The actual cost of a company car?

Rowbo

Hi there,

I have these figures from the gov.co.uk calculator (using our current company car details):

Tax Liability indicator: 40%

Company Car Tax (2017/2018) £3,248.00

Company Car Fuel Tax (2017/2018) £2,621.60


I'm sure i am being a bit stupid here, but does this mean that our company car with fuel is costing us £489.13 a month from our net pay?

If so, what would be the advantage of choosing this option over a car allowance of £7000 which (if my calculations are correct) would increase our net monthly pay by £827 (£489 + £338 car allowance)? I'm fairly sure we could get and run a car for less than £827 a month.

I must be missing something??

CvPiper

Add those two tax figures together and multiply by 40% (your tax rate).

I make it roughly £5900 x 40% = £2360 / 12 = £200 per month. Quite cheap depending what type of car it is.

DoaM

http://comcar.co.uk/newcar/companycar/taxcalc/

I tend to use that site. At the end it lets you play around with salary level and with/without private fuel to see what the actual tax is that you pay per month or year.

rich13348

Rowbo wrote: »

Hi there,

I have these figures from the gov.co.uk calculator (using our current company car details):

Tax Liability indicator: 40%

Company Car Tax (2017/2018) £3,248.00

Company Car Fuel Tax (2017/2018) £2,621.60


I'm sure i am being a bit stupid here, but does this mean that our company car with fuel is costing us £489.13 a month from our net pay?

If so, what would be the advantage of choosing this option over a car allowance of £7000 which (if my calculations are correct) would increase our net monthly pay by £827 (£489 + £338 car allowance)? I'm fairly sure we could get and run a car for less than £827 a month.

I must be missing something??

The amounts listed above are subtracted from your tax free allowance.

This new tax free allowance is divided by 12 and this amount is subtracted from your taxable pay.

The final amount is multiplied by 20% and the amount that takes you over £33500 is multiplied by 40%

Car_54

rich13348 wrote: »

The amounts listed above are subtracted from your tax free allowance.

This new tax free allowance is divided by 12 and this amount is subtracted from your taxable pay.

The final amount is multiplied by 20% and the amount that takes you over £33500 is multiplied by 40%

If the OP earns £33,500 a month then he's doing rather well. To avoid confusion, do all of the sums on an annual basis.

Rowbo

Thank you all for your replies. I’m still a bit confused. I thought those figures were after the 40% multiplication?

I’ve just run the figures through the site suggested by DoaM above and it has come out with this:

Tax year 2017/18 2018/19 2019/20
Per month £ 408.42 £ 441.09 £ 490.10
Per year £ 4,901.00 £ 5,293.08 £ 5,881.20

Ok the figures are slightly different but still over £400 a month. Is this the amount out of our net pay or do I need to multiply it by 40%?

Thank you!

bigadaj

Rowbo wrote: »

Thank you all for your replies. I’m still a bit confused. I thought those figures were after the 40% multiplication?

I’ve just run the figures through the site suggested by DoaM above and it has come out with this:

Tax year 2017/18 2018/19 2019/20
Per month £ 408.42 £ 441.09 £ 490.10
Per year £ 4,901.00 £ 5,293.08 £ 5,881.20

Ok the figures are slightly different but still over £400 a month. Is this the amount out of our net pay or do I need to multiply it by 40%?

Thank you!

What car is it?

You generally need to be doing quite a bit of personal mileage to make the fuel worthwhile, certainly over 10,000 miles and potentially quite a bit higher.

Rowbo

bigadaj wrote: »

What car is it?

You generally need to be doing quite a bit of personal mileage to make the fuel worthwhile, certainly over 10,000 miles and potentially quite a bit higher.

At the moment it’s a golf estate 2.0 automatic GT something or other with a 64 plate.

We have historically done lots of private miles but with a job change we now won’t be doing as many. Although with a couple of trips to France a year we may still get over the 10000 mark.

molerat

The figures all depend on if you are (already) a 40% tax payer. What is your annual salary (without the value of the car) ? DoaM's link above shows you exactly how much extra tax you will pay due to having the car and breaks it down into the various bands.

If your pay is £30K you will pay £204 extra tax monthly, £35K - £242, £40K - £325, £45K - £408.

So your quoted £408 indicates your salary, before the addition of the car, is above £45K.

Currently you are -£408 off your take home pay for having the car. The car allowance will give you + £350 so a take home of £758 per month more than you currently get. Plus there will be some additional payments / tax allowance for business fuel use.

The alternative may be having the car without the private fuel benefit for £220 per month and claiming back any business miles, is that a viable option ?

AdrianC

This is your CURRENT company car?

Did you not look at your P11D or a payslip?

DoaM

I don't know about other people but my payslip shows my BIK value ... the salary equivalent value of the benefit ... which is added to my actual salary. Tax is then at my marginal rate on the monthly total.

Example (not my real numbers):
BIK value = £450 (without fuel)
Marginal rate = 40%
Actual tax paid = £180

So in this example the car costs £180 per month.

Unless I'm misunderstanding how this all works?