Help me decide £400pm - opt out of company car scheme
Discussion
Hi everyone,
I have been looking at the PCH deals topic for some time but can't seem to find anything that ticks all the boxes. Before I decide to sign up to any deal, I wanted some advice from fellow members out there.
My current situation is that my job offers a company car OR the option to opt out and take the money.
Opt in and I currently have a BMW 116d Efficient Dynamics. We don't have a choice and are given whatever is assigned along with a fuel card.
Opt out and I receive £500pm (which after tax will be £400). So I have £400 to play with BUT need to consider the following;
Miles per year - approx 20k per year.
The £400pm needs to ideally cover the cost of the car as well as insurance, maintenance etc - although I am willing to pay a little out of my pocket if it means having a decent car.
Ideally want an Auto as its mixed daily driving, city & motorway and lots of traffic. Also some long trips to scotland throughout the year so the car must be comfy with the usual added extras / options.
Also would prefer something bigger such as a large hatch or ideally an SUV
Boot size is important as it needs to fit work materials, baby buggy and all the extras we take with us when going away.
All the PCH deals that appeal are all for very low miles and the increased ppm takes the price above and beyond what I am willing to pay.
So far I have test driven the Superb sportline hatch - very nice and does everything I need but was hoping to hold out for an SUV for the higher driving position.
I have also test driven the Peugeot 3008 and although very nice, it’s hard to find decent deals.
The new BMW X1 is much better than previous versions, but I feel this is still too similar to the BMW 1 series hatch I currently have. If I could get hold of the new X3 that would be something I would consider, but again no decent deals on these.
Would also consider the XC60 but again hard to find something for that mileage.
Another bad thing about PCH is the long wait for build dates and so would prefer an in stock vehicle..
Would you take the money and look for any PCH that ticks some boxes? If so, which car?
Would you stick with the 116d and drive a small car but hassle free where everything including damage, mileage, and maintenance is taken care of.
Would you take the money and purchase a car outright and not worry about mileage as its your own - although this is the least appealing option as it requires buying a decent car but all maintenance will fall on my head and will have to budget for. If I go down the purchase route the car must be no older than 5 years.
Any advice would be greatly appreciated
I have been looking at the PCH deals topic for some time but can't seem to find anything that ticks all the boxes. Before I decide to sign up to any deal, I wanted some advice from fellow members out there.
My current situation is that my job offers a company car OR the option to opt out and take the money.
Opt in and I currently have a BMW 116d Efficient Dynamics. We don't have a choice and are given whatever is assigned along with a fuel card.
Opt out and I receive £500pm (which after tax will be £400). So I have £400 to play with BUT need to consider the following;
Miles per year - approx 20k per year.
The £400pm needs to ideally cover the cost of the car as well as insurance, maintenance etc - although I am willing to pay a little out of my pocket if it means having a decent car.
Ideally want an Auto as its mixed daily driving, city & motorway and lots of traffic. Also some long trips to scotland throughout the year so the car must be comfy with the usual added extras / options.
Also would prefer something bigger such as a large hatch or ideally an SUV
Boot size is important as it needs to fit work materials, baby buggy and all the extras we take with us when going away.
All the PCH deals that appeal are all for very low miles and the increased ppm takes the price above and beyond what I am willing to pay.
So far I have test driven the Superb sportline hatch - very nice and does everything I need but was hoping to hold out for an SUV for the higher driving position.
I have also test driven the Peugeot 3008 and although very nice, it’s hard to find decent deals.
The new BMW X1 is much better than previous versions, but I feel this is still too similar to the BMW 1 series hatch I currently have. If I could get hold of the new X3 that would be something I would consider, but again no decent deals on these.
Would also consider the XC60 but again hard to find something for that mileage.
Another bad thing about PCH is the long wait for build dates and so would prefer an in stock vehicle..
Would you take the money and look for any PCH that ticks some boxes? If so, which car?
Would you stick with the 116d and drive a small car but hassle free where everything including damage, mileage, and maintenance is taken care of.
Would you take the money and purchase a car outright and not worry about mileage as its your own - although this is the least appealing option as it requires buying a decent car but all maintenance will fall on my head and will have to budget for. If I go down the purchase route the car must be no older than 5 years.
