Company car vs private purchase?
Discussion
gizlaroc said:
TwigtheWonderkid said:
Seat Leon Ecomotive. Try and control your envy.
Hahha, that actually sounds good for £80 a month! stumpage said:
Why is it a cheek? I have 2x reps who I provide with a car of their choice to some rules. But as the person responsible for their safety while at work and the company as a whole, I have complete control over how those cars are kept and looked after. Also you don't have the hassle of making sure that they buy a suitable car for business, that they keep it well maintained, properly insured, taxed MOT'd, clean etc. While a car allowance may work well for the employee they are a bit of a headache to administer. Remember if they have a crash while on business due to their penny pinching and not replacing that (add part here) and injure themselves or another who will be responsible? Yep the boss.
I am also the boss so I do see it from both sides. Just that I have a few mates that have a company car who don't do any work miles, it is classed as a 'bonus' but they are cars they don't want, and there is no option to opt out, which is what grates them.
One of them has just said he doesn't want it, which again has caused issues as he is now considered as ungrateful, but he has a C4S as his car and his wife has an older S-Max for family duties. The company doesn't seem to understand that having a company car with just cost him money each month, it is not a bonus for him.
If you have sales guys who use their cars on the road a car you are in control of is always going to win.
But I have so many customers of mine that have company 7 series, S Class, A8's, 535d's, A7's etc. etc. and you would think these are guys that are smart enough to do the sums before hand.
One of them who has just picked up a 730d M-Sport said he is a bit jarred off that it is costing him nearly £700 a month in BIK tax! Seriously? Why would you have that as a company car?
If you get a BMW 320d or even a 520d then it can make more sense.
But say you take the current favourite from BMW, the M135i, you can contract hire that for £1500 deposit and then £250 a month doing 10k miles a year.
The BIK tax on that car for someone at 40% is £501 a month from January.
Yet you will still get some out there taking it as a company car, or decide they better have the 120d instead as that is only £283 a month with nav added.
That is why I say that for many on here that like 'cars' doing some sums could get you out of the 120d and into the M135i and not cost you any more.
If the company then give you the £350 a month they budgeted, you have £2500 a year to go towards insurance and servicing as well.
CraigyMc said:
My company BMW (at list) would have been £38,600. Apparently somebody on the internet thinks I "need to do some proper sums".
See my post above Craig, you have made it work for you, as I would expect most sensible people to do, but it is amazing how many simple don't look at the figures. gizlaroc said:
Most company cars are pointless these days, the BIK tax is now working out more than the rentals on anything nice to own.
You are financially better off to say you don't want it and just buy it yourself, that is before even discussing an allowance in lieu.
Not if you are driving 50K a year.You are financially better off to say you don't want it and just buy it yourself, that is before even discussing an allowance in lieu.
grayze said:
gizlaroc said:
Most company cars are pointless these days, the BIK tax is now working out more than the rentals on anything nice to own.
You are financially better off to say you don't want it and just buy it yourself, that is before even discussing an allowance in lieu.
Not if you are driving 50K a year.You are financially better off to say you don't want it and just buy it yourself, that is before even discussing an allowance in lieu.
berlintaxi said:
Hey, he's a boss.....what do we know?
Don't smarmy 
, I only mentioned that as I was agreeing that I do see it from both sides. I also put ....
Most company cars are pointless these days, the BIK tax is now working out more than the rentals on anything nice to own.
You are financially better off to say you don't want it and just buy it yourself, that is before even discussing an allowance in lieu.
My point was, if you want to be in a 320d, 520d, 2.0tdi A4 or A6 then yeah, a company car can work, but get into a 330d, E350 etc. and it starts to get blurred as the BIK tax starts to cost more then the monthlies.
S8QUATTRO said:
If you had the choice would you lease a new car for circa £400 a month or buy a used one with the car allowance?
With regards to buying one, £10k buys a really nice diesel motor, Audi A8, A6, Mercedes CLS, E, C class, Bmw 320 m sport, 520d etc. if you get a used car with an original high retail p11d value, what tax do you pay?
