Company Car back on the radar?

[Foss62]

My company car is up for renewal in June and I was absolutely certain that would be the last one. I was paying over £350 a month tax and could potentially take a car allowance of nearly £600 (subject to 40% tax), so I was looking for a lease or PCP (+ insurance, VED, servicing etc.) of something up to about £600 a month.

However, just idly looking on the car chooser website sent by HR I was surprised to see a number of highly priced plug in hybrids and even more surprised when I ‘built’ one and checked the BIK. A quite decent large estate came out at just over £140 monthly tax. As this would be less than I have ever paid in decades of company car driving, I am now minded to avoid all the hassle of sorting out my own vehicle.

Have I misunderstood something or do company cars now make sense again?

[Disco You]

The plug in hybrids end up as decent deals, yeah. Lots of people take them and don’t ever charge them - for example if work pay for fuel, but don’t pay for electricity then it can often not make financial sense ever to plug it in.

[anonymous-user]

PHEVs are a good deal for company car drivers right now.

Mercedes A-Class / CLAs are the cheapest as they get the range above 40 miles and have low emissions. Sounds wrong to have a 1.3 engine in one, but with the support from the hybrid system they're fine. Tax from £70 / month.

I guess you're looking at a Passat or Superb if it's a large estate.

Don't rule out things like the Ford Kuga PHEV and BMW X1 / X3 PHEVs either.

I sound like a stuck record, but I went from a 520d Luxury to an X1 xDrive 25e MSport+ and have been more than happy with the swap.

[jonwm]

I went phev last time round, similar situation as I was paying £350ish tax on my A5 tdi.

Had a 330e for 3 years now, charge it when free of freezing at home so I can pre heat as I have a fuel card.

I was looking at a new position with a car allowance but for £147 a month I pay for this is struggled to make the allowance work for 20k miles a year, allowance was £4.8k, current division I work on have increased the lease allowance and car allowance so can get a 330e m sport tech with some extras and still have money left or take £6k allowance.

For me they are a no brainer, I'm moving jobs to an automotive company so bik is not done on co2 there but if I was staying Id keep in the car scheme for sure.

I'm sure they will catch on soon at HMRC

[jason61c]

The sensible option is to put the £600 a month into you company pension.

Then take the £350 a month you would be paying out on tax and get a bmw 640d gran coupe.

[jason61c]

just to add, you'd get a mercedes e300de in budget.

However, what you've got to think is that the net cost to you of any where you're paying £200 a month in extra tax is actually circa £800, or £9600 a year.........

[TwigtheWonderkid]

jason61c said:

The sensible option is to put the £600 a month into you company pension.

Then take the £350 a month you would be paying out on tax and get a bmw 640d gran coupe.

That £350/month he was paying in bik tax was for a fully funded car, with insurance, servicing etc all taken car of. But in principle, your idea is fine.

Much as I like cars, I don't go to work for the car, I go to work to earn money. Stick the £600 into the pension, thus pay no tax on it, and the £350/month you were paying on BIK, lease the cheapest thing you can find that will do the job you need. Maybe at about £125-£150 month. Leave some to pay your insurance and servicing, and stick the rest into the pension too, to get the tax back on it!

Then retire 15 years earlier than you might otherwise of done courtesy of your fk off pension pot, and then buy a nice car.

[jason61c]

its exactly what I do, people fail to see what their company car actually costs.

[anonymous-user]

jason61c said:

its exactly what I do, people fail to see what their company car actually costs.

£145 a month for a brand new, £43000 car, fully expensed bar private fuel is a bargain!

[TwigtheWonderkid]

Landcrab_Six said:

jason61c said:

its exactly what I do, people fail to see what their company car actually costs.

£145 a month for a brand new, £43000 car, fully expensed bar private fuel is a bargain!

It certainly is. But only if you need a £43K car. If you can lease a £15K that'll do the job car for £150/month, and pay the insurance and servicing for another £50/month, and you're used to paying £350/month bik previously, it leaves you £150/ month spare to put into your pension, which will be grossed up by 25%, (because you've already paid tax on it) and you can get the other 20% back if you're a 40% tax payer. Plus the £600/month also into your pension in salary sacrifice from your employer which was your new car allowance.

It's the boring option for sure, but you won't care when you retire 15 years ahead of your mates.

[anonymous-user]

Business insurance, proper breakdown cover, servicing and consumables will cost a lot more than £50 a month. And a lease for 20-30k miles a year also ramps costs significantly.

Last time I had proper business cover for proper business miles it cost me that alone.

