Need Advice - Company Car

kossohead

I need some general advice please.

I work for a smallish company which employs aprrox 22 people.

I have been with them 5 years.

I have a company car being a 2001 vauxhall vectra - 1800cc - petrol.

I want to know if i should continue with a company car or lease or buy my own. My boss said its my choice but don`t know where to start looking for facts and figures.

Can you help me???

Details:

Salary is approx £30k a year
Car is a vectra ls, 2001, 1796cc
Co2 = 183g/km
List price of car = £14280

My monthly mileage is around 1000 miles, includes home to work miles.
Home to work miles is paid for by the company, which is 356 miles per month.
On petrol I only pay for private miles which equates to £20 p/m.

If you need more information, let me know.

Much appreciated for all your help and guidance..

:beer:

Hoddie_2

The benefit value of that car is 3284 for the year, or £722 in cash terms. If you can hire/purchase and run a car for £60 a month then yes, you'd be better off getting rid of the company car.

If you were using your own car (or a hire car paid for by you) your employer would be allowed to pay you 40p per business mile up to 10,000 miles, 25p per mile thereafter. If they don't, you can claim tax relief on these amounts instead (22% of 40p/25p per mile).

I'm not certain on this particular point but I'm not sure that the £20/month you pay would cover your private mileage in full. I believe (though please check) that you should be reimbursing your employer in full for your private mileage or otherwise attract a taxable benefit worth 3312 (or £728 in cash terms).

kossohead

Hoddie wrote: »

The benefit value of that car is 3284 for the year, or £722 in cash terms. If you can hire/purchase and run a car for £60 a month then yes, you'd be better off getting rid of the company car.

If you were using your own car (or a hire car paid for by you) your employer would be allowed to pay you 40p per business mile up to 10,000 miles, 25p per mile thereafter. If they don't, you can claim tax relief on these amounts instead (22% of 40p/25p per mile).

I'm not certain on this particular point but I'm not sure that the £20/month you pay would cover your private mileage in full. I believe (though please check) that you should be reimbursing your employer in full for your private mileage or otherwise attract a taxable benefit worth 3312 (or £728 in cash terms).

Thanks for the reply hoddie.
Sorry but still not clear what to do?

1. What does the benefit of the car mean, ie; £3284...or £722 in cash terms?
2. you say yes if i can run the car for £60 per month, do you mean the hire of the car, tax, insurance , petrol,etc?
3. Is the 40p per mile a standard fixed rate or can an employer pay you more?

Sorry to sound thick, but can anyone else help

Hoddie_2

A company car is considered to be a taxable benefit, and a cash value has to be given to that benefit in order to calculate the tax due. The details you provided show that your company car attracts a taxable benefit of £3,284 - that is, you're considered to have extra salary of £3,284. If you're a basic rate taxpayer (which your salary of £30k makes you), the tax due on this £3,284 would be £722, or £60.17 a month. This is what your company car is costing you, so this is what you'd save if you didn't have it.

If you choose to use your own car for business mileage, 40p/25p per mile is what your employer is allowed to pay you without you paying tax on it. If they paid you more, say 60p per mile, the excess above the approved amount (60p - 40p = 20p) would be taxable.

morgani

what hodie means is.

1.The actual benefit in kind is £3284 and it costs you the equivelent of paying £722 for the use of the car.

2.Yes that is all costs of running the car. £722 (from above) divided by 12 months = £60 you could add on your expense claims to get a more realistic comparison. i.e 1000-356 = 644 allowable miles @ 40p = £257.60
(travel to and from a place of work is not claimable)
So total comparable is £60 + £257.60 = £317.60 x 12months = £3800aprox per year

3. 40p is the tax free rate. Anything below you can claim the difference as a tax relief and above works as a benefit in kind.

So if you do 10000 miles and get 60p per mile then you have to pay tax on the 20p per mile. soo 22% of 20p x 10000 = £440

hope this helps

zorber

A difficult one.
Your car is not particularly good or tax friendly, You could do with a Diesel, lower emmisions and more miles per gallon.

How does your company allocate cars??

My company leases them so i get to choose in bands dependant on earnings, we get 10.5p for each business mile, included are insurance and maintanence cost, like tyres etc.
All needs to be factored in.

I cant answer your question but i have always though a company car is better than having your own, yes you pay tax but this is usually less then insurance. maintanence and of course depreciation of your own car. I suppose we are lucky at our company as we get a new car every 3 years though we are limited by choice. So it make sence for me.
But with you if you have to pay maintenance insurance etc then i am not sure also your car is quite old.

kossohead

Thanks for the replies

With the figures given, it seems best to stick with the company car?
On Friday I had to have 4 new tyres and a exhaust which cost the company £456 :eek:

As my car needs changing soon, can anyone recommend what cars are best to have to cut down on the tax, ie, should I have a diesel, and a 1600cc car instead of a 1800cc.
Which cars have low Co2 readings? or should I consider a twincab pickup?

Cheers
paul

morgani

generally there are lower co2 emmissions on lower engined cars but you would need to have a look around. For tax purposes you always charge 3% more for diesels but this can often be outweighed as often the co2 emmissions are lower.

There are some best buys on this link http://www.channel4.com/4car/new-cars/advice/company-cars/index.html?noforward=true but you can try and find co2 emmissions for what you are interested in.