Any advice would be greatly appreciated
STURBO said:
Does that extra £400 in take home pay include the fact you no longer have BIK tax to pay for your compnay car? If not you can add that to your budget for a fair comparison.
That brings it back to £500 PCM for a basic tax payer.Not a bad amount, in fact disproportionately generous compared with the mandated company car!
On the other hand, a fully expensed company car for less than £100 PCM sounds like a very good deal to me! Depreciation on a private purchase will be savage on 20k miles / year - and leases tend to get very expensive on this kind of mileage.
Exactly, this is the dilema I am facing - first world problems and all.
Not paying the BIK would be nice and can be put towards the new car.
Staying on the scheme means its hassle free but I drive a car that is too small for our needs as a family.
Coming out of the scheme and taking the money means more hassle but I'm sure I can find something better for the £400+ I'd have to spend. The sticking point is the miles per year.
Not paying the BIK would be nice and can be put towards the new car.
Staying on the scheme means its hassle free but I drive a car that is too small for our needs as a family.
Coming out of the scheme and taking the money means more hassle but I'm sure I can find something better for the £400+ I'd have to spend. The sticking point is the miles per year.
The biggest thing for me is what happens if your car is off the road. Doesn't happen often, but I've been off the road due to waiting times for tyres, servicing and warranty repairs.
As it's a company car, I have a choice - I either call up our hire company and get a replacement, or I work from home / the dealership lounge. In my experience, companies tend to be a little more understanding if it's a company car rather than your own! - and you can usually pin the blame for lost days on processes set up by the company, too.
If you opt out, you also have to make sure you have very good breakdown cover and budget for replacement cars if needed.
As it's a company car, I have a choice - I either call up our hire company and get a replacement, or I work from home / the dealership lounge. In my experience, companies tend to be a little more understanding if it's a company car rather than your own! - and you can usually pin the blame for lost days on processes set up by the company, too.
If you opt out, you also have to make sure you have very good breakdown cover and budget for replacement cars if needed.
rat840771 said:
Why don't you get a loan at 3% from your bank over the period - £400 over 48 months is 20k borrowed? Buy a nearly new car with and sell it after the 4 years and then repeat?
At least you own the car and get something back at the end if the 4 years.
If you are struggling with the mileage I would go along the above lines and look at perhaps buying your own car either used or new.At least you own the car and get something back at the end if the 4 years.
For example on a PCP you can pick up a brand new Skoda Fabia Estate with a decent spec on it for around 17k (around 3k off at Skoda at the moment on Carwow) so 14k to pay. Per month your looking at approx £285 on 20k per annum, that's on a SE with the DSG gearbox, plenty of space, warranty, no issues and good customer service..
I think their biggest SUV the Kodiac works out about £450, both over 36 months.. usually cheaper over 48 on PCP.
In effect treating a PCP like this is basically leasing, as at the end of the term you hand it back as the equity will be minimal, I haven't looked into leasing deals but you may find they are even better on Skoda.
Edited by NickCW on Monday 18th December 10:28
uzyg said:
The sticking point is the miles per year.
The upside of the miles is you'll get the tax back on the difference between whatever mileage rate your employer pays and the HMRC rates of 45p for the first 10K miles and 25p for mileage beyond 10K.So if your employer pays 15p per mile and you pay tax at 20% you get 6p for the first 10K and 2p for the second 10K - that's £800 in total.
Are you sure with the allowance, bonus's etc, that you'll stay as a 20% tax payer? Generally speaking, for 20% tax payers it's a no-brainer to take the company car. Opting out really only makes sense for higher rate tax payer on bigger cars as the BIK tax becomes very high, especially if fuel is included.
Sheepshanks said:
The upside of the miles is you'll get the tax back on the difference between whatever mileage rate your employer pays and the HMRC rates of 45p for the first 10K miles and 25p for mileage beyond 10K.
So if your employer pays 15p per mile and you pay tax at 20% you get 6p for the first 10K and 2p for the second 10K - that's £800 in total.
Are you sure with the allowance, bonus's etc, that you'll stay as a 20% tax payer? Generally speaking, for 20% tax payers it's a no-brainer to take the company car. Opting out really only makes sense for higher rate tax payer on bigger cars as the BIK tax becomes very high, especially if fuel is included.
Yep I will still stay within the lower tax band if opting out.So if your employer pays 15p per mile and you pay tax at 20% you get 6p for the first 10K and 2p for the second 10K - that's £800 in total.
