Company Car or Cash Dilemma
Discussion
Im sorry to ask this as I know its been done to death a bit...
A question really for those who understand the system better than I do, as at the moment im confused!
Current situation:
BMW 330d M Sport on PCP, which is up in Sept 2012. Deal agreed at 16,000 miles per year which I thought would more than cover work and social.
However, new role in the company means im going to be doing c.25,000-28,000 miles a year. Obviously this will have an impact on the 'agreed value' of the Beemer in Sept 2012 as the mileage will be much higher. Also, cost of tyres, servicing etc will be more.
The company much prefer to give a car allowance and 21p, than a company car and 21p and so im currently taking the car allowance (which covers the cost of the PCP payment).
My question is, with everything becoming more expensive (fuel, servicing etc) should I consider trying to hand back the BMW in April (18 months will be up on the agreement, and I know i'll then be left with nothing) and try and take a company car which will be cheaper in the long term?
My only problem is the company car will not be anything like as nice as the 330 to drive...
Dilemma....thoughts welcome.
A question really for those who understand the system better than I do, as at the moment im confused!
Current situation:
BMW 330d M Sport on PCP, which is up in Sept 2012. Deal agreed at 16,000 miles per year which I thought would more than cover work and social.
However, new role in the company means im going to be doing c.25,000-28,000 miles a year. Obviously this will have an impact on the 'agreed value' of the Beemer in Sept 2012 as the mileage will be much higher. Also, cost of tyres, servicing etc will be more.
The company much prefer to give a car allowance and 21p, than a company car and 21p and so im currently taking the car allowance (which covers the cost of the PCP payment).
My question is, with everything becoming more expensive (fuel, servicing etc) should I consider trying to hand back the BMW in April (18 months will be up on the agreement, and I know i'll then be left with nothing) and try and take a company car which will be cheaper in the long term?
My only problem is the company car will not be anything like as nice as the 330 to drive...
Dilemma....thoughts welcome.
A couple of things I would say :
Bear in mind that the 50% point isn't when you have made half the payments, it's when you have paid half the agreement cost including interest (just in case you hadn't realised that)
You will have an excess mileage charge which they prorata so if your over where you said you would be at that point you'll get a bill.
I would work out if you keep it how much you'll get charged for excess miles, work out how much servicing and tyres might set you back over that period, that might help make your choice.
Personally I would look at the co car option, say the 320d, then get something daft for the weekend.
Bear in mind that the 50% point isn't when you have made half the payments, it's when you have paid half the agreement cost including interest (just in case you hadn't realised that)
You will have an excess mileage charge which they prorata so if your over where you said you would be at that point you'll get a bill.
I would work out if you keep it how much you'll get charged for excess miles, work out how much servicing and tyres might set you back over that period, that might help make your choice.
Personally I would look at the co car option, say the 320d, then get something daft for the weekend.
northandy said:
A couple of things I would say :
You will have an excess mileage charge which they prorata so if your over where you said you would be at that point you'll get a bill.
I'm very unsure indeed about that. The effect would be for the contractual provisions to override s.99 of the Consumer Credit Act - and while I can't point to case law, I'd be very doubtful that any mileage charge could be imposed in excess of the half payments. I'm not arguing fairness but principles of strict legal interpretation here, by the way. All the MGFV is, is an offer to purchase the car at the end of the agreement, failing which the borrower must settle the balance. You will have an excess mileage charge which they prorata so if your over where you said you would be at that point you'll get a bill.
As it stands I don't think there's enough information. OP - can you explain:
1. How much deposit you had in the car to start the PCP?
2. What the mileage is at present and how much is owing?
3. What kind of car you'd be getting on the company scheme?
4. How much car allowance currently is.
DavidHM said:
I'm very unsure indeed about that. The effect would be for the contractual provisions to override s.99 of the Consumer Credit Act - and while I can't point to case law, I'd be very doubtful that any mileage charge could be imposed in excess of the half payments. I'm not arguing fairness but principles of strict legal interpretation here, by the way. All the MGFV is, is an offer to purchase the car at the end of the agreement, failing which the borrower must settle the balance.
