Tax and salary - Company car vs No Company car

[StuVT]

Hi all.
I am looking for some advice. My role is changing at work and I won't be travelling to other offices and I have the option to keep the company car. I also am in the fuel scheme for private fuel paid for.

I have done some calcs using an on line salary calculator using the standard tax code of 1185L against my current code of K92 and the savings in tax are £425 per month.

Now, I am thinking that I could easily run a car for much less a month. My commute is 25 miles each way. I have a classic car and a TVR, but would sell my sportsbike to fund a daily estate car. I enjoy older cars and am more than capable and equipped to keep running myself.

Is its as simple as using a normal tax code to accurately calculate the savings?

A colleague has also mentioned that if I give up the car, not only will I benefit from the tax saving but also they would have to compensate for the loss of the car as an increase in my salary as the car is part of my package.

I'm quite confused and would appreciate any advice.

Kind Regards,
Stu

[zedx19]

At my previous job I had a company car, a Mazda 6 which cost me about £120 a month in tax. If I opted out, I would have got paid £400 extra but would have lost the fuel card and had to have a car no older than 3 years. I also covered about 40k a year, therefore I stuck with the company car scheme.

When I moved jobs, my new employer offered me £450 per month if I opt out the company car scheme, plus I keep the fuel card and can have whatever car I wish, of any age. As my mileage is low (6k last year in my own car) and we have a pool car, I bought a 2010 5 pot Focus ST which is effectively a cheapish toy.

So yes, if you opt out and your company has no rules on cars plus your mileage is low, it can make a lot of sense. Your company will also pay you a car allowance, the amount of which should be in your contract?

[StuVT]

zedx19 said:

So yes, if you opt out and your company has no rules on cars plus your mileage is low, it can make a lot of sense. Your company will also pay you a car allowance, the amount of which should be in your contract?

I had a brief word with HR and they say that if I give up the company car I am not entitled to any increase in salary as its a benefit and I will be saving enough on the tax of said benefit.
Are they obligated to offer cash alternative? I'm saving the company money overall with the bills, corporation tax etc.

Stu

[rlg43p]

StuVT said:

I had a brief word with HR and they say that if I give up the company car I am not entitled to any increase in salary as its a benefit and I will be saving enough on the tax of said benefit.
Are they obligated to offer cash alternative? I'm saving the company money overall with the bills, corporation tax etc.

Stu

Your HR department are a bunch of tts: that's an unbelievable stance to take!

I suspect they are not obliged to do anything, but you would think that if they have any sense of the need to retain good employees they would offer a car allowance equivalent to the cost of providing the company car.

[zedx19]

That can't be right surely? So if you opt out there's zero benefit bar tax savings? Everywhere I've worked has either been company car or car allowance.

[Sheepshanks]

zedx19 said:

That can't be right surely? So if you opt out there's zero benefit bar tax savings? Everywhere I've worked has either been company car or car allowance.

Not if the car was role based, and you change roles to one that doesn't need a car. He's "lucky" to have been able to keep the car.

Sounds like it's not a very switched on company - having private fuel included is unusual these days as the tax is so high it rarely makes sense, as evidenced by the current £425/mth tax hit.

[TwigtheWonderkid]

rlg43p said:

StuVT said:

I had a brief word with HR and they say that if I give up the company car I am not entitled to any increase in salary as its a benefit and I will be saving enough on the tax of said benefit.
Are they obligated to offer cash alternative? I'm saving the company money overall with the bills, corporation tax etc.

Stu

Your HR department are a bunch of tts: that's an unbelievable stance to take!

I suspect they are not obliged to do anything, but you would think that if they have any sense of the need to retain good employees they would offer a car allowance equivalent to the cost of providing the company car.

It's not that unusual. Many companies offer a co car, but if you don't need it to do your job and it's a perk, and you don't want it due to the BIK hit, then that's your choice. But they don't offer a cash allowance in its place.

Edited by TwigtheWonderkid on Thursday 17th May 20:18