Company car & fuel card - BIK Liability

[Snollygoster]

Here's how it works.

Each car is given a P11d value which is calculated from the on the road price of the car excluding road tax and first registration fee when new. Even if you are gettting 40% off a car when buying it, the P11d does not take this into account.

So once you have the P11d value of the car, you also have to work out how what BIK band it is in which is based on emissions. Just google this and you will find a table. Diesel currently has a 3% surcharge, but is due to be abolished in 2016/17 I think; or maybe the year later.

So lets say the P11d of the car is £30,000. You then times that BIK band. The car has Co2 emissions of 120 which is 17%, however, as it's a diesel, it makes it 20%. So 30,000 * 20% = £6,000

You then need to times that by your tax band 20/40/45. So lets say you're a 20% tax payer, we times the £6,000 by 20% again gives us a tax liability of £1,200 a year. So £100 a month.

For fuel, you then get taxed on top of this. The private fuel benefit isn't as good as it once was, and you really need to be doing the miles to make this cost effective, especially if a 40% tax payer. The fuel benefit this year is £21,700 (or £22,134 for the next tax year). HMRC set this rate. You then need to apply the above again.

So on the same car, we do £21,700 * 20% Co2 emissions * 20% tax payer = £868 a year, £72.33 a month. On a 20% tax payer, it's not bad, but if you're a 40% tax payer, the cost would be £154.66 a month. With the lowering cost of fuel, a lot of people won't spend that much in fuel a month so do the maths first.

Hope that helps, don't think I missed anything.

For a company car, insurance is almost always included. I can't think of a company who don't. If you take a cash allowance instead, that usually won't be insured.

Also, as it's a company car, depending on how your company buys cars, you may be surprised to see you will be able to get the likes of BMW/Audi/Merc for near enough the same rental figures as Ford/VW, and it mightly actually be cheaper for you due to the Co2 emissions being quite low.

Edited by Snollygoster on Friday 14th November 15:01

[TwigtheWonderkid]

Snollyghoster is spot on, and the BIK you pay on your company car assumes you are paying for noting other than private fuel. So you shouldn't be paying for your own insurance, servicing, tyres, or any other car expenses. If you will be, you need to contact HMRC for advice on offsetting your costs against your BIK tax.

[bogie]

try www.comcar.co.uk to work out the effect on your net pay

if you are a high mileage business driver in a cheapish diesel, it can work out in your favour

if you have a good cash alternative and dont do so many miles, then its often better just to run your own car

cash alternative + fuel card can work out well (what ive chosen for 10 years now) because you are not taxed by CO2 and run shop around for cheap V8s that no-one else wants, effectively you pay tax at your rate (20 or 40%) on your private fuel benefit

you really have to do the maths for your own situation....

[Jerry Can]

the other thing you need to remember is that most companies lease cars over three years, (3+33) there is a lot of billy bks deals on the net that could get you in to a 7 series for £400 pm but it is for a 6k miles pa, 9 + 24 deal. that is you pay for 33 months, but get the car for 24. if your company is buying they won't be doing that deal.

[Zyp]

Would having a company fuel card, and running a car that does 23mpg and doing no business miles (10k pa private miles) be deemed not a sensible thing to do?

Trying to work this out and struggling...

This is the situation the wife is now in, having changed cars.

[bogie]

Zyp said:

Would having a company fuel card, and running a car that does 23mpg and doing no business miles (10k pa private miles) be deemed not a sensible thing to do?

Trying to work this out and struggling...

This is the situation the wife is now in, having changed cars.

thats good, the fuel is a cash benefit and basically you pay 20 or 40% tax on the value of the private fuel..simple as that

[TwigtheWonderkid]

bogie said:

Zyp said:

Would having a company fuel card, and running a car that does 23mpg and doing no business miles (10k pa private miles) be deemed not a sensible thing to do?

Trying to work this out and struggling...

This is the situation the wife is now in, having changed cars.

thats good, the fuel is a cash benefit and basically you pay 20 or 40% tax on the value of the private fuel..simple as that

No you don't. You pay a fixed amount of BIK based on your car's co2, regardless of whether you do 100 or 100K private miles. That's why it's important to work out what you would spend on private fuel and if that's more or less than your BIK hit.

[Zyp]

The car in question is our own personally leased car using her car allowance cash, so I thought co2 makes no difference?

[blank]

TwigtheWonderkid said:

bogie said:

Zyp said:

Would having a company fuel card, and running a car that does 23mpg and doing no business miles (10k pa private miles) be deemed not a sensible thing to do?

Trying to work this out and struggling...

This is the situation the wife is now in, having changed cars.

thats good, the fuel is a cash benefit and basically you pay 20 or 40% tax on the value of the private fuel..simple as that

No you don't. You pay a fixed amount of BIK based on your car's co2, regardless of whether you do 100 or 100K private miles. That's why it's important to work out what you would spend on private fuel and if that's more or less than your BIK hit.

Only if it's a company car. If it's your own privately owned car then you just pay tax on the cash value. So essentially you get a discount on your fuel of 80/60/55% depending on your tax rate.

[Zyp]

It transpires she could have had either £1800 gross contribution towards fuel per annum, or take the fuel card.
Calculated fuel used in this car would be around £2400 over 10k miles.

Looks like the fuel card and a decent discount was the better option.