Company Car - Is it worth it??

[chuno]

Will be looking for a new everyday motor soon. I have the opportunity of a company car at work, but currently take the allowance.

The allowance is £4k or i can have a car up to the value of £14k

Not being an accountant, can someone please tell me is this how it works.

If i took the car, i would lose the allowance (£4k per year). I obviously pay tax on this (at say 22%). So i would therefore lose £3120 per year (after tax). Then on top of this i pay 'company car tax' based on emissions/value etc, which, depending on the car, works out to be somewhere of the region of say £750 a year (based on online calculators). That means that i'll be the best part of £4k a year (£12k over the 3 year period) worse off for a £14k car???

I know that includes all maintanance etc, (but not fuel), but it hardly seems worth it! It would be cheaper to buy the damn thing!!


Am i reading this right??

[sklar]

www.comcar.co.uk is the best calculator imo and unless you're looking at an incredibily dirty car then £750 seems way off unless you're a higher rate tax payer.

£14k doesn't get much in this day. Do they mean retail price or what they can get one for?

My choice if it was retail price is a Seat Ibiza Sport 105 TSI. £269 a year in cc tax - £22ish per month.

If you're higher rate I doubt I would even consider it in your shoes and keep the allowance.

Edited by sklar on Wednesday 16th March 16:35

[Matt UK]

How many miles will you be doing? It's often key.

If mega-miles, you may as well ruin a company car.
If not many miles, buy what you want (esp if you can run an older car)

[texasjohn]

sklar said:

www.comcar.co.uk is the best calculator imo and unless you're looking at an incredibily dirty car then £750 seems way off unless you're a higher rate tax payer.

This. I only pay £1000 a year for a 118d with a £24k list price as a higher rate taxpayer. If my car cost 14k and I was a lower rate taxpayer I would be paying something like

14000 * 13% * 22% = £400

List price * CO2 rating percentage * tax percentage = tax impact in your pocket

I think the highest CO2 rating percentage is something like 30% and I dont think any car under 14k has a big enough engine to create that much CO2.

sklar said:

£14k doesn't get much in this day. Do they mean retail price or what they can get one for?

And this too; 14k doesnt get much and note that income tax is based on the retail price of the car regardless of what the company actually pays for it.

I would take the 4k unless you are going to be driving more than 25000 miles a year.

[grgrgray]

Again, it depends on the business mileage you do, no impact on the tax you pay but affects other costs of the car.

If you do 50K - 60K miles per year, then its just not worth running your own car with servicing, tyres, depreciation.

[aruck]

Buy something yourself but nothing that will lose much money. Thats the key. I used to be much better off each year instead of having a company car. Then I started buying more expensive cars that depreciate more and it would now be cheaper for me to have a company car. Obviously having a company car limits choice and in my case would require me to have something dull with a diesel engine!

[Teebs]

grgrgray said:

Again, it depends on the business mileage you do, no impact on the tax you pay but affects other costs of the car.

If you do 50K - 60K miles per year, then its just not worth running your own car with servicing, tyres, depreciation.

This. I do 40k per year, running a car myself would be a pain.

[Vron]

Don't forget the horrendous price of fuel. I opted out in 2001 when unleaded was 72p /l. I have been opted back 'in' for the last 3 years. You will also need business class insurance not SDP. I take it the £4K is net?

[chuno]

Thanks for the replies.

A i thought, it will probably be best to keep taking the allowance, especially as i do less than 5k per year.

It's a shame really as i think that they are quite flexible as to car choice, but buying an older car that won't deperiate seems to be the way to go...

Just gotta convince the missus i need that focus RS mk1 now :-)