Are you sure with the allowance, bonus's etc, that you'll stay as a 20% tax payer? Generally speaking, for 20% tax payers it's a no-brainer to take the company car. Opting out really only makes sense for higher rate tax payer on bigger cars as the BIK tax becomes very high, especially if fuel is included.
At the moment the fuel card provided is used when filling up - we are charged for personal miles (deducted from monthly pay).
I believe we can also opt out of the fuel card and pay for fuel ourselves and then claim back - this is where it gets interesting as you mentioned the rates.
Couple of questions as I was in this same position not long back......
Is the £400 your allocation after you've been deducted tax and Nat ins?
Does the company impose any criteria for your car? i.e. Size, Emissions, age, No. of Doors?
Are you still eligible for a fuel card if you opt out of the company car scheme?
Firstly I opted out of the company car scheme as the cars available were of low spec, and the BIK tax would have been expensive. I looked at PCH and again decided against this as the deals were very pricey when you cover average+ miles, and the tie in clauses scared me.
I eventually opted for PCP on second hand....If you buy savvy I bought a 18month old 320d M Sport Touring, very high spec 1 prev owner and included a 5 year service pack. I negotiated a very competitive APR rate which basically saw me drive away in a virtually new car where the majority of depreciation has been covered by the previous owner and free main dealer servicing for the life of my PCP thanks to the previous owner. All I pay is insurance and Tax which monthly is approx. £45 and falls inside the allowance amount.
So in summary my allowance covers Car, servicing, Insurance and tax without dipping a penny into my own pocket so instantly I am approx. £100 a month better off due to the BIK saving.
Additionally to this I opted out of the card as company fuel cards are a very pricey perk, and on average you would need to cover at least 12k a year PERSONAL mileage to just draw even. I claim mileage which the company pay 11p per mile.....low I know, but the government says this should be 45p which can be claimed end of year which is likely to cover all wear ant tear including tires.
There is a further bonus where if you buy the right car with decent residuals, the company would have paid any depreciation and the car is likely to be worth more than your end settlement figure (balloon) so you can sell privately and bank some cash or buy the car and use it for a further year and continue to claim the allowance at 400 a month earning you nearly £5k.
Either that or if the company does not state age of car or restrictions, go to auctions, buy an average car ex lease outright for 3-4k as a work hack and pocket the allowance as additional income.
Is the £400 your allocation after you've been deducted tax and Nat ins?
Does the company impose any criteria for your car? i.e. Size, Emissions, age, No. of Doors?
Are you still eligible for a fuel card if you opt out of the company car scheme?
Firstly I opted out of the company car scheme as the cars available were of low spec, and the BIK tax would have been expensive. I looked at PCH and again decided against this as the deals were very pricey when you cover average+ miles, and the tie in clauses scared me.
I eventually opted for PCP on second hand....If you buy savvy I bought a 18month old 320d M Sport Touring, very high spec 1 prev owner and included a 5 year service pack. I negotiated a very competitive APR rate which basically saw me drive away in a virtually new car where the majority of depreciation has been covered by the previous owner and free main dealer servicing for the life of my PCP thanks to the previous owner. All I pay is insurance and Tax which monthly is approx. £45 and falls inside the allowance amount.
So in summary my allowance covers Car, servicing, Insurance and tax without dipping a penny into my own pocket so instantly I am approx. £100 a month better off due to the BIK saving.
Additionally to this I opted out of the card as company fuel cards are a very pricey perk, and on average you would need to cover at least 12k a year PERSONAL mileage to just draw even. I claim mileage which the company pay 11p per mile.....low I know, but the government says this should be 45p which can be claimed end of year which is likely to cover all wear ant tear including tires.
There is a further bonus where if you buy the right car with decent residuals, the company would have paid any depreciation and the car is likely to be worth more than your end settlement figure (balloon) so you can sell privately and bank some cash or buy the car and use it for a further year and continue to claim the allowance at 400 a month earning you nearly £5k.
Either that or if the company does not state age of car or restrictions, go to auctions, buy an average car ex lease outright for 3-4k as a work hack and pocket the allowance as additional income.
Company car tax is very simple.
You either get a % tax on p11d or you take a "car allowance". (effectively a bonus)
I have always received a car allowance. I use my own car(s) and pocket the money.
