Second hand company car

[OMS]

Hi, I am a recently appointed director of a company. I've negotiated a sum of money for a company car. In the past the company has always leased the directors cars but I've been told if I find something else that doesn't present any additional work on our admin I can get anything I want up to the same cost.

So, I've been thinking whether it's possible to buy a second hand car and run it as a company car? I'm only thinking 3-4 years old but it gives me much more options.

Has anyone got any advice on this?

Thanks in advance...

[Davel]

Of course you can and a decent s/h company car shouldn't be a problem.

Just bear in mind that the Benefit in Kind will be based as though the car is brand new, so there probably isn't any advantage taxation wise for you personally.

[1]

Depends if they are giving you the money directly to go and buy your own car (car allowance) or simply giving you the budget that they are prepared to spend on providing you with a company car.

If it is the later then you will still be liable for BIK tax on the full list price if the car is upto 4 years old. However if the car is over 4 years old then I believe you only pay BIK on 25% of the origional list price.

Alternatively they could just be giving you the money to go and spend it on whatever you like, if this is the case then you will be taxed on the allowance as if it were salary and if they don't have a co car policy you can spend it on whatever you like.

[Deva Link]

Why don't you (through the company) just lease a used car?

[VX Foxy]

1 said:

you only pay BIK on 25% of the original list price.

Can anyone confirm if this is true?

[Davel]

No, I don't think so.

[Deva Link]

VX Foxy said:

1 said:

you only pay BIK on 25% of the original list price.

Can anyone confirm if this is true?

No, it's not. Wonder what the poster was thinking of?

[PhilLL]

Deva Link said:

Why don't you (through the company) just lease a used car?

Or you could arrange a PCH (personal contract hire) on a second hand car up to 15 months old?

[Eric Mc]

VX Foxy said:

1 said:

you only pay BIK on 25% of the original list price.

Can anyone confirm if this is true?

Not true.

The BIK on a car is based on the manufacturer's list price WHEN THE CAR WAS NEW. There are no reductions due to the age of the car.

Older BIK rules used to have age related reductions but these concessions were abolished a number of years ago.

[1]

Eric Mc said:

VX Foxy said:

1 said:

you only pay BIK on 25% of the original list price.

Can anyone confirm if this is true?

Not true.

The BIK on a car is based on the manufacturer's list price WHEN THE CAR WAS NEW. There are no reductions due to the age of the car.

Older BIK rules used to have age related reductions but these concessions were abolished a number of years ago.

I suspect you are right Eric, although it was the case some years ago.

Edited by 1 on Thursday 12th June 22:41

[1]

Deva Link said:

VX Foxy said:

1 said:

you only pay BIK on 25% of the original list price.

Can anyone confirm if this is true?

No, it's not. Wonder what the poster was thinking of?

In fairness I did say "I belive you only pay 25%" and didnt state it as a fact, which is what it looks like when I was quoted.

[Deva Link]

1 said:

Deva Link said:

VX Foxy said:

1 said:

you only pay BIK on 25% of the original list price.

Can anyone confirm if this is true?

No, it's not. Wonder what the poster was thinking of?

In fairness I did say "I belive you only pay 25%" and didnt state it as a fact, which is what it looks like when I was quoted.

Sure. I just wondered where you'd got that thought from - sound like EricMc may be on the money that it's something that used to be done but has been discontinued.

[VX Foxy]

Oh well, thought it was too good to be true!

[OMS]

Thanks for all the feedback.

I've effectively negotiated an amount, I can use this however I please - take a company car or use the money as a car allowance. The leasing a second hand car using the allowance does sound like the most cost effective.

Question, does anyone know of leasing companies specialising in second hand cars?

Thanks again in advance.

[1]

When you say leasing, if what you mean is contract hire, finance lease etc, where you pay a monthly payment to essentially rent the car and never have the option to own it, then looking at second hand cars is not always as good as you may think.

Brokers and leasing companies will often negotiate such good discounts with manufactures that when leased over say 2 years the discount will eliminate a large proportion of the depreciation. When you combine that with the fact that the leasing company can claim back all the VAT, you start to see why so few companies lease used cars.

Having said that if you manage to find a vat qualifying used car which you would be unlikely to get a discount off when new then it may prove more economic. An example would be an ex demonstrator on something like an R8.

I must stress that all of this info is only relevant to "non purchase" products such as contract hire and finance lease, if however you are looking for something like a Personal Contract Purchase where you do have the option to own then it will be slightly different, mainly due the VAT element.

[PhilLL]

1 said:

When you say leasing, if what you mean is contract hire, finance lease etc, where you pay a monthly payment to essentially rent the car and never have the option to own it, then looking at second hand cars is not always as good as you may think.

Brokers and leasing companies will often negotiate such good discounts with manufactures that when leased over say 2 years the discount will eliminate a large proportion of the depreciation. When you combine that with the fact that the leasing company can claim back all the VAT, you start to see why so few companies lease used cars.

Having said that if you manage to find a vat qualifying used car which you would be unlikely to get a discount off when new then it may prove more economic. An example would be an ex demonstrator on something like an R8.

I must stress that all of this info is only relevant to "non purchase" products such as contract hire and finance lease, if however you are looking for something like a Personal Contract Purchase where you do have the option to own then it will be slightly different, mainly due the VAT element.

This is very good advice

A PCP on a nearly new car sounds like a good bet in your situation

[PhilLL]

Your other option may be to take out a conventional loan for the cost of the vehicle and extend the payment period so that the monthly payments match your allowance, you can change your car whenever and pay off the loan with the proceeds of the sale.

The advantage is the flexibility and a lower APR on the loan, but you're obviously opening yourself up to risk if there's a shortfall between the value of the car and the loan amount when you come to sell.

[Justin Miles]

Most of my clients are taking the PCH route rather than buy a car outright or take out a loan. In most instances, PCH beats losses through depreciation, and interest on loan repayments would only add to the cost.

There are many companies out there offering PCH. I would advise you to go through a broker rather than a main dealer. Brokers often get the same buy price as a main dealer, but without having to cover the cost of a retail infrastructure, the markup added is much lower. As an example, I just arranged a PCH for a clients PA on a very small car, but still managed to chip £70 per month off of the best main dealer price without even knowing what I was up against.

When you deal through a broker you must realise that if you request a price, often that price is only available for a limited period. Brokers take advantage of pricing benefits by agreeing minimum order levels, tapping in to over ordering problems etc so any offer should be acted upon as soon as you can.

A "google" search of car brokers should bring up some good companies (moderator please note - my company does NOT appear on the results list for this search term so I am not surreptitiously advertising my company!)

Brokers don't just arrange PCH and other finance deals, they can also help you to save money on outright purchase too by taking advantage of their purchasing strength and contacts.

I really would steer away from a used car... a good broker should be able to help you get what you need... and what you want!

Best of luck

Justin

[Brown and Boris]

I have a 2000 Lotus Elise as the company car. Obviously one problem is the original purchase price is what they tax me on, but by giving SORN each Autumn and running my own car on a mileage alllowance in the winter I have minimised the BIK tax as it is unavailable for use.