Company car: "Car Ownership Scheme" versus Contract Hire
Discussion
Looking for some advice from people who really understand company cars. All facts are numbers are 100% actual to add most value for me and others who may read this in the future. Just to include the Pistonheads factor, I'm selling my Q7 to get a Lotus Elise S2 Honda VTEC...now that I am getting a new company car as well.
I am hovering over the "Order" button for a new 520d, which with options is £33,885. According to my grade etc I must pay a Personal Uplift Contribution (PUC) of £131.45
1) is this number gross or net of tax & NI? HR/payroll can't tell me!
My Benefit in Kind (BIK) as a 40% tax payer is £150.73.
2) I understand this amount x 12 comes off my tax code. Is that right?
I have been advised by Lex Autolease that due to my annual mileage (25k, split 50/50 business/personal), my tax rate, my choice of car, that I have been placed in the employee "Car Ownership Scheme" (COS) as opposed to my company car being a contract hire vehicle. I know that it will be my name on the V5 from day one. I am told that I am not liable for Benefit in Kind contribution, but instead pay the exact same amount (£150.73) to my employer.
3) Hence the relevance of "is this amount net of tax/NI". And, will it still be net of tax/ni under this new arrangement.
4) I think with the vehicle being in my name, and not paying BIK, I will be able to claim tax relief on the difference between the 17p/mile I get for business miles and 45p (for 1st 10k miles...)
Anyone who actually understands this, and more importantly can provide advice on the impact to me, would be greatly appreciated! I really am getting very little advice from my employer or Lex Autolease, I know that sounds silly but that's how it is!
I am hovering over the "Order" button for a new 520d, which with options is £33,885. According to my grade etc I must pay a Personal Uplift Contribution (PUC) of £131.45
1) is this number gross or net of tax & NI? HR/payroll can't tell me!
My Benefit in Kind (BIK) as a 40% tax payer is £150.73.
2) I understand this amount x 12 comes off my tax code. Is that right?
I have been advised by Lex Autolease that due to my annual mileage (25k, split 50/50 business/personal), my tax rate, my choice of car, that I have been placed in the employee "Car Ownership Scheme" (COS) as opposed to my company car being a contract hire vehicle. I know that it will be my name on the V5 from day one. I am told that I am not liable for Benefit in Kind contribution, but instead pay the exact same amount (£150.73) to my employer.
3) Hence the relevance of "is this amount net of tax/NI". And, will it still be net of tax/ni under this new arrangement.
4) I think with the vehicle being in my name, and not paying BIK, I will be able to claim tax relief on the difference between the 17p/mile I get for business miles and 45p (for 1st 10k miles...)
Anyone who actually understands this, and more importantly can provide advice on the impact to me, would be greatly appreciated! I really am getting very little advice from my employer or Lex Autolease, I know that sounds silly but that's how it is!
My advice would be not to commit to or sign anything until you have total clarification of EVERYTHING from your HR Department - it sounds like there are lots of figures flying round and I would want to know exactly what I'd be liable for.
If the V5 is in your name, I assume the agreement would also be in your name - what would happen if you were made redundant or you left?
If the V5 is in your name, I assume the agreement would also be in your name - what would happen if you were made redundant or you left?
LHD said:
Any PUC or contribution is paid after tax...
Thanks LHD. Any idea on the BIK bit, ie is it the case that (12 x £150.73) = £1808.76 would come off my tax code and therefore the 'cost' to me is £1808.76 in lost tax free allowance, which at 40% means the actual cost to me is (£1808.76 * 40%) = £723.51 ???That's the BIK route...if I do this Car Ownership Scheme all of a sudden I don't pay company car tax and instead pay my employer £1808.76 which I'm gonna guess isn't tax free and so I'm worse off doing that scheme?
God I hate all this nitty gritty, it was so much more fun when I went out and splashed £25k on a 911 Turbo 2 years ago.....
Orgasmiccry said:
LHD said:
Any PUC or contribution is paid after tax...
Thanks LHD. Any idea on the BIK bit, ie is it the case that (12 x £150.73) = £1808.76 would come off my tax code and therefore the 'cost' to me is £1808.76 in lost tax free allowance, which at 40% means the actual cost to me is (£1808.76 * 40%) = £723.51 ???That's the BIK route...if I do this Car Ownership Scheme all of a sudden I don't pay company car tax and instead pay my employer £1808.76 which I'm gonna guess isn't tax free and so I'm worse off doing that scheme?
God I hate all this nitty gritty, it was so much more fun when I went out and splashed £25k on a 911 Turbo 2 years ago.....
It's why i've changed from waiting for a Mk7 Golf GTI to going for a new A3 1.6 TDI S-Line. 99g/km CO2 and no contribution.
You may find this link useful.
Only dealt with basic company car and fuel allowance tax myself. Not sure if I'd be happy to be responsible in the way you're being forced to. Either have a company car with the firm taking on finance shortfall, gap insurance, repair, insurance, breakdown cover etc or take a cash option and do what you want.
Seems like you've got the worst of both worlds.
Only dealt with basic company car and fuel allowance tax myself. Not sure if I'd be happy to be responsible in the way you're being forced to. Either have a company car with the firm taking on finance shortfall, gap insurance, repair, insurance, breakdown cover etc or take a cash option and do what you want.
Seems like you've got the worst of both worlds.
Stubby Pete said:
Either have a company car with the firm taking on finance shortfall, gap insurance, repair, insurance, breakdown cover etc or take a cash option and do what you want.
Seems like you've got the worst of both worlds.
It's not quite that bad, it IS a company car, finance/gap, repair, insurance, servicing, tyres, tax, breakdown etc is all covered by Lex. As part of those monthly numbers...Seems like you've got the worst of both worlds.
Orgasmiccry said:
It's not quite that bad, it IS a company car, finance/gap, repair, insurance, servicing, tyres, tax, breakdown etc is all covered by Lex. As part of those monthly numbers...
Not as bad as I first thought then, they're still resteicting your options though. No chance of you getting a deal from a local dealer, using a "delivery mileage" car or older or even shopping round for a better finance.It is what it is I guess but I would put money on the firm being better off than you with this deal. They've also tied in your employment by making you responsible for the finance. What if they fold or lay you off, will you still be paying off the car?
Your PUC is deducted from the BIK.
So the BIK of your 5er is about £6k. Less the PUC of £1.5k = £4.5k.
This is treated as taxable income. So the monthly tax you pay will be £4.5*40% / 12 = £150.
So the total cost to you will be about £280 per month net (PUC+BIK).
So the BIK of your 5er is about £6k. Less the PUC of £1.5k = £4.5k.
This is treated as taxable income. So the monthly tax you pay will be £4.5*40% / 12 = £150.
So the total cost to you will be about £280 per month net (PUC+BIK).
Edited by Amateurish on Wednesday 24th October 11:36
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