Company Car or Allowance - Odd Situation
Discussion
Bit of an odd one this, as I couldn’t find a clear answer after a good few hours of research I thought I’d ask the oracle that is PH!
My employer has offer me a company car as an incentive due to me relocating. However, my role doesn’t actually entail me having to do that many business miles (will be less than 2k per year), but I do quite a big personal mileage (around 25k per year which includes commuting to work). Now, I know I’ve only been offered a car as a sweetener, but I don’t want to get hammered with the myriad of taxes and additional costs (none of which I can figure out). I don’t have an indication of car type/budget yet as this is still in the early planning stages with my employer, but I know I’m going to get lumped with something that’s frankly a bit crap going by what else is in the car park!
The question I need answered is, because I’m doing such low business miles would it make more sense to see if I can get a car allowance, therefore giving me a bit more freedom of choice about what I get to drive, rather than just lumping for the company car option and hoping for the best?
I’m aware of the risks of buying something myself (tax, insurance, servicing, tyres, breakdown cover etc), but it would be my intention to buy something nearly new (Octavia VRS diesel is the current preferred option) anyway and just run it until it dies. I know the allowance won’t cover me for the full amount of the finance deal, but I’d be quite happy to top it up to be able to drive something half decent. Whilst the idea of a company car is quite appealing, I’m leaning more towards the allowance (if they’ll let me) due to the type of mileage that I do. None of this is based on fact, I’m just guessing as I can’t figure out which is the most sensible/cost effective option!
Suggestions appreciated!
My employer has offer me a company car as an incentive due to me relocating. However, my role doesn’t actually entail me having to do that many business miles (will be less than 2k per year), but I do quite a big personal mileage (around 25k per year which includes commuting to work). Now, I know I’ve only been offered a car as a sweetener, but I don’t want to get hammered with the myriad of taxes and additional costs (none of which I can figure out). I don’t have an indication of car type/budget yet as this is still in the early planning stages with my employer, but I know I’m going to get lumped with something that’s frankly a bit crap going by what else is in the car park!
The question I need answered is, because I’m doing such low business miles would it make more sense to see if I can get a car allowance, therefore giving me a bit more freedom of choice about what I get to drive, rather than just lumping for the company car option and hoping for the best?
I’m aware of the risks of buying something myself (tax, insurance, servicing, tyres, breakdown cover etc), but it would be my intention to buy something nearly new (Octavia VRS diesel is the current preferred option) anyway and just run it until it dies. I know the allowance won’t cover me for the full amount of the finance deal, but I’d be quite happy to top it up to be able to drive something half decent. Whilst the idea of a company car is quite appealing, I’m leaning more towards the allowance (if they’ll let me) due to the type of mileage that I do. None of this is based on fact, I’m just guessing as I can’t figure out which is the most sensible/cost effective option!
Suggestions appreciated!
this place is useful:
http://www.comcar.co.uk/
the advantage with a company car is that they are replaced every 60k miles, and all consumables are paid for, so ideal if you do high miles.
don’t forget you'll be taxed on any allowance.
do the maths, does the allowance - income tax + benefit in kind allow you to get a new ##### every 3yrs?
obviously you could save money by getting something 2yrs old and keeping it longer...
Custard
http://www.comcar.co.uk/
the advantage with a company car is that they are replaced every 60k miles, and all consumables are paid for, so ideal if you do high miles.
don’t forget you'll be taxed on any allowance.
do the maths, does the allowance - income tax + benefit in kind allow you to get a new ##### every 3yrs?
obviously you could save money by getting something 2yrs old and keeping it longer...
Custard
GadgeS3C said:
Don't assume that happens everywhere - we're 100k or 4 years
Gary
I've heard of longer too. When I was younger my Dad had the same Mk2 Golf company car for 10 years (1990-2000ish) although I think they had been bugging him to change it for some time. Had at least 130,000 miles on the clock when he gave it back to the lease company IIRC. Gary
Basic assumptions on a "normal" diesel car and a "normal" wage.
You'll have to pay somewhere between £80-140 per month in tax for the car, and if you get your fuel paid for, a similar amount for the tax on that.
So between £160-240 for a company car.
If you get an allowance, it would be between £350-500, but you will then be taxed on that so you'll only get £250-400.
If you do 25k per year, what ever you buy will lose a fortune in depreciation.
I've had company cars for the last 20 years, and I like the convenience of phoning the transport department and saying "my car is broken, can you get me another one" rather than worrying about potential £1 or £2k bills for repairs.
You might not get your first choice of car, but it should be worry free.