Will be doing 10 to 15k a year, not fussed about buying a high miler either
Thanks
This was the original post.With regards to buying one, £10k buys a really nice diesel motor, Audi A8, A6, Mercedes CLS, E, C class, Bmw 320 m sport, 520d etc. if you get a used car with an original high retail p11d value, what tax do you pay?
Will be doing 10 to 15k a year, not fussed about buying a high miler either
Thanks
You pay BIK on the new retail price plus options, doesn't matter how old it is.
Doing 10-15k miles a year, you could be in the following.....
http://www.gogreenleasing.co.uk/business-lease-car...
Or...
http://www.bluechillicars.com/business-contract-hi...
As a company car it would more likely be a 320d or a C220cdi.
And that was my point to the OP.
gizlaroc said:
berlintaxi said:
You need to grow up then, and learn not to give a fk what other people are doing, your life, live it how you want.
Also you need to learn how to read contract hire deals properly, but that's just a minor point.
Haha, steady on treacle. k what other people are doing, your life, live it how you want.Also you need to learn how to read contract hire deals properly, but that's just a minor point.
If your happy to pay twice as much as the next man for things in life that is great, but I am allowed to begrudge paying twice as much as well.
I have done so many contract hire deals I think I know how they work.
Take the M5 you mentioned.
You say it will cost a private buyer £1,250 a month over 2 years versus £520 when leased.
So the lease costs approx £12k. How on earth is a brand new M5 only depreciating by £12k over 2 years? And that's without factoring in profit for the lease company..... how are they doing that?
oyster said:
So the lease costs approx £12k. How on earth is a brand new M5 only depreciating by £12k over 2 years? And that's without factoring in profit for the lease company..... how are they doing that?
If I may opine: leasing companies get better purchase deals from manufacturers than the public can.In some cases the leasing companies are manufacturers.
ETA a couple of examples:
Leaseplan: 50% owned by VW Group.
Alphabet: 100% owned subsidiary of BMW group.
Edited by CraigyMc on Thursday 28th November 12:05
CraigyMc said:
oyster said:
So the lease costs approx £12k. How on earth is a brand new M5 only depreciating by £12k over 2 years? And that's without factoring in profit for the lease company..... how are they doing that?
If I may opine: leasing companies get better purchase deals from manufacturers than the public can.In some cases the leasing companies are manufacturers.
ETA a couple of examples:
Leaseplan: 50% owned by VW Group.
Alphabet: 100% owned subsidiary of BMW group.
Edited by CraigyMc on Thursday 28th November 12:05
This is how it was explained to me by someone at Audi in finance.
Say Inchape buy the car, they can get around 12-16% discount on a new vehicle, they also then can get roughly another 5-10% by hitting the targets for the quarter, sell 100 cars and get your quarterly kick back from the manufacturer, sell 200 and it may be trippled. Easy to do when you're hiring them for peanuts.
Plus they can still take the BMW AG offers that are about, currently £6500 dealer contribion (done from BMW) but was £10,000 a few weeks back on an M5.
Also, as they own the car they can claim the VAT back on them, they are only charging vat on the rental, it is not like they are charging vat on the item itself.
Same as a tool hire company that is vat registered.
Not sure if they can still only claim half the vat though as they as using it, to hire out.
So, take your £74k M5, less say 20% for the trade purchase and kick back leaves it at £59k.
Then take off the VAT (at 50%) that leaves it at £53000 that car owes them.
They would then look at what it would sell for to the used department in 24 months, say it is £35k, they need to get £18k back over that period.
Knock off that dealer contribution of £10000 and they need to find £8k over the 24 month rental period.
9 x 23 £439+20% vat = £12200.
Leaves them with £4000 profit.
Now I would guess most cars only see £1000 to £3000 profit over that period, but when you get companies hiring out 10 cars a day, that is around £5m of gross profit, and it doesn't even need a showroom, a team of 5 people can run that set up.
