Help!! Company car vs Lump sum from employer for car??

hillbilly5

I currently have a company car which is due for renewal and had been told that I would be able to choose between a ford focus or Toyota Prius - either of which would be great tax wise.

However my employer is now saying that they are getting Mini's with the company logo on. This is totally impractical for me a I have 3 children, 2 of which are in their teens and a mini just won't be big enough. The company car is fully expensed.

Rumour has it that some emloyees have been given £6000 to buy a car and then 40p per mile costs, and are responsible for all unning costs.

How will this affect me? Which would I be better off with? What issues do I need to think about?

I ama basic rate tax payer - pleeeeaaaase help me as I am confused!

Cardinal-Red

You basically (!!) need to calculate the "tax value" of the two options.

The lump sum is easy - it's £6000, and you'll basically be taxed at your marginal rate on that much. Plus also consider that 40p a mile is an allowance for business journeys only. If you get 40p regardless of the purpose of the journey (ie normal commuting, weekend use for driving your family around) then this is also likely to be taxable at your marginal rate.

The car option is a function of the list price of the car and it's CO2 emmissions - your Payroll team will be able to tell you what the tax value is. Also, if you say "fully expensed" and that includes all fuel (personal and private) then there'll be an additional benefit, which is a set % of a figure (around about £14k I think).

But perhaps more importantly, if the mini is of no use to you, surely not taking it is in your interests anyway, regardless of tax benefits/savings?

PhilL_3

Well you only have one option if the company are providing Mini's and they are completely unsuitable for your needs.

There are many other factors to consider such as which model Mini are they offering (this will effect the amount of tax you will have to pay).

Also, if you take the company car will you have to pay for your personal mileage or will this be a 'benefit in kind' (which would increase the amount of tax you would pay)?

How many miles a year will you do both privately and business?

Is the £6000 a one-off payment or will you receive another payment when you come to change (say in 3 years time)? Is it company policy that if you opt out you must have a vehicle newer than a certain age?

This website will be of help to you;

http://www.cashorcar.co.uk/

Hope this helps

Hagar_uk

hillbilly5 wrote: »

I currently have a company car which is due for renewal and had been told that I would be able to choose between a ford focus or Toyota Prius - either of which would be great tax wise.

However my employer is now saying that they are getting Mini's with the company logo on. This is totally impractical for me a I have 3 children, 2 of which are in their teens and a mini just won't be big enough. The company car is fully expensed.

Rumour has it that some emloyees have been given £6000 to buy a car and then 40p per mile costs, and are responsible for all unning costs.

How will this affect me? Which would I be better off with? What issues do I need to think about?

I ama basic rate tax payer - pleeeeaaaase help me as I am confused!

You really need to work out how you are going to use your car, if most of your miles are going to be business then the payout option is quite good IMHO. shame about the prious, one of our guys at works has one, chooses not to have free fuel, not only does he not pay tax for the free fuel, the expenses he puts in at 12p/mile pays more than his combined cost of fuel for both his business and private miles.

While all this is a pain for you, things could be worse, the company I work are being right gits and trying to say every last penny from company car expenses and trying to scrap private mileageandcars if they can,without any kind of compensation.which is painfully when I live 40 miles away..