Opt-in to my company car scheme? (currently take the cash)

[kmpowell]

As part of my 'package' my employer gives me a company car allowance (£625pcm), which I take as cash and is paid as salary to be taxed accordingly (after tax it works out at c£330pcm take home).

This is because I do not need or use a company car, and fundamentally the cars on the list were all boring 4pot diesels.

My personal circumstances (not work) are changing where I need to change my car, so out of curiosity I asked for the current car list and because the company have recently changed their lease provider, there are now a couple of interesting petrol options (S3, 340i, JCW Countryman, Golf R Estate), all on 20k miles per annum.

A Golf R estate, which also has an allowance of £2800 of options on top of the list price, and metallic paint, would be a perfect car, and there is no way I could get one for £330pcm with no upfront payment if I went PCP or PCH. Given the car will not be used for any business use, only personal use to about 12-15k miles a year (me paying for the fuel I assume), and I know nothing about how company car schemes work, will I be worse off financially opting back in?

Thanks

[Chris Stott]

If you take the company car, you’ll lose the £330 month in salary, and you’ll have to pay company car tax, which will be a decent chunk on a golf r/340.

[Jamessd]

VW’s website provides a company car tax calculator.

https://www.volkswagen.co.uk/fleet/calculators/com...

Looks like in the region of £200 extra tax per month for a basic rate payer, and double that for the higher rate.

[kmpowell]

Chris Stott said:

If you take the company car, you’ll lose the £330 month in salary, and you’ll have to pay company car tax, which will be a decent chunk on a golf r/340.

Thanks, that's what I feared. I had hoped that opting back into the scheme would simply lose me the gross £625 a month that goes into my pay-packet, and then all other costs would be taken care of in the company car scheme, leaving me with just fuel (and possibly insurance) to pay.

It seems that's not the case and I'll lose my £330 'take home' per month PLUS I will also have to pay (according to the calculator linked above) circa £400 a month extra from my newly reduced take home pay each month ?

I'll just carry on taking the cash if that's the case.

[Chris Stott]

Correct. And why I gave up my company car some years ago. Only makes sense if you’re doing big mileage, or if you go for something with super low emissions.

[TwigtheWonderkid]

Chris Stott said:

Correct. And why I gave up my company car some years ago. Only makes sense if you’re doing big mileage, or if you go for something with super low emissions.

Those are two reasons for taking a company car, but there are others.

No matter what it costs, it's a fixed cost. Your own car never is. That's important for some people.

Insurance costs. These are variable. I have 2 sons. They've been able to drive my company car since they were 17, at no cost to me. To add 2 teenage sons to my own private car policy in London was around £5K

A guy in his 20s with a new car in a big city with maybe a claim in the recent past and a couple of speeding offences can pay thousands for insurance. A company car with insurance provided begins to make more sense.

[Condi]

^^

You're right, once you take into account all the costs and individual circumstances then its not all that clear cut.

We made a spreadsheet at work which included every cost and tax we could think of. On 20% tax the company car was a winner most of the time. Above that then the results were very marginal, £1k/yr maybe here or there. If your private car had a big bill for a new clutch for example, then it would wipe out a year's worth of benefits, but if you wanted to drive something other than a 1.6 or 2.0 eco-diesel then private was often best.