Company car noob

Author
Discussion

matrignano

Original Poster:

4,362 posts

210 months

Tuesday 25th November 2014
quotequote all
Company just rolled out a new scheme.
Speccing a Golf R out of curiosity, this the automatically generated quote I get from Leaseplan:

Your Quote Explained
P11D £31,330.00
"Basic Monthly Cost": £233.39
"Gross Monthly Cost": £449.64
"Net Cost To You†" (An estimate of the effect this may have on your disposable income): £511.44
Retail Comparison: £481.39

Why on earth would I get a car through the scheme if it's cheaper to go retail??
(and even cheaper judging by the offers seen on here for less than £300pcm)

KarlMac

4,480 posts

141 months

Tuesday 25th November 2014
quotequote all
As a wild stab in the dark the numbers above may include your additional income tax contributions.

Sheepshanks

32,725 posts

119 months

Tuesday 25th November 2014
quotequote all
You need to ask for an explanation of what the numbers mean. As the above poster said they might include tax, and maybe they take account of a cash allowance that you'd be losing. Who knows?

Also bear in mind you can't really make a straight price comparison between company car and private ownership. The company car will be insured, probably, as far as you're concerned, with zero excess. It will likely include all service and maint, and the big thing is that you don't have the risk of ownership.

cpas

1,661 posts

240 months

Sunday 30th November 2014
quotequote all
If you have a company car, you will be taxed as if you are earning an extra income. This is based on the value of the car, multiplied by a figure defined by the CO2 emissions. This then gives a figure which is added to your tax code, on which you will either be taxed 20% or 40%. For example, if you had a 20k car with CO2 emissions which put it at 20%, your taxable income would rise by £4000, so, as a 20% tax payer, you would be liable for 20% of this extra £4k, ei £800 per year, or £66.66 per month. This figure changes according to car value and CO2 value. If you were given the value of the lease of the car instead - eg £350 per month - you would be taxed on this value instead, and not on the car at all.

Eric Mc

121,958 posts

265 months

Sunday 30th November 2014
quotequote all
It's not based on the "value of the car". That is far too vague.

The Benefit in Kind rules, in most cases, use the "Manufacturer's List Price When New" as the basis of the calculations.

The exception is when the care is of a type that does not have a "Manufacturer's List Price" - for example, a classic 1910 Rolls Royce could not use the list price of the car when it was new in 1910.

cpas

1,661 posts

240 months

Sunday 30th November 2014
quotequote all
Eric Mc said:
It's not based on the "value of the car". That is far too vague.

The Benefit in Kind rules, in most cases, use the "Manufacturer's List Price When New" as the basis of the calculations.

The exception is when the care is of a type that does not have a "Manufacturer's List Price" - for example, a classic 1910 Rolls Royce could not use the list price of the car when it was new in 1910.
I know it's not, but it's an easier way of explaining it, especially as the OP is talking about brand new cars. Each new car has a P11D value which is used in the calculation, plus any optional extras. If fuel is 'free' than this is taxed as well on CO2 percentage and a 'nominal' car value which is set every year.

Jon1967x

7,211 posts

124 months

Wednesday 3rd December 2014
quotequote all
The various figures will be amoun of the leaset, effective cost to you because it's taken before tax Is deducted and then benefit in kind added which gives the reduction in your pay packet (at least that's how it works where we are).

As others have said, you can't easily compare as your company car will almost certainly be taxed, insured, new tyres when needed, serviced when needed, unlimited mileage etc. you just stick fuel in.

Lower emissions cars work out better on the company as the bik is lower to the point where some are zero, and you still get tax relief of the lease cost - that's why lots of people are looking to take BMW i8 as company cars/business lease

Eric Mc

121,958 posts

265 months

Wednesday 3rd December 2014
quotequote all
cpas said:
I know it's not, but it's an easier way of explaining it.
It may be "easier" but it's fundamentally not the case.

Once upon a time, the BIK WAS genuinely based on the actual cost of the car to the employer - so if a car with a list price of £25,000 was bought for £20,000, the BIK was based on the £20,000 actual cost (i.e. the market value).

Now, no matter what the "value" of the car is, it is ignored and "list price" is always used (apart from the exceptions mentioned earlier). So, if the employer buys or acquires a three year old car for £10,000 that had an original list price of £25,000 - then the £25,000 amount is used. List price may be very, very different to the "market value".