You'll have to pay somewhere between £80-140 per month in tax for the car, and if you get your fuel paid for, a similar amount for the tax on that.
So between £160-240 for a company car.
If you get an allowance, it would be between £350-500, but you will then be taxed on that so you'll only get £250-400.
If you do 25k per year, what ever you buy will lose a fortune in depreciation.
I've had company cars for the last 20 years, and I like the convenience of phoning the transport department and saying "my car is broken, can you get me another one" rather than worrying about potential £1 or £2k bills for repairs.
You might not get your first choice of car, but it should be worry free.
Driving a high personal mileage probably means that a company car is a good option for you. This way you'll be protected against the huge depreciation you'll suffer with your own car. Plus maintenance + servicing will be much higher.
If you get a company car with less than 100g/km CO2 then the BIK rate will be 10% / 13% (petrol / diesel). You need to do a simple calculation to compare the options financially:
Company car cost = company car tax + net loss of allowance
Private car cost = personal lease + VED + insurance + maintenance/servicing
If you get a company car with less than 100g/km CO2 then the BIK rate will be 10% / 13% (petrol / diesel). You need to do a simple calculation to compare the options financially:
Company car cost = company car tax + net loss of allowance
Private car cost = personal lease + VED + insurance + maintenance/servicing
Amateurish said:
Driving a high personal mileage probably means that a company car is a good option for you. This way you'll be protected against the huge depreciation you'll suffer with your own car. Plus maintenance + servicing will be much higher.
If you get a company car with less than 100g/km CO2 then the BIK rate will be 10% / 13% (petrol / diesel). You need to do a simple calculation to compare the options financially:
Company car cost = company car tax + net loss of allowance
Private car cost = personal lease + VED + insurance + maintenance/servicing
Is there anything "interesting" to a PH'er which would qualify?If you get a company car with less than 100g/km CO2 then the BIK rate will be 10% / 13% (petrol / diesel). You need to do a simple calculation to compare the options financially:
Company car cost = company car tax + net loss of allowance
Private car cost = personal lease + VED + insurance + maintenance/servicing
Well, it's likely the company car option will be something like a Golf/Focus, nothing to set the earth on fire. What I couldn’t figure out using the online calculators was would the BIK cripple me as I was doing such a high personal mileage compared to a tiny business mileage? I haven’t been given a budget yet for a Company car, I suspect it will just be a case of ‘here’s what you’re getting like it or lump it’, whereas my view is if I’m spending a huge amount of time in the car (which I will be) I’d rather have something I actually want. Plus a lot of my mileage is motorway, so options like cruise I deem essential where as my work doesn't!
My brother works for a main dealer so I know I can get a half decent deal on something nearly new if I finance it, but I guess it’s a balance between what I’m willing to drive and how much I’m willing to pay for it. I just don’t want to end up trapped in a crap situation with a crap car that I then can’t get out of!!
My brother works for a main dealer so I know I can get a half decent deal on something nearly new if I finance it, but I guess it’s a balance between what I’m willing to drive and how much I’m willing to pay for it. I just don’t want to end up trapped in a crap situation with a crap car that I then can’t get out of!!
sim16v said:
Basic assumptions on a "normal" diesel car and a "normal" wage.
You'll have to pay somewhere between £80-140 per month in tax for the car, and if you get your fuel paid for, a similar amount for the tax on that.
So between £160-240 for a company car.
If you get an allowance, it would be between £350-500, but you will then be taxed on that so you'll only get £250-400.
If you do 25k per year, what ever you buy will lose a fortune in depreciation.
I've had company cars for the last 20 years, and I like the convenience of phoning the transport department and saying "my car is broken, can you get me another one" rather than worrying about potential £1 or £2k bills for repairs.
You might not get your first choice of car, but it should be worry free.
One other thing to add, is that if you have the allowance, you're entitled to relief on business mileage between what they pay you per mile and the 45/25ppm HMRC rate. To me over 10k a year that means i have nearly £6k a year nett.You'll have to pay somewhere between £80-140 per month in tax for the car, and if you get your fuel paid for, a similar amount for the tax on that.
So between £160-240 for a company car.
If you get an allowance, it would be between £350-500, but you will then be taxed on that so you'll only get £250-400.
If you do 25k per year, what ever you buy will lose a fortune in depreciation.
I've had company cars for the last 20 years, and I like the convenience of phoning the transport department and saying "my car is broken, can you get me another one" rather than worrying about potential £1 or £2k bills for repairs.
You might not get your first choice of car, but it should be worry free.
