Company Car - please help...
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timbo1234
Posts: 16 Forumite
Hi all,
So I finally get told I can have a company car or an allowance. Trouble is no-one can tell me what the allowance will be so I reckon it's pretty rubbish.
I've looked at some of the online car tax calculators but I'll admit it, I'm a total dunce when it comes to things like this so I was hoping the helpful MSE forumites could help explain it to me!
So the car is probably a...
New Passat SE TDI 2.0 6-speed (saloon) - List price appears to be £18232
Extras to add are metallic paint (£335), CD changer (£235), climate control (£395) and mats/mudflaps (£100). Total extras £1065.
The cars emissions are 159 and it's EuroIV compliant.
This overall seems to result in the following:
2005/6 Tax year
Benefit in kind £3,473
Tax (22% rate) £764
Tax (40% rate) £1389
So, as long as these figures are right, I really need to know about the 22%/40% tax split. My salary less allowances puts me just under the 40% bracket. Does this mean I'll pay the 22% rate or as the benefit in kind above is greater than the amount I'm under the 40% rate will I pay 40% rate??
I hope that's clear as It's not to me! Help :question:
Cheers,
T
So I finally get told I can have a company car or an allowance. Trouble is no-one can tell me what the allowance will be so I reckon it's pretty rubbish.
I've looked at some of the online car tax calculators but I'll admit it, I'm a total dunce when it comes to things like this so I was hoping the helpful MSE forumites could help explain it to me!
So the car is probably a...
New Passat SE TDI 2.0 6-speed (saloon) - List price appears to be £18232
Extras to add are metallic paint (£335), CD changer (£235), climate control (£395) and mats/mudflaps (£100). Total extras £1065.
The cars emissions are 159 and it's EuroIV compliant.
This overall seems to result in the following:
2005/6 Tax year
Benefit in kind £3,473
Tax (22% rate) £764
Tax (40% rate) £1389
So, as long as these figures are right, I really need to know about the 22%/40% tax split. My salary less allowances puts me just under the 40% bracket. Does this mean I'll pay the 22% rate or as the benefit in kind above is greater than the amount I'm under the 40% rate will I pay 40% rate??
I hope that's clear as It's not to me! Help :question:
Cheers,
T
0
Comments
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Ok, so digging around it seems like it's as I thought. As with your salary it's just a normal benefit in kind which you pay 22% on for the proportion which falls under the threshold and 40% on that over the threshold.
It's be nice to see a company car tax calculator which takes this into accout rather than spitting two figures at you. Anyone know of one?
T0 -
Not much help but get your workplace to sort this out. They should know.
If they don't then get them to find out.Watch out people. You don't know what lurks around the corner for you![/SIZE]0 -
I don't know how they do the sums, I just know that more and more people feel they are better off having the allowance rather than the car. And I believe that was the government's intention, to get us less reliant on cars by making a company car less attractive as a perk.Signature removed for peace of mind0
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You are correct to say the car will be taxed just like salary i.e. once the basic rate threshold at 22% has been exceeded you will pay 40% on the amount over the threshold.
Don't know if you have been to the Lex Vehicle Leasing site, try this:
https://www.lvl.co.uk/features_cashcalc.php
On the left hand side there are 2 calculators, first is standard tax calculations and second is a more useful schedule to help you decide if you should take allowance or company car.
Each individual is different, private mileage, vehicle type, allowance offered etc so you can't really generalise but allowance has certainly become more popular over the last few years.Before you buy Google Nest or British Gas Hive check out ESPproMon the Android and iOS Smartphone app that helps you build the same system from just £30.0 -
Try www.comcar.co.uk
Enjoy your new car - the tax is a rip off but still works out cheaper than buying your own when you take into account total running costs and repairs. If you have the option of the allowance, generally, that works out better.If it was easy, everyone would do it!0 -
Thanks all, decided to go for the car and not the allowance. The tax is only the same as insurance, road tax, tyres and servicing for a year.
T0 -
Hi Timbo1234,
But you are not factoring in the tax breaks that you get if you use your own car/lease car for business mileage. You'll claim this back at a rate of
40p per mile for the first 10000 miles
25p per mile for every mile thereafter
So if you do 20000 business miles in a year and are in the 40% bracket (which if sounds like you are ) then you will get the following back from the tax man......
£4000 allowance for the first 10000 miles
£2500 allowance for the next 10000 miles
Total £6500 allowance
Total tax back = £6500 * 40% = £2600 cash back to you.
Once you've factored this in...is a company car still cheaper? You need to look at the picture as a whole before you can make a decision.
Edit: Also please remember that there are more tax implications if the company pay for your fuel via a fuel card etc."One day I realised that when you are lying in your grave, it's no good saying, "I was too shy, too frightened."
Because by then you've blown your chances. That's it."0 -
There is an article on company car tax in this months What Car mag.
Also Peugeot have tax calculators - sometimes compare other makes - in the leaflets in their showrooms. Probably something on their www.
Have you asked in the VW showromm/www?
VB0 -
mrcow wrote:Hi Timbo1234,
But you are not factoring in the tax breaks that you get if you use your own car/lease car for business mileage. You'll claim this back at a rate of
40p per mile for the first 10000 miles
25p per mile for every mile thereafter
In my company, if you get a car allowance, you claim mileage at cost of petrol/diesel (approx 10p a mile). They do this because to all intents and purposes they are still paying to give you a company car.
Timbo - you the same?If it was easy, everyone would do it!0 -
The going rate is about 10p /mile if the company pays you a car allowance but as mrcow indicates you can still claim the tax free rates (40p & 25p) on your tax return as you will have been taxed on the car allowance.
StabiloBefore you buy Google Nest or British Gas Hive check out ESPproMon the Android and iOS Smartphone app that helps you build the same system from just £30.0
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