Don't even need stock, they simply order the car when the paperwork is signed.
But he was pointing out that sometimes, when BMW or Audi or whoever want to get metal out there and sales figures up, they do it through contract hire as they can hide discounts, they keep control of the used market, there is a flood of used cars that come onto the market, but they control the pricing of them.
It might all be nonsense, but that was how he explained what he does.
Say Inchape buy the car, they can get around 12-16% discount on a new vehicle, they also then can get roughly another 5-10% by hitting the targets for the quarter, sell 100 cars and get your quarterly kick back from the manufacturer, sell 200 and it may be trippled. Easy to do when you're hiring them for peanuts.
Plus they can still take the BMW AG offers that are about, currently £6500 dealer contribion (done from BMW) but was £10,000 a few weeks back on an M5.
Also, as they own the car they can claim the VAT back on them, they are only charging vat on the rental, it is not like they are charging vat on the item itself.
Same as a tool hire company that is vat registered.
Not sure if they can still only claim half the vat though as they as using it, to hire out.
So, take your £74k M5, less say 20% for the trade purchase and kick back leaves it at £59k.
Then take off the VAT (at 50%) that leaves it at £53000 that car owes them.
They would then look at what it would sell for to the used department in 24 months, say it is £35k, they need to get £18k back over that period.
Knock off that dealer contribution of £10000 and they need to find £8k over the 24 month rental period.
9 x 23 £439+20% vat = £12200.
Leaves them with £4000 profit.
Now I would guess most cars only see £1000 to £3000 profit over that period, but when you get companies hiring out 10 cars a day, that is around £5m of gross profit, and it doesn't even need a showroom, a team of 5 people can run that set up.
Don't even need stock, they simply order the car when the paperwork is signed.
But he was pointing out that sometimes, when BMW or Audi or whoever want to get metal out there and sales figures up, they do it through contract hire as they can hide discounts, they keep control of the used market, there is a flood of used cars that come onto the market, but they control the pricing of them.
It might all be nonsense, but that was how he explained what he does.
TwigtheWonderkid said:
Utter rubbish. Most company cars are a fantastic deal for the driver. The only time it becomes questionable is when you want to drive something high powered or really expensive, and even then it depends on the cash in lieu situation.
I have a company car. List price £20K, it costs me £84/month as a 40% tax payer. If I was a standard rate tax payer it would only cost me £42/month. For a £20K car, insured in London, for any driver including my 17 y/o son, all repairs and maintenance paid for. The only thing I have to pay is private fuel, and my car averages 60 mpg anyway! The only down side is that it isn't an exciting car.
The other benefit of a company car, regardless of what it is, is that it's a fixed cost. You know exactly what it's going to cost you every month, for 3yrs in advance.
£84 ? How much cash allowance do you forgo for having the car ?I have a company car. List price £20K, it costs me £84/month as a 40% tax payer. If I was a standard rate tax payer it would only cost me £42/month. For a £20K car, insured in London, for any driver including my 17 y/o son, all repairs and maintenance paid for. The only thing I have to pay is private fuel, and my car averages 60 mpg anyway! The only down side is that it isn't an exciting car.
The other benefit of a company car, regardless of what it is, is that it's a fixed cost. You know exactly what it's going to cost you every month, for 3yrs in advance.
gizlaroc said:
Muzzer79 said:
+1
I have a company car, with private fuel included. I pay nothing to run it whatsoever apart from my monthly tax bill, which is under £200.
Show me a £20k car that I can buy or lease myself, maintain, insure and fuel for under 200 quid a month.
It's a no-brainer and it's convenient.
I had a puncture a few weeks back - not my problem.
Servicing? Not my problem
Something breaks? Not my problem
If I get made redundant? I just hand it back and go to the next one - I'm not left with a depreciating asset sitting on the drive.
So for you it is worth it for piece of mind. I have a company car, with private fuel included. I pay nothing to run it whatsoever apart from my monthly tax bill, which is under £200.