Car allowance = £4k - less tax = £2400
11ppm relief on 10,000 miles = £1100
Saving from not having car, say £25k @ 21% BIK @ 40% = £2100
However, for anything over 25k miles a company car is the cheaper option, especially if it's a low CO2 derivative like a 118d BMW or similar.
It's the depreciation that'll get you.
You won't get that, so my figures at 2k miles would mean £1k less nett.
Bear in mind class 1 insurance is £500, plus tax plus maintenance, plus buying the thing in the first place.
You could do what i do and drive around in a £1k Volvo, but at that mileage a nice new co car is the way forward unless it's a fiesta or something
Edited by davethebunny on Tuesday 2nd August 16:44
davethebunny said:
...for anything over 25k miles a company car is the cheaper option, especially if it's a low CO2 derivative like a 118d BMW or similar.
It's the depreciation that'll get you.
It's the depreciation that'll get you.
Yes, 20 or 25k miles seems to be the 'break even' point.
And at 25000 miles a year that's a set (or just over) of tyres, insurance won't be cheap if you declare 25000 miles (do some online quotes on confused.com to see the difference) and its at least one maintenance service
Company car benefit tax: The mileage you do in the company car has absolutely NO bearing on the tax you pay for the benefit.
Fuel card benefit tax: Most 'perk of the job' cars at a manager level don't come with a fuel card (in my personal experience anyway) but at 25000 private miles a year you'd be better off with a fuel card than not - similar to the income tax for the car the amount of miles you do per year has no bearing on the tax you pay for the benefit of the fuel card.
What tax will you pay for the car: On something like a 118d or 320d Efficient Dynamics it would be about £50-60 a month if you are on a salary of up to about £40k, and if you earn more than that (into the 40% income tax band), then double ie £100-120 a month.
What tax will you pay for the fuel card: Depends how efficient (CO2) or not the car is, basically.
Are there any efficient company cars that would appeal to a PHer: Depends on what you want. Anything diesel upto 120-125g CO2 is what I would call tax efficient and anything upto about 140g CO2 if a petrol car (note also list price comes into play so the smaller hot hatches like Polo GTI and Cooper S are not much more than a 2.0 diesel in terms of tax).
One of the most tax efficient cars that is a bit of fun is the 118d or even 120d. Also the Cooper S mentioned already. People say that the 320d ED is not a bad steer and rides well (no runflats).
In my experience Ford Focus are not bad to drive, handle pretty well and quite peppy although I've only driven the original Mk1.
Some might not consider these PH cars but they are a bit of fun and the BMWs can do a little tail out if you desire (and it is someone else paying for tyres!)
Cooper S
Tax payable at 20% £607
Tax payable at 40% £1,213
Polo GTI DSG
Tax payable at 20% £633
Tax payable at 40% £1,267
320d ED
Tax payable at 20% £724
Tax payable at 40% £1,448
And just for s
ts and giggles:135i
Tax payable at 20% £1,815
Tax payable at 40% £3,629
Edited by texasjohn on Tuesday 2nd August 20:04
D_T_W said:
Bit of an odd one this, as I couldn’t find a clear answer after a good few hours of research I thought I’d ask the oracle that is PH!
My employer has offer me a company car as an incentive due to me relocating. However, my role doesn’t actually entail me having to do that many business miles (will be less than 2k per year), but I do quite a big personal mileage (around 25k per year which includes commuting to work). Now, I know I’ve only been offered a car as a sweetener, but I don’t want to get hammered with the myriad of taxes and additional costs (none of which I can figure out). I don’t have an indication of car type/budget yet as this is still in the early planning stages with my employer, but I know I’m going to get lumped with something that’s frankly a bit crap going by what else is in the car park!
The question I need answered is, because I’m doing such low business miles would it make more sense to see if I can get a car allowance, therefore giving me a bit more freedom of choice about what I get to drive, rather than just lumping for the company car option and hoping for the best?
I’m aware of the risks of buying something myself (tax, insurance, servicing, tyres, breakdown cover etc), but it would be my intention to buy something nearly new (Octavia VRS diesel is the current preferred option) anyway and just run it until it dies. I know the allowance won’t cover me for the full amount of the finance deal, but I’d be quite happy to top it up to be able to drive something half decent. Whilst the idea of a company car is quite appealing, I’m leaning more towards the allowance (if they’ll let me) due to the type of mileage that I do. None of this is based on fact, I’m just guessing as I can’t figure out which is the most sensible/cost effective option!
Suggestions appreciated!
