnt get all the papers from HMRC like I have got for mine.

Hope this helps

Aquamania

georgiac wrote: »

Hi all, I am going to sound incredibly naive and stooopid but I have no idea where else to ask for help.

Having worked for the same company for 20+ years and claiming about 750 business mileage a month in my own car, they have decided to give us company cars.

At the moment I drive a decent car which I will have to sell.

They won't be new cars and they won't be the low emission ones but former rep. cars that are now redundant ( both the cars and the reps unfortunately.)

I have absolutely no idea how company cars schemes operate with regards to who pays what and how much it will cost me.

I don't know who pays for the petrol / insurance / road tax / upkeep etc and what I have to contribute and how much I will be charged for personal journeys.

I unofficially work from home but my office is 15 miles away - although I rarely go into the office there is talk that the company will charge me 150 miles a week for the journey to and from the office despite the fact I won't actually be doing it. Is that likely to be correct?

Any advice would be very gratefully received as I am becoming increasingly concerned at the prospect.

Many thanks

It's not just you that doesn't know how your employer operates their scheme.
I don't and nor does anyone else here.

Ask your employer - only they will be able to tell you their policy.

Then ask HMRC (or possibly here) what the tax effect on you will be, if your employer won't explain that bit to you.

You might find yourself better off continuing to own your own car, especially if your employer would give you the option of an additional payment ilo a company car. (Some will, some won't)

If you work from home, how come you are claiming 750 miles per month in expenses?
If the employer no longer wished to pay you mileage expenses for use of your own car on company business (not including commuting), and you don't wish to accept a company car but the employer expects you to travel on business, then ask for the use of a pool car for such business trips

Kei

Hi Georgiac,

I am an HR manager and also have a company car, so know a fair bit about how these things work!

You need several details to work out how much the car is going to cost you in tax (as if you have it for personal use it will be a taxable benefit), such as the make, model, list price, co2 emissions etc. See this link http://cccfcalculator.hmrc.gov.uk/CCF0.aspx and ask your employer for all the details.

Regarding fuel, it can work in 2 ways.
1. your employer gives you a fuel card which you pay for all (company and private fuel on), then each week/month you work out how many personal miles you have done and your employer will advise you how you pay this back (for me, directly out of my monthly salary). HRRC requires you to keep records of business miles, so your company should already have a process for this.

2. You pay for all fuel, keep receipts and expense only the business miles, company pays you back for these at agreed rate.

I do option 1 which on the face of it appears easier and better for me to manage financially, but your company will be able to provide you details of how yours has to be done.


You say that your company will take 150 miles a week for your commute to the office regardless? This seems unfair and likely to be incorrect. As the office is your 'base' then travel to the office would be commuter miles and therefore would come out of your personal mileage, but only if you have made the journey. If you work from home one day with no travel, the company should not be taking the miles from you! As another person pointed out, depending on the company policy they may deduct the 15 mile commute from other business journeys not to the office base. It depends on your employment contract and your company policy - request a copy of each and keep for your records so you know where you stand.

Plus - your company cannot estimate or determine miles in advance. You have to record the actual miles traveled (what if you have to take a long diversion one day?). Almost all journeys I travel, the miles on google maps are different to the miles my car records.

I hope this helps. Personally I love having a company car, for me it is less hassle and as every month I am taxed the same amount, the cost is consistent (no more surprise MOT or servicing bills!) Also you may get AA cover paid for by the company, and have the option to add one named person to the company insurance. Again, check your company policy.

Hope this is useful!

georgiac

Kei, that is an incredibly helpful and insightful post for which I am incredible grateful.

It has opened my eyes to the situation and I will have a list of questions prepared for when the time comes.

Many thanks