Company car... To be or not to be?

[MC Bodge]

I currently own a Mk3 Mondeo estate that I'll be changing soon.

The option to have a company car or car allowance (a fairly reasonable £6500 ...minus tax) has arisen at my place of work.

Most people are generally of the view that company cars are a good thing, although I've always been of the view that having your own (used) car means being able to keep it in good mechanical condition myself, tweak it if necessary, fill it full of stuff, get it dirty, not worry about it and not having to answer to anybody if somebody scrapes it in a car park etc.

I also commute by motorbike most of the time so my car is on the driveway for ~4 days week. Motorbikes aren't supported by my company.

The car list is quite extensive, but, as expected, consists almost entirely of somewhat unappealing tiny cars, the Prius,eco/blue/green tax test mobiles from most manufacturers and small Audi/BMWs up to 'sport' editions (too small).

I'm not looking for a dragster, but a heavy family estate with 105bhp, although not dangerously slow, wouldn't do it for me when pressing-on.

There seems to be a lack of the mid-powered (~140bhp) family cars that I would be interested in.

I'd have to look into the figures and used prices, but I'm tempted to buy a used Mondeo or Octavia 140ps (or maybe a more powerful version, if cheap) estate in cash, which will be serviced at home, by moi and used to travel to meetings, weekends and holidays.




Any views and experiences would be welcome.

Edited by MC Bodge on Monday 14th November 13:07

[Kevin VRs]

Tax on benefit in kind (company car) is calculated based on P11D value of the car multiplied by the emissions % base. If you are not doing many miles a year in the car then a company car will likely cost far more than taking the allowance and getting your own car. The allowance is added to your salary and taxed at your marginal rate 20-40%. At 40% you will get over £300 a month extra in your monthly salary from £6500. If the car you take as a company car cost £20,000 and has a BIK % of 20% you would be paying tax on £4,000 per year.

In the above example the taxable value plus the allowance would be £10,500. This is the effective increase in income before tax.

What about fuel? If having a company car then if you get free fuel the tax hit is large. If no company car and free fuel the value of fuel supplied is added to salary and taxed. You can offset this by claiming back 45p per mile of company business (upto 10K miles, 25p over 10K) and reduce your taxanle income by this much (less any re-imbursements made by the company).

Hope this helps.

[MC Bodge]

I'll knock up a spreadsheet later.

I suspect that the company car is 'cheaper' than buying a new car, but maybe not a used one that isn't driven a lot.

[U T]

One thing people often overlook is that a company car, whilst it might appear to be more expensive, is a fixed cost. This can be quite useful in planning your finances. Insurance, repairs etc are all included.

Run your own car and you never know what financial calamity is waiting around the corner.

[MC Bodge]

It now appears that there are some reasonably powerful 140bhp Passat estates, which puts a different perspective on things.

I think I'd prefer a Mondeo, but not a 1.6 eco thing.

[GreatGranny]

Do you need to pay an additional amount for the Passat?

It will in a higher tax bracket than the 1.6 105bhp cars on offer.

[andy-xr]

Used to be the case in a company I worked at where they'd give a sliding scale allowance. £6k for less than 3 years, £350 for between 3 and 5 years. Fuel was paid flat rate 14ppm at the time (diesel was around 70ppl)

Only other stipulation was the car had to be able to carry 4 people to avoid people using 2 seaters etc.

Might be worth looking into incase there's any Gotchas