Company car schemes

andro12345

Evening all,
New to the forum and hoping for a bit of advice in relation to company car schemes.
I currently have a company car that is paid for by my company and I pay company car tax under the HMRC. My company is changing the company car scheme and effectively doing away with the scheme. Instead what we are getting to do now is, purchase our own car under a loan or pcp agreement. In giving up my company car, the saving in company car tax will then be used to part pay for the cost of the new one. My company will then give a top up value to cover more of the cost of the new one and then finally, by claiming the 0.45p per mile per 10000 miles and 0.25p above the 10000 miles, this should cover the remaining part of the loan or pcp. If I travel about I make money and if I'm in the office its costing me money.
The idea is this new scheme is to be cost neutral to me, but I carry the burden of owning, maintaining and insuring the car.

Anyone out there aware of this type of scheme or on it? Is it legal? Are there any other tax implications? I know I will be subject to PAYE on the additional income too.

Cheers

Dazed_and_confused

You may have overcomplicated your question?

Do you mean you are getting extra cash (often called Car Allowance) in return for giving up your company car?

Who are claiming the 45p/25p from, your employer or have they told you you can claim it from HMRC?
by claiming the 0.45p per mile per 10000 miles and 0.25p above the 10000 miles

andro12345

Hi
I'll be claiming the 45p / 25p from my company. My company will be giving extra money towards the cost of a car. By not claiming company car tax, the money saved will go towards the cost of a new one.

singhini

I've had company cars for years and during the past 20+ years I have also been under the "car allowance" scheme too.


Whether the old scheme or new scheme is better depends on a lot of factors.


Is there an age restriction on the car you can get (some companies say you cant have a car over 4 years old for example).


You will need to get insurance that covers business use (my employer wanted to see copies of the insurance certificate to check I did actually have business use each year). I also had to demonstrate I had breakdown cover which included courtesy car.


The 45p for the first 10,000 miles and 25p for every mile thereafter is correct (however I experienced a situation where an employer reduced the rate and said they were going to pay a flat 25p rate for all mileage). You do have the option to claim the 20p per mile on the initial 10,000 miles from HMRC but HMRC will only give you the tax relief on the 20p and not full 20p i.e. if you are a 40% tax payer you would get 40% of 20p = 8p per mile


Also if you leave the company and don't require your own car anymore, you would be left with a car on finance.


Also are there any restrictions on the type of car you can or cannot get i.e. no convertibles, no people carriers, car must have boot space of x number of litre space etc......


I always preferred the company car option but I got lucky as my company never put a restriction on the age of my car, nor did they stop me from getting any car I wanted (I got a 6 year old Vauxhall Insignia from a dealership with 1 years warranty which cost £6,000). I was used to having company cars which costs me roughly £2,500 a year on company car tax.

singhini

I think the running costs were something like this:


Deposit for car £900 (one off payment)
Monthly repayment = £160 (£2,000 annually for 3 years)
Annual RFL = £180
MOT = £50
Servicing & Tyres = £800 budget
Fuel = £350 (£4,000 annually)
Annual business insurance = £680 (incl breakdown cover)






The incomings were from:
Monthly Car Allowance = £550 - 40% income tax
Mileage 45p / 25p