Of course, if the car is a perk rather than a proper business tool, the calculation is different.

[jason61c]

Landcrab_Six said:

£145 a month for a brand new, £43000 car, fully expensed bar private fuel is a bargain!

its not.......

you loose what you could put in your pension. So that car costs you nearly £30k over 3 years. its terrible.

for what?

[Sheepshanks]

jason61c said:

The sensible option is to put the £600 a month into you company pension.

Then take the £350 a month you would be paying out on tax and get a bmw 640d gran coupe.

When I worked in a largish multi-national, we got £750/mth to opt out of 5 Series / A6 level cars. Loads of the guys took the money and bought things like 3yr old Astras etc!

They rolled the allowance into salary a few years ago and now pay business mileage at the full HMRC rates - that's going well at the moment! Everyone has forgotten they still get the allowance embedded in ther pay.

[anonymous-user]

jason61c said:

its not.......

you loose what you could put in your pension. So that car costs you nearly £30k over 3 years. its terrible.

for what?

If you put £600 into your pension, you're left with £140 to buy and run a car. That's the calculation here.

And that's if you can put in that amount of extra contribution. I know I couldn't, even if I wanted to.

[jason61c]

Landcrab_Six said:

If you put £600 into your pension, you're left with £140 to buy and run a car. That's the calculation here.

And that's if you can put in that amount of extra contribution. I know I couldn't, even if I wanted to.

First off, well done if you're doing £40k a year into a pension!

Even if the OP was to spend £400 a month on a car, hes better off doing it if he was putting £600 into his pension.

[anonymous-user]

jason61c said:

First off, well done if you're doing £40k a year into a pension!

Even if the OP was to spend £400 a month on a car, hes better off doing it if he was putting £600 into his pension.

Well, I didn’t say that, but I can’t put that into my company pension, I have maxed out what they allow.

I just don’t think it’s quite as simple as you make out once you consider the true cost of running a business car especially if the company place constraints on what you can run.

[jason61c]

It goes in as a personal contribution.

I put my full allowance into my pension and spend £400 on a loan and insurance, tax on a 2018 640d.

So the car costs me £14over 3 years, I put £19600 into a pension in the same period.

Add to that you get 45ppm, you also end up with a surplus value in the car.

Just a different way of doing it. Not saying it’s right, however I end up saving more money than having a company car, also end up driving a much better car.

[Keepersball]

Is this pistonheads or moneysavingexpert haha

In all seriousness I understand the need to put into a pension etc etc but if the last year has shown me anything it’s not to live life ONLY working towards tomorrow

In my opinion planning for the future is important but equally you can’t spend money when your dead - I’d rather enjoy a car in my 30’s than live like a pauper with the chance I may not ever get to experience it.

Again I’ll caveat this by saying making provisions is important but not at the expense of living life whilst you can

[jason61c]

Keepersball said:

Is this pistonheads or moneysavingexpert haha

In all seriousness I understand the need to put into a pension etc etc but if the last year has shown me anything it’s not to live life ONLY working towards tomorrow

In my opinion planning for the future is important but equally you can’t spend money when your dead - I’d rather enjoy a car in my 30’s than live like a pauper with the chance I may not ever get to experience it.

Again I’ll caveat this by saying making provisions is important but not at the expense of living life whilst you can

yes, so would you prefer a regular boring phev or something with 300+bhp? thats the result.

[anonymous-user]

jason61c said:

yes, so would you prefer a regular boring phev or something with 300+bhp? thats the result.

You're massively over-simplifying based on what has worked for you.

I've opted out before when I had a chance of a massive bargain car - a parallel import a dealer couldn't shift and a very lowball offer.

But... we had a very lax policy at the time. Subsequent companies haven't - a hard cut-off of 4 years, minimum 4 doors, so no coupes and no ragtops. Mileage was at company car rates, not private car rates, so although I could claim back some tax, it wasn't a big money maker. Insurance for 30k business miles was pretty horrendous, 2 services a year, plus tyres, brakes and needing really good breakdown cover with courtesy car wasn't exactly cheap, either.

If your car is essentially a perk rather than a business tool, you can be a bit more creative. But if you need the car to do the job, don't underestimate the value of a cheap company car.

The other thing is attitudes of employers - if you opt out and the car breaks, they expect you to get a hire car and continue on your way. If the company owned car breaks down, you get a lot more leeway in getting things sorted. A day off the road for a recall - fine, it's the company asset. If it's your car - get an alternative option, not our problem.