Company Car opting out quick question

[jonwm]

Hi All

I know I Know posted millions of times but I've been a bit oblivious over the years on actually how much the BIK has increased on Company Cars, in the past as a high mileage driver I've always taken the car option, now I'm home based (same company) but mileage has dropped from 35k to 15k tops per year.

I've just scared myself by checking the up to 2020 percentages for BIK, my car is going back end of this year, currently an A5 ULtra at £35k P11d and 109 CO2.

I have the option of opting out and receiving £5800 per year, so man maths ahoy and I've worked the below out, very basic I know but hoped to hear off similar people that have opted out and find it financially advantageous.

So here goes:

40% Tax Payer
2017/2018 BIK £8027 - £267.57 per month
Car allowance £5800 - £483.33 per month (gross) roughly £289 per month in pay

So I'm basing it on 2017/2018 that in my pay would be increased by £556 per month

In peoples experience can you run a similar type of car for this kind of money, not including fuel as I would also opt out of the fuel card, that's another question as I'm unsure on how all that works, maybe that's a later post if the figures look good on this.

Insurance may be a problem as I run a Cupra 290 (Leased) that is insured in my name with my no claims.

[snorkel sucker]

First off, comcar and listentotaxman are both good sources of information to plug in your actual figures to get an accurate comparison.

Not quite sure your figures are correct in terms of the difference in salary.

Basically a car allowance gets added to your salary and is taxed. Broadly speaking, unless it bumps you up into a higher band you can assume it'll be taxed at 40% (reasonable assumption given your allowance of £5800; It doesn't sound like you're a six figure director!).

Also, if you do business miles, then you are able to claim up to 45ppm for 10k miles and then 25p there after from HMRC. Check your company policy on this as they vary. Some, for example, pay you a lower rate but give you back the difference through your pay thus making your £5800 allowance (or whatever it is) a gross figure per month.

Business mile rates on company cars are much lower (11p/mile for diesel last time I looked) obviously due to you not needing to maintain your own vehicle.

So, it isn't as clear cut as it first seems but, for someone doing 15k you should be able to make your allowance work and potentially get into something more interesting than the usual company car fare, especially if there are no restrictions what you spend your allowance on.

[jonwm]

Thanks for taking the time to reply, I've used Comcar before actually, a great website.
Im just cautious of taking the plunge out of the scheme and being worse off, like wise don't want to order a new car and ne lumbered with it for 4 years with the BIK rising all the time, the Hybrids are the grade above me on the list due to the monthly lease, I could probably get into a petrol car to save on the 3% but still means going up a tax bracket.

[QuartzDad]

snorkel sucker said:

Also, if you do business miles, then you are able to claim up to 45ppm for 10k miles and then 25p there after from HMRC.

Not quite - lots of people think that if they do 10,000 miles p/a the taxman will send them a cheque for £0.45 x 10,000 = £4500. Would be nice if they did...

If you do 10,000 miles p/a and your employer doesn't give you any mileage allowance then the taxman will (effectively) send you a cheque for the *tax* on the £4500, so £1800 if you're a 40% taxpayer.

If you do 10,000 miles p/a and your employer gives you 30p per mile then the taxman will (effectively) send you a cheque for the *tax* on the £1500 shortfall, so £600 if you're a 40% taxpayer.