As it stands I don't think there's enough information. OP - can you explain:
1. How much deposit you had in the car to start the PCP?
2. What the mileage is at present and how much is owing?
3. What kind of car you'd be getting on the company scheme?
4. How much car allowance currently is.
I also looked into that when I handed a car back a couple of years ago under halves and thirds, even went as far as the CAB and they came back on the side of the BMW finance agreement. The contracts are very confusing in that aspect, but the CAB were adamant the contracts were ok and the mileage charge applied.As it stands I don't think there's enough information. OP - can you explain:
1. How much deposit you had in the car to start the PCP?
2. What the mileage is at present and how much is owing?
3. What kind of car you'd be getting on the company scheme?
4. How much car allowance currently is.
Depending on the pattern of your increased mileage, could you hire a car from time to time for long journeys? ie if you would normally travel 250 miles in a week but every 5-6 weeks you'll have a 1000 mile week, rent a car for those times. I presume there's no obligation to provide yourself with just one car for company use.
I've done this in previous roles because some weeks the mileage allowance worked out at double the fuel + rental cost, so I could hire a car and pocket a straight profit without adding miles to my own vehicle.
I've done this in previous roles because some weeks the mileage allowance worked out at double the fuel + rental cost, so I could hire a car and pocket a straight profit without adding miles to my own vehicle.
DavidHM said:
I'm very unsure indeed about that. The effect would be for the contractual provisions to override s.99 of the Consumer Credit Act - and while I can't point to case law, I'd be very doubtful that any mileage charge could be imposed in excess of the half payments. I'm not arguing fairness but principles of strict legal interpretation here, by the way. All the MGFV is, is an offer to purchase the car at the end of the agreement, failing which the borrower must settle the balance.
As it stands I don't think there's enough information. OP - can you explain:
1. How much deposit you had in the car to start the PCP?
2. What the mileage is at present and how much is owing?
3. What kind of car you'd be getting on the company scheme?
4. How much car allowance currently is.
1. I put £6000 down. Car was £23k.As it stands I don't think there's enough information. OP - can you explain:
1. How much deposit you had in the car to start the PCP?
2. What the mileage is at present and how much is owing?
3. What kind of car you'd be getting on the company scheme?
4. How much car allowance currently is.
2. The mileage was 13k when I got it, now 43k, so im already over the 16k pa agreed.
3. I havent yet explored the options, but hopefully a 320ED or a Diesel Golf at the very worst.
4. Car allowance is currently £4500 pa
oldcynic said:
Depending on the pattern of your increased mileage, could you hire a car from time to time for long journeys? ie if you would normally travel 250 miles in a week but every 5-6 weeks you'll have a 1000 mile week, rent a car for those times. I presume there's no obligation to provide yourself with just one car for company use.
I've done this in previous roles because some weeks the mileage allowance worked out at double the fuel + rental cost, so I could hire a car and pocket a straight profit without adding miles to my own vehicle.
Sadly I dont think this is an option. I've done this in previous roles because some weeks the mileage allowance worked out at double the fuel + rental cost, so I could hire a car and pocket a straight profit without adding miles to my own vehicle.
Welshbeef said:
How can £4500 gross or net cover £23k less £6k down BMW pcp?
Honestly would like to know as if that is the case you have negotiated materially better than I on a higher purchase price and higher milage. Unless mine has a huge amount of equity built into the mgfv
21 pence per mile allowance on top - it's in the opening postHonestly would like to know as if that is the case you have negotiated materially better than I on a higher purchase price and higher milage. Unless mine has a huge amount of equity built into the mgfv
Can you purchase the car at the end of the agreement for a fixed value, and would this get you out of the penalty clause for the mileage? Do you have age / mileage criteria for your company car or could you just take a personal loan and buy the car in 2012 then run it for another 3/5 years?
I was thinking 'keep the 330d' but I can't see it making much sense financially... as the allowance is barely £250/month net of basic rate tax + employers NI, and the 21p mileage allowance just doesn't cover true running costs for the mileage expected of the OP when factoring in tyres, insurance, servicing / repairs, rising fuel costs, etc.
If it's an option I'd take something like a company provided 320d ED over the allowance all day long, as the running costs (tyres, insurance, etc.) will be passed to the employer, it will provide a similar driving experience to the 330d albeit without the power (which I'd probably sacrafice for the improved ride anyway) whilst obviously being great on fuel and low co car tax.
If it's an option I'd take something like a company provided 320d ED over the allowance all day long, as the running costs (tyres, insurance, etc.) will be passed to the employer, it will provide a similar driving experience to the 330d albeit without the power (which I'd probably sacrafice for the improved ride anyway) whilst obviously being great on fuel and low co car tax.
theboss said:
I was thinking 'keep the 330d' but I can't see it making much sense financially... as the allowance is barely £250/month net of basic rate tax + employers NI, and the 21p mileage allowance just doesn't cover true running costs for the mileage expected of the OP when factoring in tyres, insurance, servicing / repairs, rising fuel costs, etc.
