Company Vehicle Scheme

shockleader

Hi,

I hope this is in the correct section....

My wife has just landed a new job and has been lucky enough to be enrolled in the company car scheme. She has two options, either choose from a list of various cars, or take £250 per month and source her own vehicle. The downside with the first option is that I am not able to drive the car or use it for personal trips. The downside with the second option is that I can't see how we could buy a suitable car for £250 per month?!!

The car needs to be large enough to take our family and a large dog, and ideally should come with some sort of warranty.

If anyone has any suggestions I'd appreciate it.

Thank You.

fatrab

It depends what you class as a suitable car.

Are there any other stipulations to the company car allowance? Such as the age of the vehicle or the CO2 emissions? Is insurance going to be expensive if you buy your own car? If you're young or either of you have a squiffy driving history then probably best to take the company car. If not, read on...

I take company car allowance in lieu of a company car with my employer. Only condition is that it has to be less than 10 years old. If I had £250/month here's what I'd do:

Insignia/Mondeo/Focus/Astra Estate @ £6000 (£150/month over 48 months)
Insurance £400 (£33/month)
Tax £150 (£12.50/month)
Servicing, MOT, repairs, tyres (£50/month)

These figures are just plucked out of the air for an average car but £250/month is perfectly do-able.

Will your wife be taxed on the £250 though?

DoaM

£250 net of tax would be OK; £250 gross would be a struggle.

Jonesya

You need to look at the cars on the list and look at what Benefit in kind tax she'd have to pay - she might not have to contribute toward the car but there will certainly be some tax to pay on it.

The comparison will probably be £250 per month (is that before or after tax?) and sourcing your own car possibly with you paying something towards it, or a company car but then paying the BIK tax.

And when you check the BIK tax don't make the mistake of looking at just one year because it is going up sharply in coming years, so the cost will probably rise as the car ages!

fatrab

Just another thought. One of the other reasons I run my own car, in 4 years time you'll own an asset. It may not be worth much depending on the mileage accrued over the 4 years, but it'll be worth something. Pay BIK tax for 4 years and you have nothing to show for it. If you chose your car wisely and maintain it well you might get another year or 2 out of it once it's paid off, that'll be £250/month in the back pocket.