What can you get as a car allowance?My employer has offer me a company car as an incentive due to me relocating. However, my role doesn’t actually entail me having to do that many business miles (will be less than 2k per year), but I do quite a big personal mileage (around 25k per year which includes commuting to work). Now, I know I’ve only been offered a car as a sweetener, but I don’t want to get hammered with the myriad of taxes and additional costs (none of which I can figure out). I don’t have an indication of car type/budget yet as this is still in the early planning stages with my employer, but I know I’m going to get lumped with something that’s frankly a bit crap going by what else is in the car park!
The question I need answered is, because I’m doing such low business miles would it make more sense to see if I can get a car allowance, therefore giving me a bit more freedom of choice about what I get to drive, rather than just lumping for the company car option and hoping for the best?
I’m aware of the risks of buying something myself (tax, insurance, servicing, tyres, breakdown cover etc), but it would be my intention to buy something nearly new (Octavia VRS diesel is the current preferred option) anyway and just run it until it dies. I know the allowance won’t cover me for the full amount of the finance deal, but I’d be quite happy to top it up to be able to drive something half decent. Whilst the idea of a company car is quite appealing, I’m leaning more towards the allowance (if they’ll let me) due to the type of mileage that I do. None of this is based on fact, I’m just guessing as I can’t figure out which is the most sensible/cost effective option!
Suggestions appreciated!
What mileage rate will your employer pay? (I'm guessing 45p a mile)
Are there any restrictions on the type/age of car you can choose?
I run an E39 M5 on the company!!
Another runs a Jag XKR
Most run diesels, so it ends up costing them nowt.
I suspect you might have to aim a bit lower as you cant get enough business miles in to make thos viable, but a nice 250 bhp super hatch should be easily doable, if you're allowed to go back down the years.
You could of course just accept the diesel grotbox company car , but if you were that sort I suspect you'd not be asking on pistonheads.
Go on, live a little, lifes too short
D_T_W said:
Well, it's likely the company car option will be something like a Golf/Focus, nothing to set the earth on fire. What I couldn’t figure out using the online calculators was would the BIK cripple me as I was doing such a high personal mileage compared to a tiny business mileage? I haven’t been given a budget yet for a Company car, I suspect it will just be a case of ‘here’s what you’re getting like it or lump it’, whereas my view is if I’m spending a huge amount of time in the car (which I will be) I’d rather have something I actually want. Plus a lot of my mileage is motorway, so options like cruise I deem essential where as my work doesn't!
My brother works for a main dealer so I know I can get a half decent deal on something nearly new if I finance it, but I guess it’s a balance between what I’m willing to drive and how much I’m willing to pay for it. I just don’t want to end up trapped in a crap situation with a crap car that I then can’t get out of!!
Assuming no fuel card (you haven't mentioned one) then mileage makes no different to BIK. You just pay a BIK charge depending on CO2 and list price. My brother works for a main dealer so I know I can get a half decent deal on something nearly new if I finance it, but I guess it’s a balance between what I’m willing to drive and how much I’m willing to pay for it. I just don’t want to end up trapped in a crap situation with a crap car that I then can’t get out of!!
I think you need to find out what your company car choice will be.
At 25k miles I really would go company car - it will take all the stress out of ownership. As long as you are happy with the car of course.
It really all depends on the car you'll get and how long you'd be expected to keep it.
From my own painful experience, I would always suggest getting the company to fund your own car (opt out of the company car scheme), that way you drive what you want and can choose to part fund a Ferrari or make money on a Fiesta.
I took the company car option and am currently faced every day with a 4 year old old shape TDCi Mondeo with over 100k miles, it needs attention to lots of things and is on it's last legs but the company will not change it or even pay for 'non essential' repairs as it's close to being changed. As it has been for the last 9 months...
I pay BIK tax on the P11D (new) value of £20k but the car is not worth anything if you take into account the money needed spending on it in repairs. If I need tyres they have to be the cheapest and servicing is done 'only if it really needs it'.
From my own painful experience, I would always suggest getting the company to fund your own car (opt out of the company car scheme), that way you drive what you want and can choose to part fund a Ferrari or make money on a Fiesta.
I took the company car option and am currently faced every day with a 4 year old old shape TDCi Mondeo with over 100k miles, it needs attention to lots of things and is on it's last legs but the company will not change it or even pay for 'non essential' repairs as it's close to being changed. As it has been for the last 9 months...
I pay BIK tax on the P11D (new) value of £20k but the car is not worth anything if you take into account the money needed spending on it in repairs. If I need tyres they have to be the cheapest and servicing is done 'only if it really needs it'.
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