Show me a £20k car that I can buy or lease myself, maintain, insure and fuel for under 200 quid a month.
It's a no-brainer and it's convenient.
I had a puncture a few weeks back - not my problem.
Servicing? Not my problem
Something breaks? Not my problem
If I get made redundant? I just hand it back and go to the next one - I'm not left with a depreciating asset sitting on the drive.
What car is it?
How many miles for work and for pleasure?
6k-ish work, 13-14k-ish pleasure
deltashad said:
When I buy a car I want it to belong to me.
Very wise IMO.I'd start with the question, can you afford to buy a car outright? If so, that's what I'd do; if not, I'd lease.
If you can afford to buy your own car it's a simple question of how much "newness" you want and how much "performance" you want. The company schemes are usually priced around a new 1.4, 1.6 or something like that from the mainstream manufacturers.
I'd by a 2nd hand krautmobile with a bit of quality which would work out around the same cost overall.
The cheapskate approach is to buy an older Fiesta or Micra and take a clear profit every month!!
Super Slo Mo said:
CraigyMc said:
oyster said:
So the lease costs approx £12k. How on earth is a brand new M5 only depreciating by £12k over 2 years? And that's without factoring in profit for the lease company..... how are they doing that?
If I may opine: leasing companies get better purchase deals from manufacturers than the public can.In some cases the leasing companies are manufacturers.
ETA a couple of examples:
Leaseplan: 50% owned by VW Group.
Alphabet: 100% owned subsidiary of BMW group
If you add up what was paid in company car payments plus the purchase price I paid at the end of the agreement when I took the option to buy it outright, plus the company car tax for those years, you cannot get to a figure you could feasibly buy the car for from new as a member of the public, and that doesn't account for the tyres, insurance, servicing and so on that were included in the two years it was a company vehicle.
I do now own the car outright and it's a depreciating asset at this point, but it's a car I know the history of (nobody else has ever driven it except for delivery on day 1 and any miles it does while being "serviced" by BMW), and I know it's been (a) mechanically looked after properly and (b) rarely driven hard. You can't really put a price on the last two points.
Edited by CraigyMc on Thursday 28th November 14:32
gizlaroc said:
Just that I have a few mates that have a company car who don't do any work miles, it is classed as a 'bonus' but they are cars they don't want, and there is no option to opt out, which is what grates them.
One of them has just said he doesn't want it, which again has caused issues as he is now considered as ungrateful, but he has a C4S as his car and his wife has an older S-Max for family duties. The company doesn't seem to understand that having a company car with just cost him money each month, it is not a bonus for him.
Wife is in this situation, but luckily is offered an opt-out. She's just been promoted and gets the option of a car. I think it works out something along the lines of a choice between an extra £225 per month take-home or a £120 per month deduction in pay and a 1.6 litre diesel Mondeo. So effectively it would cost her £345 per month to have the use of a slow, boring soot-chucker.One of them has just said he doesn't want it, which again has caused issues as he is now considered as ungrateful, but he has a C4S as his car and his wife has an older S-Max for family duties. The company doesn't seem to understand that having a company car with just cost him money each month, it is not a bonus for him.
I can see both sides of the argument for company car v's private via cash allowance.
One major factor is annual mileage. Most attractive PCPs seem to be based on 10,000 miles per year but if you do, say, 30,000 miles per year the numbers are suddenly much less attractive.
There is also the matter of job security. In early 2007 I was made redundant along with every other person in the same division of the company I worked for. I handed back the keys to the company BMW and said "Bye Bye". I had a colleague who had opted out and taken a cash allowance. He suddenly found himself with no job, a mortgage, two young kids and an Audi which was still costing him £550 per month. In desperation, he eventually got the Audi dealer to buy it for cash and bought himself out of his lease but he still took a huge hit on it.
I currently drive a Diesel (boo hiss) Passat Estate. It's a Sport, but not remotely sporty, is specced to the hilt (over £30k) and is fully maintenanced, tyres, servicing, everything. It would be lunacy to buy this as a private purchase but it costs me £170 per month in BIK. I reimburse my private fuel costs at about £40 per month so I'm all in for £200 pm.