If it's an option I'd take something like a company provided 320d ED over the allowance all day long, as the running costs (tyres, insurance, etc.) will be passed to the employer, it will provide a similar driving experience to the 330d albeit without the power (which I'd probably sacrafice for the improved ride anyway) whilst obviously being great on fuel and low co car tax.
This is what im currently thinking too. However, work are very unwilling to hand company cars out anymore (despite quite a few having them in the office). If it's an option I'd take something like a company provided 320d ED over the allowance all day long, as the running costs (tyres, insurance, etc.) will be passed to the employer, it will provide a similar driving experience to the 330d albeit without the power (which I'd probably sacrafice for the improved ride anyway) whilst obviously being great on fuel and low co car tax.
I could always save up and have a toy for the weekends...
How does the BIK tax thing work, do I end up paying more in the first year or is it spread over 4 years for example?
MBadders said:
This is what im currently thinking too. However, work are very unwilling to hand company cars out anymore (despite quite a few having them in the office).
I could always save up and have a toy for the weekends...
How does the BIK tax thing work, do I end up paying more in the first year or is it spread over 4 years for example?
The BIK value for a given vehicle is calculated based on its list price and CO2 emmissions. So for a 320d I would guess your tax may be based on a BIK value of 13% of £30k (roughly) or £3900/annum. So you would incur an extra tax liability as if you were earning an extra £4k per year. This would be deducted automatically through the PAYE system so you wouldn't face a large bill at the end of the year. I think the employer pays national insurance on the BIK but I'm not sure about the employee - somebody will put me right I'm sure.I could always save up and have a toy for the weekends...
How does the BIK tax thing work, do I end up paying more in the first year or is it spread over 4 years for example?
Also as you are only getting 21p per mile you should be able to make a modest tax reclaim as HMRC alloys you to claim up to 40p for the first 10,000 and 25p subsequently. So for 28000 miles you would have claimed 0.21 x 28000 = 5880 whereas HMRC allow you to claim (0.40 x 10000) + (0.25 x 18000) = £8500. You can reclaim tax paid on £2620 of income which at the basic rate is £524. Again I stand to be corrected!
oldcynic said:
Welshbeef said:
How can £4500 gross or net cover £23k less £6k down BMW pcp?
Honestly would like to know as if that is the case you have negotiated materially better than I on a higher purchase price and higher milage. Unless mine has a huge amount of equity built into the mgfv
21 pence per mile allowance on top - it's in the opening postHonestly would like to know as if that is the case you have negotiated materially better than I on a higher purchase price and higher milage. Unless mine has a huge amount of equity built into the mgfv
If you can reclaim tax as per the post above you're probably better off (less badly off) keeping the car rather than buying a fun car for the weekend and incurring yet more expense, then stumping up the £10K at the end to keep running it for a few more years.
However I now completely understand why you may want to hand the car back at the 50% stage if that were an option - trouble is you then need to start again from the beginning and it may cost you just as much to get a car you didn't really want.
oldcynic said:
Given fuel costs to run the BMW I'm reconsidering this answer - did the original deal work at 16K PA, or were you paying out of your own pocket already? If so, how much?
If you can reclaim tax as per the post above you're probably better off (less badly off) keeping the car rather than buying a fun car for the weekend and incurring yet more expense, then stumping up the £10K at the end to keep running it for a few more years.
However I now completely understand why you may want to hand the car back at the 50% stage if that were an option - trouble is you then need to start again from the beginning and it may cost you just as much to get a car you didn't really want.
I can reclaim tax as per above so agree, its sort of 6 of one and half a dozen of another as you say. I dont want to drive around in a car I dont want so would only consider the company car option if the car was half decent (which I believe it will be), but it is like starting again. If you can reclaim tax as per the post above you're probably better off (less badly off) keeping the car rather than buying a fun car for the weekend and incurring yet more expense, then stumping up the £10K at the end to keep running it for a few more years.
However I now completely understand why you may want to hand the car back at the 50% stage if that were an option - trouble is you then need to start again from the beginning and it may cost you just as much to get a car you didn't really want.
There's absolutely nothing wrong with the 330d and its fantastic (if a bit easy) to drive.
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