Many people also do the same .
Of course you don't have to worry about tax, servicing , maintenance etc. But then also the car is not yours.
Some very simple calculations should be enough to work out what is best for you.
EG find a few 2-3 year old cars that you'd like to buy and their price range, work out estimate insurance and running costs and see if that's better off than the 116d you'd get (it almost certainly would be).
Other benefit is usually with a car allowance you can claim the full 45P from the business (some companies don't).
You either get a % tax on p11d or you take a "car allowance". (effectively a bonus)
I have always received a car allowance. I use my own car(s) and pocket the money.
Many people also do the same .
Of course you don't have to worry about tax, servicing , maintenance etc. But then also the car is not yours.
Some very simple calculations should be enough to work out what is best for you.
EG find a few 2-3 year old cars that you'd like to buy and their price range, work out estimate insurance and running costs and see if that's better off than the 116d you'd get (it almost certainly would be).
Other benefit is usually with a car allowance you can claim the full 45P from the business (some companies don't).
xjay1337 said:
Other benefit is usually with a car allowance you can claim the full 45P from the business (some companies don't).
I'd say most companies don't - your allowance is essentially buying a 'company car', so the logic is wear & tear / maintenance and insurance are taken care of within the allowance.Also be very wary of any company offering a disproportionately large opt-out allowance - they don't do this for the fun of it, there's usually an underlying reason - which could range from wanting to get out of providing cars through to knowing they are making large scale redundancies and don't want the liability for a fleet of returned cars.
Nine-Eighty-Six said:
I'd say most companies don't - your allowance is essentially buying a 'company car', so the logic is wear & tear / maintenance and insurance are taken care of within the allowance.
Also be very wary of any company offering a disproportionately large opt-out allowance - they don't do this for the fun of it, there's usually an underlying reason - which could range from wanting to get out of providing cars through to knowing they are making large scale redundancies and don't want the liability for a fleet of returned cars.
Every company I have been at that does not provide a company car will provide a "car allowance" and a PPM for fuel.Also be very wary of any company offering a disproportionately large opt-out allowance - they don't do this for the fun of it, there's usually an underlying reason - which could range from wanting to get out of providing cars through to knowing they are making large scale redundancies and don't want the liability for a fleet of returned cars.
This has ranged from 18p to 45p.
My last one was £5600 per year for the car and 45ppm
Happy days.xjay1337 said:
Every company I have been at that does not provide a company car will provide a "car allowance" and a PPM for fuel.
This has ranged from 18p to 45p.
My last one was £5600 per year for the car and 45ppm Happy days.
Sorry - I wasn't saying they won't pay a fuel allowance - but the number who'll pay the 'full whack' 45ppm *and* a decent car allowance is vanishingly small.This has ranged from 18p to 45p.
My last one was £5600 per year for the car and 45ppm
Happy days.uzyg said:
Exactly, this is the dilema I am facing - first world problems and all.
Not paying the BIK would be nice and can be put towards the new car.
Staying on the scheme means its hassle free but I drive a car that is too small for our needs as a family.
Coming out of the scheme and taking the money means more hassle but I'm sure I can find something better for the £400+ I'd have to spend. The sticking point is the miles per year.
How big is your family? I ask because a 1er is decent and perhaps spending 400 on a nice Thule roof box for the few times a year you need to fill it to the brim might be better instead of the poorer MPG for something bigger that will be empty lots of the time? Not paying the BIK would be nice and can be put towards the new car.
Staying on the scheme means its hassle free but I drive a car that is too small for our needs as a family.
Coming out of the scheme and taking the money means more hassle but I'm sure I can find something better for the £400+ I'd have to spend. The sticking point is the miles per year.
Decent kit like Thule is fine on eBay 2nd hand for resale, transports from car to car with new feet too?
I faced this exact same predicament three years ago and ended up opting for the money. I was sick of driving low end Golfs, Volvo v40s and Passats. Basically cars that's a bit meh.
Took the money and for myself a very well specced GTD. That went back and now I drive a BMW 4GC.
The thing is, with the good lease deals you find here, none of the above has cost me any more money than when I had a company car but the choice and standard of cars is so much higher.
As someone mentioned above though, you do have a risk about redundancies as you can't simply hand back your vehicle.
