Company car benefit
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Hi I’m after some advice. My wife’s employers arrange for her to have a company car ( on her tax code it states Car benefit £11968.)
As of Dec this year they are saying she will now get £550 per month to arrange her own vehicle.
They have said she will not be worse off but surely she will be, as at present she does not have to source insurance or servicing.
ive looked at leasing the same car she has now and we would need a £2000 deposit and £650 per month with no servicing.
Are the company wrong in saying £550 per month as the Car benefit equates to nearly £1000 per month.
Sorry I’m being a bit stupid here ?
thanks
They have said she will not be worse off but surely she will be, as at present she does not have to source insurance or servicing.
ive looked at leasing the same car she has now and we would need a £2000 deposit and £650 per month with no servicing.
Are the company wrong in saying £550 per month as the Car benefit equates to nearly £1000 per month.
Sorry I’m being a bit stupid here ?
thanks
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Comments
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Buy something a couple of years old which has lots loads of value and she will be quids in.0
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£550 a month will get you a lot of car!!! I wouldn't say you were being stupid but have you explored the market properly?0
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Obviously she will be worse off, or they would just carry on providing a car if it cost them less than paying her £550 wouldn't they?Remember that the "free" car is presently costing her the tax on £12k, if she is on 40% that would be an actual cost of £480 a month. If the "free" car goes, she doesn't pay the extra tax, so is £480 up, plus she gets an extra £550, assume £220 in her hand, so she is £700 up a month.Be warned though, I only have a shaky grasp of income tax once you leave basic rate and standard tax code.I want to go back to The Olden Days, when every single thing that I can think of was better.....
(except air quality and Medical Science )0 -
facade said:Obviously she will be worse off, or they would just carry on providing a car if it cost them less than paying her £550 wouldn't they?Remember that the "free" car is presently costing her the tax on £12k, if she is on 40% that would be an actual cost of £480 a month. If the "free" car goes, she doesn't pay the extra tax, so is £480 up, plus she gets an extra £550, assume £220 in her hand, so she is £700 up a month.Be warned though, I only have a shaky grasp of income tax once you leave basic rate and standard tax code.With a similarly shaky grasp.Tax on £12k at 40% is actually "only" £400 a month. Tax on £550 is £220 (£330 after tax) so she'll be £730 better off.At 20% (unlikely?), she's paying £200 and will get £440, so £640 up.Don't know if there are any pension and/or NI implications.0
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i echo what Facade says ...if she pays 20% the calculations are not that much different. Whatever tax she pays she has closer to £700 to source a car0
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A rough and dirty calculation if salary of £40K plus car = take home of £2550 per month. Salary of £40K plus £550 per month car allowance = take home of £3210 per month. How is the employer going to pay for business mileage ?
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My maths is shocking isn't it?Yes 40% of 12K is £4800 which is £400 a month to pay out of her salary for the "free" car.Then if they give her £550 a month, the tax on that is £220, leaving her with £330.So net increase in take home is £730 a month.I'd buy a £20k car on 0% finance, around £600 pcm over 36 months, leaves £130 pcm for tax, insurance & servicing, and you have a £7-8k asset at the end of it.I want to go back to The Olden Days, when every single thing that I can think of was better.....
(except air quality and Medical Science )1 -
Thanks for all the info. Her employer will continue with the fuel allowance
thanks again0 -
Is she getting a Rolls Royce from the company at present?
£700 should be plenty for a good car - an Octavia (fantastic all round car) can be had for under £200 a month, and insurance should be £50 a month or less.
Sounds to me like she'll be quids in!0
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