Jon1967x

7,211 posts

124 months

Wednesday 3rd December 2014
quotequote all
Eric Mc said:
It may be "easier" but it's fundamentally not the case.

Once upon a time, the BIK WAS genuinely based on the actual cost of the car to the employer - so if a car with a list price of £25,000 was bought for £20,000, the BIK was based on the £20,000 actual cost (i.e. the market value).

Now, no matter what the "value" of the car is, it is ignored and "list price" is always used (apart from the exceptions mentioned earlier). So, if the employer buys or acquires a three year old car for £10,000 that had an original list price of £25,000 - then the £25,000 amount is used. List price may be very, very different to the "market value".
Which is also why there are so few cars like BMW 6 series on company schemes as the list price is stupidly high and then discounted heavily. They've made a rod for their own back - with 10-20% discounts available, that could translate into a 10-20% BIK reduction which could be a significant amount, into £100 a month or more. Even on 3 series there are big discounts worth having on BIK. If only they'd price them more realistically in the first place.

cpas

1,661 posts

240 months

Wednesday 3rd December 2014
quotequote all
Eric Mc said:
cpas said:
I know it's not, but it's an easier way of explaining it.
It may be "easier" but it's fundamentally not the case.

Once upon a time, the BIK WAS genuinely based on the actual cost of the car to the employer - so if a car with a list price of £25,000 was bought for £20,000, the BIK was based on the £20,000 actual cost (i.e. the market value).

Now, no matter what the "value" of the car is, it is ignored and "list price" is always used (apart from the exceptions mentioned earlier). So, if the employer buys or acquires a three year old car for £10,000 that had an original list price of £25,000 - then the £25,000 amount is used. List price may be very, very different to the "market value".
That's what I really love about Pistonheads. Somebody asks for advice, then trolls sit there not giving advice but waiting for somebody else to, then start picking that to pieces. What the OP was asking about was advice on a new car, and my advice was a basic explanation of how it works - OK not word perfect, but an explanation. Why don't you try to offer some helpful advice rather than picking on others? Bullied at school, were we?

Eric Mc

121,958 posts

265 months

Thursday 4th December 2014
quotequote all
As an accountant I think it is only right that people who do this for a living should step in now and then to correct others' errors - that's all.

And no, I wasn't bullied at school.

JamieBeeston

9,294 posts

265 months

Thursday 4th December 2014
quotequote all
cpas said:
Eric Mc said:
cpas said:
I know it's not, but it's an easier way of explaining it.
It may be "easier" but it's fundamentally not the case.

Once upon a time, the BIK WAS genuinely based on the actual cost of the car to the employer - so if a car with a list price of £25,000 was bought for £20,000, the BIK was based on the £20,000 actual cost (i.e. the market value).

Now, no matter what the "value" of the car is, it is ignored and "list price" is always used (apart from the exceptions mentioned earlier). So, if the employer buys or acquires a three year old car for £10,000 that had an original list price of £25,000 - then the £25,000 amount is used. List price may be very, very different to the "market value".
That's what I really love about Pistonheads. Somebody asks for advice, then trolls sit there not giving advice but waiting for somebody else to, then start picking that to pieces. What the OP was asking about was advice on a new car, and my advice was a basic explanation of how it works - OK not word perfect, but an explanation. Why don't you try to offer some helpful advice rather than picking on others? Bullied at school, were we?
I fear you've picked the wrong battle here!

EricMC is a Pistonheads Institution and you'll earn yourself no favours by trying to embarrass him!

One suggests you regroup and come back sensibly, or lose!

cpas

1,661 posts

240 months

Sunday 7th December 2014
quotequote all
Eric Mc said:
As an accountant I think it is only right that people who do this for a living should step in now and then to correct others' errors - that's all.

And no, I wasn't bullied at school.
OK, sorry if my comments were a bit harsh - you caught me on a bad day. I only stated 'value' as the OP was looking at new cars. You're quite correct about value versus P11D - I suppose it was changed to stop people fiddling their tax forms by claiming they'd bought the car for a lot less, and also to give a level playing field. What I should have said on my first post is the P11D value of the car - which is normally clearly posted on brochures and websites for new cars.

texasjohn

3,687 posts

231 months

Monday 8th December 2014
quotequote all
JamieBeeston said:
I fear you've picked the wrong battle here!

EricMC is a Pistonheads Institution and you'll earn yourself no favours by trying to embarrass him!
+1, a very helpful chap.