Voluntary Termination of VW Finance - HELP!?

Ectophile

dominicruk wrote: »

They already have a 65 plate Audi A3 Sport available for me which I can have next week. That will be costing roughly £110 a month out of my tax. The option I have is to continue to pay for the VW finance for 8 months though and then try and sell privately.

Until you have paid the entire PCP contract, including the balloon payment at the end, the car isn't yours to sell. It still belongs to the finance company.

DoaM

dominicruk wrote: »

I have no issues with you guessing my salary, it just isn't something I wish to discuss on a public forum. Nor was it the main bulk of the thread. Thank you though for your help with the original question.

I believe I have everything I need :beer:

I was just trying (badly it seems) to make you aware that £109 per month in taxation for a fully funded car (with private fuel) does not exist ... certainly not with an Audi A3. Therefore whatever figure you worked out with the company may not include what you think.

£109 for the car only - yes. But with private fuel? Not a chance. (And the company has no say in this - it is laid down in law).

neilmcl

Ectophile wrote: »

Until you have paid the entire PCP contract, including the balloon payment at the end, the car isn't yours to sell. It still belongs to the finance company.

That doesn't mean they wont allow it to be sold, more often than not there's no problem, other than persuading a private buyer to purchase a car on finance.

lopsyfa

Le_Kirk wrote: »

Well, I thought it was quite clear but now explained by others. It normally takes time for a company to organise a company car for new/promoted employees. In the meantime you could offer to use your existing car and they could pay you for the privilege. This might take you a few weeks/months down the line by which time you would be nearer the 50% finance cut-off point with your existing car and it's financial arrangement and it should make it easier to pay off.

I think the reason for the difference in the numbers is because the OP is getting a 65 plate Audi not a brand new one and the value of the car is going to be significantly smaller.

Jonesya

lopsyfa wrote: »

I think the reason for the difference in the numbers is because the OP is getting a 65 plate Audi not a brand new one and the value of the car is going to be significantly smaller.

Unlikely - company car tax is calculated using the car's original list price when new, so even if a company purchased a used car for a big discount, the actual company car tax on it would be the same as if they paid full list price.

OP - other thing to watch, is the tax rate is going up in coming years by a few percent for diesel but the killer will be if you get a pay rise and become a higher rate tax payer - then your monthly cost will double over-night!

JP1978

When I had an offer of car or allowance, I took the £400/month allowance and continued to use my own car. £400 is around average for car allowances - its obviously taxed at your normal rate (I assume 20%).

When you get a car allowance though, they will pay the business fuel as a pence per mile driven - ask them what their rate per mile is - at the time of my allowance it was 45p/25p as per standard HMRC, although they were going to change it to around 20ppm (the company that is, not HMRC).

So, if you get this information from the company, even though your car would get a higher mileage and you have to pay for maintenance etc, depending on if all your miles are business related (claimable at ppm) or commuting to work only (you pay it) you MAY actually make a small profit on the deal.

Your HP would appear to be approx £200 a month? Assuming that the car is economical, you are likely to make a small profit from the mileage payments. If your car allowance was the average £400 a month - you have upwards of £200 a month to go towards depreciation, insurance, servicing, tyres.... Thats quite a lot. Even if you broke even, its still better than paying £109 per month out!

bigadaj

Jonesya wrote: »

Unlikely - company car tax is calculated using the car's original list price when new, so even if a company purchased a used car for a big discount, the actual company car tax on it would be the same as if they paid full list price.

OP - other thing to watch, is the tax rate is going up in coming years by a few percent for diesel but the killer will be if you get a pay rise and become a higher rate tax payer - then your monthly cost will double over-night!

Though pension contributions would reduce your gross earnings and potentially limit tax to 20%.

bigadaj

JP1978 wrote: »

When I had an offer of car or allowance, I took the £400/month allowance and continued to use my own car. £400 is around average for car allowances - its obviously taxed at your normal rate (I assume 20%).

When you get a car allowance though, they will pay the business fuel as a pence per mile driven - ask them what their rate per mile is - at the time of my allowance it was 45p/25p as per standard HMRC, although they were going to change it to around 20ppm (the company that is, not HMRC).

So, if you get this information from the company, even though your car would get a higher mileage and you have to pay for maintenance etc, depending on if all your miles are business related (claimable at ppm) or commuting to work only (you pay it) you MAY actually make a small profit on the deal.

Your HP would appear to be approx £200 a month? Assuming that the car is economical, you are likely to make a small profit from the mileage payments. If your car allowance was the average £400 a month - you have upwards of £200 a month to go towards depreciation, insurance, servicing, tyres.... Thats quite a lot. Even if you broke even, its still better than paying £109 per month out!

And you can claim the difference in business mileage back from the taxman, so for most 45p minus what they pay your for fuel.

Nearlyold

bigadaj wrote: »

And you can claim the difference in business mileage back from the taxman, so for most 45p minus what they pay your for fuel.

The taxman doesn't give you the difference between 45p and whatever your employer gives you per mile - the taxman gives you tax relief on the difference

letspretendforaminute

The finance director is the last person you want to take advice regarding inheriting someone else's company car. Right now that A3 is sitting in their car park costing them money and if it's a 4 year contract the exit penalty (lets assume Arval here) would be the same as the remaining payments outstanding.

Take the £400/450 cash don't worry about going over the 10k per annum and make the final balloon payment, sell it afterwards if you must.

Company car tax rates for the next 3 years are available online and the trajectory is clearly on the upwards path. I don't believe for a minute you'll be paying £109 more like £210-205 averaged over 2 years.

We looked at a new Mercedes E class ourselves as a company car and opted for the cash instead (£730) as the company car tax (£280p/month) is nearly as much as the £325 it costs us as a purchase. We effectively get £850 net (40% bracket) per month from that £730 figure, assuming 10,000 business miles reimbursed at 11p plus the 40% on the 45p HMRC rateable allowance.

£325,
£70 insurance (including business), £50 service contract leaves £400 to pay for consumables and most of our fuel.