Company Car or take the cash?

rca779

I have the same dilema - Co Car or £5k a year (before tax).

I could get a really nice car (Audi A3 Sport,Mondeo 2.0 TDCi Zetec, Honda Accord, VW Passat) which I would dearly love, but it is hard to justify when I only do about 15-20 miles a day.

I did look at a cheaper car (Focus 1.5 TDCi Zetec) with some cash back as it is a lower bracket than my entitlement, but AFTER the co car tax I would be about £100 a month worse off than I am now. However if I took the cash, I would be about £250 a month better off. A net difference of £350 a month.

I am therefore leaning towards the cash despite really liking the idea of having a brand new car with trouble free motoring!

AdrianHi

Having done these sums myself I'd say £400 a month salary vs. £450 car allowance with BIK tax to pay usually comes out at a very similar figure. You are also exposed to the government whacking up the BIK tax while you have the car.

£400 a month extra salary gives to the choice of running an older car and saving some money.

If going the company car route and BMW 3 series is big enough for you the exceptionally low CO2 emission's on the latest versions of these cars make the BIK unusually low and the lease costs are much different from a Mondeo - in other words it;s a cheaper car for you.

bored_of_debt

Have you considered taking the car allowance and going to a lease company?

Personally I've opted for the cash allowance to help target my debt; but a colleague of mine recently handed back his company zafira and went to a lease company and got a zafira VXR and reckons all in he is no better or worse off financially!

Only the petrol and the speding tickets he has to worry about now!!

And also the fuel rates for milage have just ben increased within my company to reflect (nope that isn't the right word) I mean have increased marginally againt the recent fuel price hikes!! Might be worth ckecking with your companies all!

rca779

What does BIK stand for?

hewhoisnotintheknow

rca779 wrote: »

What does BIK stand for?

I think it means Bloke in Kent

AdrianHi

hewhoisnotintheknow wrote: »

I think it means Bloke in Kent

:rotfl:

Benefit In Kind
The company car is a benefit in kind and considered for tax purposes as part of your income. The way it works is you take a percentage of the cars list price dependant on CO2 emissions, say the a lower level like 15% (e.g. petrol BMW 318i), so take 15% of it's list price and then you pay PAYE at your rate (22% or 40%) on that figure (15% of list price).
Higher emissions cars head for rates in the 20% to 26% range where the tax bill gets really silly.

BillScarab

If you take the cash is there any restriction on what car you can have? For example wehre I work there are several car schemes but for people who can take the cash instead they have to buy a car suitable for business use (regardless of whether they do any business miles). So they can't take the cash and run an old banger for instance.

PotentialLondoner

One other question - what type of car will equivalent £450 per month company car allowance get me from my firm?

Any one know any links of general makes and models of cars related to the amount a firm will pay (I don't mean private leasing etc, just what type of motor my firm will provide)

Cheers

AdrianHi

PotentialLondoner wrote: »

One other question - what type of car will equivalent £450 per month company car allowance get me from my firm?

Any one know any links of general makes and models of cars related to the amount a firm will pay (I don't mean private leasing etc, just what type of motor my firm will provide)

Cheers

For around £450 ex VAT figure, the firm does not pay the VAT (or possibly only half of it, need to check that) this is the sort of thing you can lease:
Click on page 10 of these results to get to around the 450 mark
http://www.whatcar.co.uk/contract-hire-results.aspx?pg=2&make=0&model=0&body=0&min=400&max=500