It covers miles effortlessly and the economy is so good that I only need to fill up around once a week. Things like that are important if you're doing big miles.
Ultimately, it's a tool but it also suits me perfectly for throwing my fishing tackle into and heading off for the weekend. I had the choice of "nicer" cars but the numbers didn't add up, for me.
"You pays your money and takes your choice". Just make sure you look at ALL the numbers first!
One major factor is annual mileage. Most attractive PCPs seem to be based on 10,000 miles per year but if you do, say, 30,000 miles per year the numbers are suddenly much less attractive.
There is also the matter of job security. In early 2007 I was made redundant along with every other person in the same division of the company I worked for. I handed back the keys to the company BMW and said "Bye Bye". I had a colleague who had opted out and taken a cash allowance. He suddenly found himself with no job, a mortgage, two young kids and an Audi which was still costing him £550 per month. In desperation, he eventually got the Audi dealer to buy it for cash and bought himself out of his lease but he still took a huge hit on it.
I currently drive a Diesel (boo hiss) Passat Estate. It's a Sport, but not remotely sporty, is specced to the hilt (over £30k) and is fully maintenanced, tyres, servicing, everything. It would be lunacy to buy this as a private purchase but it costs me £170 per month in BIK. I reimburse my private fuel costs at about £40 per month so I'm all in for £200 pm.
It covers miles effortlessly and the economy is so good that I only need to fill up around once a week. Things like that are important if you're doing big miles.
Ultimately, it's a tool but it also suits me perfectly for throwing my fishing tackle into and heading off for the weekend. I had the choice of "nicer" cars but the numbers didn't add up, for me.
"You pays your money and takes your choice". Just make sure you look at ALL the numbers first!
Vee said:
TwigtheWonderkid said:
Utter rubbish. Most company cars are a fantastic deal for the driver. The only time it becomes questionable is when you want to drive something high powered or really expensive, and even then it depends on the cash in lieu situation.
I have a company car. List price £20K, it costs me £84/month as a 40% tax payer. If I was a standard rate tax payer it would only cost me £42/month. For a £20K car, insured in London, for any driver including my 17 y/o son, all repairs and maintenance paid for. The only thing I have to pay is private fuel, and my car averages 60 mpg anyway! The only down side is that it isn't an exciting car.
The other benefit of a company car, regardless of what it is, is that it's a fixed cost. You know exactly what it's going to cost you every month, for 3yrs in advance.
£84 ? How much cash allowance do you forgo for having the car ?I have a company car. List price £20K, it costs me £84/month as a 40% tax payer. If I was a standard rate tax payer it would only cost me £42/month. For a £20K car, insured in London, for any driver including my 17 y/o son, all repairs and maintenance paid for. The only thing I have to pay is private fuel, and my car averages 60 mpg anyway! The only down side is that it isn't an exciting car.
The other benefit of a company car, regardless of what it is, is that it's a fixed cost. You know exactly what it's going to cost you every month, for 3yrs in advance.
I'm also confused by this, as I know the way co. car tax works, and working backwards 84/mth at 40% gives an annual taxable charge of c.£2,500. Which on a £20k car is a taxable percentage of 12.5%...except the rates go from 15 to 35%, unless they've changed recently...
Edit: Checked - they have changed. But 12-13% is a low-emissions petrol car, so probably a 1.4 / 1.6 eco-biased n/a lump, or maybe that nasty 1.2TSi thing. So £1k in tax plus say £3k cash lost on the sacrifice of a £5k car allowance. What PH-worthy car could we get for £4k a year all-in (except fuel - so dep'n, tax, ins, service/tyres, warranty (to be fair))??? Probably have to be £12-14k purchase price for that bracket, and reasonably new to comply with car allowance regs...sounds like 3-4y.o. Golf GTi territory to me, as a mainstream starter...
Edited by havoc on Thursday 28th November 21:17
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