Took the money and for myself a very well specced GTD. That went back and now I drive a BMW 4GC.
The thing is, with the good lease deals you find here, none of the above has cost me any more money than when I had a company car but the choice and standard of cars is so much higher.
As someone mentioned above though, you do have a risk about redundancies as you can't simply hand back your vehicle.
I doesn’t matter the level of mileage the company will pay though as you can claim the rest through either a self assesment or P11D.
I get 12p from my work which based on the avg. MPG my car does covers my fuel.....the rest I will claim back at the end of the year will cover tyres/wear and tear. Free motoring in effect.
Also with regards to redundancies this didn’t bother me too much as I found it more comforting knowing the car was my own, and if anything happened I still have wheels. I’m at a stage now where professionally wherever I work I would expect an allowance and would just take the car with me.
I get 12p from my work which based on the avg. MPG my car does covers my fuel.....the rest I will claim back at the end of the year will cover tyres/wear and tear. Free motoring in effect.
Also with regards to redundancies this didn’t bother me too much as I found it more comforting knowing the car was my own, and if anything happened I still have wheels. I’m at a stage now where professionally wherever I work I would expect an allowance and would just take the car with me.
Some good advice here, thanks all for your input. Nice to know I am not the only one having this dilema.
Just to answer a few q's.
At the moment we are a small family, me, the wife and a 1 yr old. But hope for another baby at some point down the line. We have a tendency to carry everything but the kitchen sink when going away.
The £400 is after income tax is deducted - Didn't even think about NI - but that isn’t too much of a biggie.
The company states the following must be met if opting out;
Car must be no older than 5 years
Cannot be a 2 seater or convertible
Fuel card is an option but we have to pay for all personal mileage regardless if we have a fuel card or not.
I think having a well specced car with a maintenance pack is what is most important. I'm at that stage where I realise how many hours I actually spend behind the wheel and inside the car, so it must be comfy and have the spec to entertain and make life easy. The only problem is most of the cars I like the look of are all brand new.
Just to answer a few q's.
At the moment we are a small family, me, the wife and a 1 yr old. But hope for another baby at some point down the line. We have a tendency to carry everything but the kitchen sink when going away.
The £400 is after income tax is deducted - Didn't even think about NI - but that isn’t too much of a biggie.
The company states the following must be met if opting out;
Car must be no older than 5 years
Cannot be a 2 seater or convertible
Fuel card is an option but we have to pay for all personal mileage regardless if we have a fuel card or not.
I think having a well specced car with a maintenance pack is what is most important. I'm at that stage where I realise how many hours I actually spend behind the wheel and inside the car, so it must be comfy and have the spec to entertain and make life easy. The only problem is most of the cars I like the look of are all brand new.
BEN139 said:
I doesn’t matter the level of mileage the company will pay though as you can claim the rest through either a self assesment or P11D.
I get 12p from my work which based on the avg. MPG my car does covers my fuel.....the rest I will claim back at the end of the year will cover tyres/wear and tear. Free motoring in effect.
Also with regards to redundancies this didn’t bother me too much as I found it more comforting knowing the car was my own, and if anything happened I still have wheels. I’m at a stage now where professionally wherever I work I would expect an allowance and would just take the car with me.
Correction - you can claim back the tax on the difference between 12p and 45p for the first 10k miles, but this drops to the tax on the difference between 12p and 25p above 10k miles. This is a very important detail to know when working it out.I get 12p from my work which based on the avg. MPG my car does covers my fuel.....the rest I will claim back at the end of the year will cover tyres/wear and tear. Free motoring in effect.
Also with regards to redundancies this didn’t bother me too much as I found it more comforting knowing the car was my own, and if anything happened I still have wheels. I’m at a stage now where professionally wherever I work I would expect an allowance and would just take the car with me.
slightly off topic but I have found that I don’t enjoy a company car as much as one that I own as it becomes a bit of an appliance that I use and abuse for 3 years and hand it back. It’s a bit nerdy but I enjoy owning a car, maintaining it well and keeping it well valeted. In your case with that stingy 5 year limit you could buy something at least semi interesting at 1 year old (can be great value at this price point), run it for 4 years while your company pays for it then give it to your wife to use and start again. At least that’s what I’m going to do in a year!
I do zero business miles however.
I do zero business miles however.
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