company car question

[japgt]

i'm after some advice regarding company cars.

I currently do not have a company car, i work for a company that i've been with for some years and instead of my annual rise in July i'm considering asking my MD for a company car instead.

I have no idea how these things work with regards to what it costs me or the company over and above the monthly lease fee for the actual car and the tax implication to me on a weekly/monthly basis.

Obviously my employer would be liable for adding the car to the fleet insurance policy but is there anything over and above this that i need to take into consideration??

the reason being that i am trying to be realistic over costs to the company ( only small but doing ok ) and if there is anything that i've missed would like to know so i am fully up to speed when it comes to the crunch time.

any help would be appreciated.

[T1547]

You'll need to pay company car tax - see here for details http://www.parkers.co.uk/company-cars/tax-calculat...

[japgt]

ok, so apart from the company car tax, and the monthly lease fee of whichever car there is nothing else to pay.

[TwigtheWonderkid]

Providing you pay for your own private fuel.

You should get reimbursed for your business mileage, normally according to rates set by the revenue, dependent on engine size and petrol diesel.

If the firm pay for your private fuel, you get taxed heavily on that at a flat rate, regardless of whether you do 1000 or 20000 private miles. Do not let your firm pay for your private fuel, even if they offer to. Unless you do circa 20K private miles or more, it'll cost you more in tax than it would have done in fuel.

Obviously you don't pay the monthly lease, your employer does. All you pay is the Benefit in Kind (BIK) tax.

[Bullett]

Do you need a car to do your job? How many miles do you do?
Do others in the company have company cars?
What sort of pay rise are you realistically expecting (cost of living or an actual pay rise!)

I take a car allowance, I have been offered them from £300 to £600 a month. So that's £3600 to £7200 p.a. what is that as a % of your salary and is it in the same ballpark as your expected raise.

[Chipchap]

My car has now gone up to the net equivalent of £346 per month [=£15.73 per day equiv]. My office is 2.6 miles away. In reality I would be better off with my own car but there is no opt out for my grade sadly.

Co cars actually cost you money if you live close to where you work.

So unless you are a 20% tax payer or liver fairly far from the office tread carefully as you can end up worse off

[japgt]

thanks for the info guys, i would be paying private mileage myself, no issues there, i am mainly office based but do site visits a few times a month as well as other job related stuff driving wise. total mileage per year business wise prob wouldn't be a huge amount around 6/8k and about another 10k private use, working 20 miles away from home so 40 mile round trip per day.

wouldn't be looking at anything like 300-600 per month for the car, only looking at around the 200 month mark which will get me what i would like. hopefully a Lexus CT200H or Nissan Juke.

i'm currently on around 20k but my MD who i have a very good working relationship with has confirmed that he feels i'm worth considerably more following a slight change in job description recently which means me taking on a lot more work, which i dont mind and really enjoy, so i'm hoping that instead of an actual pay rise i could secure a company car instead, i currently drive a Mitsubishi which could then go back to the finance company freeing up the money from that, and after checking out the company car tax on the sort of cars i'm looking at i would be somewhere around £75 month better off .

[uk89camaro]

TwigtheWonderkid said:

If the firm pay for your private fuel, you get taxed heavily on that at a flat rate, regardless of whether you do 1000 or 20000 private miles. Do not let your firm pay for your private fuel, even if they offer to. Unless you do circa 20K private miles or more, it'll cost you more in tax than it would have done in fuel.

erm. bks mate.

You get taxed on private fuel based on the amount of cash (BIK) your company spends on your private fuel. (In my case via a fuel card.)

[XDA]

uk89camaro said:

TwigtheWonderkid said:

If the firm pay for your private fuel, you get taxed heavily on that at a flat rate, regardless of whether you do 1000 or 20000 private miles. Do not let your firm pay for your private fuel, even if they offer to. Unless you do circa 20K private miles or more, it'll cost you more in tax than it would have done in fuel.

erm. bks mate.

You get taxed on private fuel based on the amount of cash (BIK) your company spends on your private fuel. (In my case via a fuel card.)

Unless you reimburse your employer for the cost of private mileage, then you pay no tax on private mileage.

[Frik]

japgt said:

wouldn't be looking at anything like 300-600 per month for the car, only looking at around the 200 month mark which will get me what i would like. hopefully a Lexus CT200H or Nissan Juke.

Not a managed lease then. Who pays for the servicing?

[mph1977]

Chipchap said:

My car has now gone up to the net equivalent of £346 per month [=£15.73 per day equiv]. My office is 2.6 miles away. In reality I would be better off with my own car but there is no opt out for my grade sadly.

Co cars actually cost you money if you live close to where you work.

So unless you are a 20% tax payer or liver fairly far from the office tread carefully as you can end up worse off

do you actually use your carfor work or is it just a 'perk car' ?

[mph1977]

XDA said:

uk89camaro said:

TwigtheWonderkid said:

If the firm pay for your private fuel, you get taxed heavily on that at a flat rate, regardless of whether you do 1000 or 20000 private miles. Do not let your firm pay for your private fuel, even if they offer to. Unless you do circa 20K private miles or more, it'll cost you more in tax than it would have done in fuel.

erm. bks mate.

You get taxed on private fuel based on the amount of cash (BIK) your company spends on your private fuel. (In my case via a fuel card.)

Unless you reimburse your employer for the cost of private mileage, then you pay no tax on private mileage.

which has to be the kindof point of difference between the 'perk 'car and the car actually used for work ...

[WhereamI]

From the company perspective it is quite possible that they don't see this as attractive, firstly they have to be intending to give a pay rise that is at least as much as the cost of providing the car, and that includes the hassle of doing it. It also sets a precedent that makes it hard to refuse to do the same for others. It also can be problematic because if you don't stay for the whole term of the lease, assuming they lease it, they are then stuck with a car they don't want when you go.

Be prepared for the possibility they will say no.

[New POD]

Chipchap said:

My car has now gone up to the net equivalent of £346 per month [=£15.73 per day equiv]. My office is 2.6 miles away. In reality I would be better off with my own car but there is no opt out for my grade sadly.

Co cars actually cost you money if you live close to where you work.

So unless you are a 20% tax payer or liver fairly far from the office tread carefully as you can end up worse off

Years ago, when the tax rules were different, a bloke I worked with had 5 kids, and the only company car on offer was a Rover 418D. He had previously a 505 estate with 7 seats.
He suggested they give him a rover 100, which was not on the 1 car list, so it was agreed that he wouldn't have one, but the department would have a pool car instead. He bought an old metro for getting to work, as his wife had a mini-bus for transporting the kids.

[Chipchap]

mph1977 said:

do you actually use your carfor work or is it just a 'perk car' ?

Yes I am doing around 24 or 25,000 miles per year overall. However my point was that a company car is no longer a perk.

The car B.I.K is c£203.24 per month this year net. This is what I pay HMRC in order to drive to do my job.

The fuel B.I.K. is c£127.92 per month this year net. This is what I pay HMRC to cover any personal miles.

Assume I go to the office for 12 days per month as this is classed as personal mileage for HMRC this is 5.2 x 12 = 62.4 miles at 32 mpg when cold = c£12.35.

So what this means is that I need to drive around 770 miles over weekends every month in order to break even on fuel.

Using the same basis of calculation I pay £203.24 for the convenience of a car. So assuming that I have 9 weekend days each month, that costs me £22.60 for each of those days and drive almost 78 miles each and every one of those days.

Do I enjoy having a nice car to drive, yes. Is it a perk, no I pay HMRC handsomely for it sitting here.

However my company are fairly inflexible on opting out or having no fuel card etc.


A

[mph1977]

Chipchap said:

mph1977 said:

do you actually use your carfor work or is it just a 'perk car' ?

Yes I am doing around 24 or 25,000 miles per year overall. However my point was that a company car is no longer a perk.
<snip>

where's the parrot

the fact is for 'perk' car users it is a perk regardless of the tax position ... 'fetch me another one this one has broken ! '

[Bullett]

So even at £200 per month you are looking at a 10%+ pay rise equivalent.

I couldn't find a quote for the Lexus at £200 for the mileage you mentioned, closer to £300 (+ VAT) no mention of what that included with regard to maintenance/insurance etc.

[mfmman]

uk89camaro said:

TwigtheWonderkid said:

If the firm pay for your private fuel, you get taxed heavily on that at a flat rate, regardless of whether you do 1000 or 20000 private miles. Do not let your firm pay for your private fuel, even if they offer to. Unless you do circa 20K private miles or more, it'll cost you more in tax than it would have done in fuel.

erm. bks mate.

You get taxed on private fuel based on the amount of cash (BIK) your company spends on your private fuel. (In my case via a fuel card.)

I'd always believed that if private fuel if paid by the employer, the BIK is a flat rate multiplied by the C02 percentage of the car, If this has changed could you please provide me with a link/source.

Otherwise I think this the current HMRC situation

http://www.hmrc.gov.uk/payerti/exb/a-z/c/cars-fuel...

[TwigtheWonderkid]

mfmman said:

uk89camaro said:

TwigtheWonderkid said:

If the firm pay for your private fuel, you get taxed heavily on that at a flat rate, regardless of whether you do 1000 or 20000 private miles. Do not let your firm pay for your private fuel, even if they offer to. Unless you do circa 20K private miles or more, it'll cost you more in tax than it would have done in fuel.

erm. bks mate.

You get taxed on private fuel based on the amount of cash (BIK) your company spends on your private fuel. (In my case via a fuel card.)

I'd always believed that if private fuel if paid by the employer, the BIK is a flat rate multiplied by the C02 percentage of the car, If this has changed could you please provide me with a link/source.

Otherwise I think this the current HMRC situation

http://www.hmrc.gov.uk/payerti/exb/a-z/c/cars-fuel...

That's my understanding. But uk89camero says I'm talking bks, so let's await his evidence. I'm always happy to be educated by someone who knows more than I do.

[japgt]

this is where i got my ideas from.

http://www.contracthireandleasing.com/business/car...

there was an offer on for 10k mileage at the 200 mark, but it seems to have disappeared from their listings but even 215-220 would be ok i think.

maintenance wise i assume that the company would have that through local dealership?? rather than as part of the deal.