Company Car Scheme / Opting Out
Discussion
My company car is due to run out at the end of the year and I am considering the option of taking a cash allowance instead of renewing my car. My basic circumstances are these:
Higher rate tax payer.
Do zero business milage, short journey to work (12 miles, mostly motorway).
Average personal mileage, although we do have another car (leased) in the household. Say 12-14k per year,
Fuel included from work at the moment.
Happy to lease if it works out better, currently our other car is leased so know about it a bit.
£6,437 taxable car benefit at the moment.
£5,106 taxable fuel benefit at the moment.
My employer has said I can opt out and take a cash alternative instead of renewing my car at the end of the year, but whenever they have offered this to another employee considering it they have turned it down due to the allowance offered. It has been suggested that my allowance would be around the £500 per year mark.
Tempted to look at something like a Golf R on lease, I can only chose 5 door diesel cars through my works scheme.
Any more information required in order to offer and advice , please let me know.
thanks in advance
Higher rate tax payer.
Do zero business milage, short journey to work (12 miles, mostly motorway).
Average personal mileage, although we do have another car (leased) in the household. Say 12-14k per year,
Fuel included from work at the moment.
Happy to lease if it works out better, currently our other car is leased so know about it a bit.
£6,437 taxable car benefit at the moment.
£5,106 taxable fuel benefit at the moment.
My employer has said I can opt out and take a cash alternative instead of renewing my car at the end of the year, but whenever they have offered this to another employee considering it they have turned it down due to the allowance offered. It has been suggested that my allowance would be around the £500 per year mark.
Tempted to look at something like a Golf R on lease, I can only chose 5 door diesel cars through my works scheme.
Any more information required in order to offer and advice , please let me know.
thanks in advance
£500 per year? sod that! you need £5000 at least! that still only equates to £250 per month in your pocket, a mid size BMW probably costs £250 in tax means you got approx £500pm to play with, u obviously need to factor in insurance, tyres, servicing etc too...
fuel wise you need to run the numbers... do you pay more or less in tax than the fuel you currently put in?
fuel wise you need to run the numbers... do you pay more or less in tax than the fuel you currently put in?
Nano2nd said:
£500 per year? sod that! you need £5000 at least! that still only equates to £250 per month in your pocket, a mid size BMW probably costs £250 in tax means you got approx £500pm to play with, u obviously need to factor in insurance, tyres, servicing etc too...
fuel wise you need to run the numbers... do you pay more or less in tax than the fuel you currently put in?
Sorry! Typo, £500 per month allowance! fuel wise you need to run the numbers... do you pay more or less in tax than the fuel you currently put in?
Currently fill up a C class diesel Merc 2-3 times per month so would estimate £150 spent filling this one up. Current lease car is fully maintained and would look to do the same again if leasing my own.
Thanks
So you're going to get around £7500/yr - allowance plus not paying the tax. £625/mth.
You'd likely be in the region of £100/mth better off opting out, which I reckon is fairly marginal bearing in the risk of ownership / responsibility for your own car.
For a fully expensed truly perk car with fuel, £500/mth isn't a particularly good allowance.
You'd likely be in the region of £100/mth better off opting out, which I reckon is fairly marginal bearing in the risk of ownership / responsibility for your own car.
For a fully expensed truly perk car with fuel, £500/mth isn't a particularly good allowance.
Sheepshanks said:
So you're going to get around £7500/yr - allowance plus not paying the tax. £625/mth.
You'd likely be in the region of £100/mth better off opting out, which I reckon is fairly marginal bearing in the risk of ownership / responsibility for your own car.
For a fully expensed truly perk car with fuel, £500/mth isn't a particularly good allowance.
No. When I asked at work today I was told by the accountant that whilst the option is open to staff, nobody has ever take up the offer because the amount they offer is relatively low. You'd likely be in the region of £100/mth better off opting out, which I reckon is fairly marginal bearing in the risk of ownership / responsibility for your own car.
For a fully expensed truly perk car with fuel, £500/mth isn't a particularly good allowance.
My rough figures told me I would be around £100 better off per month on a Golf R - risk of ownership basically off set though as I would only go for a fully maintained lease. I suppose there is the hassle factor if anything happens to it, but the trade off is having more flexibility of choice (Can have petrol or 3 door).
Just wanted to make sure I hadn't missed out anything glaringly obvious.
thanks
You are better off on the fuel if you opt out as its not taxed on Co2, but on the cash value of the fuel
So if you do 15K miles in a diesel @ 40mpg, say 375 gallons at £5 = you pay the tax on £1875 ...which is a bit better than the previous "fuel benefit" based on car tax band whether you use it much or not
Then if you do any business miles, you claim them back on your tax return as an expense at .45p a mile
I dont think £500 is too bad for a non essential car user. We get £650 for essential users (senior sales and above that live in their cars) and £850 for Director/VP roles
So if you do 15K miles in a diesel @ 40mpg, say 375 gallons at £5 = you pay the tax on £1875 ...which is a bit better than the previous "fuel benefit" based on car tax band whether you use it much or not
Then if you do any business miles, you claim them back on your tax return as an expense at .45p a mile
I dont think £500 is too bad for a non essential car user. We get £650 for essential users (senior sales and above that live in their cars) and £850 for Director/VP roles
So many people seem to think they should be able to make a profit on a car allowance.
A company car costs you money. You pay tax on the car and fuel benefit, and that comes off your gross pay.
A car allowance will also cost you money, because your allowance is taxable, so that £500 per month will become £400 or even £300, depending on your tax bracket. That isn't enough to get you a decent lease, so you'll have to dip into your own pocket to make up the difference. If they are going to continue to pay for your fuel, then you'll still get taxed on that allowance. If not, then you should get x pence per mile, but from that, you need to account for fuel, insurance (including business use), VED, tyres, servicing, repairs etc.
You can only really decide which option is best once you've identified which company car and which "owned" car you're considering, and applied all the relevant costs of each to the calculaton.
A company car costs you money. You pay tax on the car and fuel benefit, and that comes off your gross pay.
A car allowance will also cost you money, because your allowance is taxable, so that £500 per month will become £400 or even £300, depending on your tax bracket. That isn't enough to get you a decent lease, so you'll have to dip into your own pocket to make up the difference. If they are going to continue to pay for your fuel, then you'll still get taxed on that allowance. If not, then you should get x pence per mile, but from that, you need to account for fuel, insurance (including business use), VED, tyres, servicing, repairs etc.
You can only really decide which option is best once you've identified which company car and which "owned" car you're considering, and applied all the relevant costs of each to the calculaton.
Doofus said:
So many people seem to think they should be able to make a profit on a car allowance.
A company car costs you money. You pay tax on the car and fuel benefit, and that comes off your gross pay.
A car allowance will also cost you money, because your allowance is taxable, so that £500 per month will become £400 or even £300, depending on your tax bracket. That isn't enough to get you a decent lease, so you'll have to dip into your own pocket to make up the difference. If they are going to continue to pay for your fuel, then you'll still get taxed on that allowance. If not, then you should get x pence per mile, but from that, you need to account for fuel, insurance (including business use), VED, tyres, servicing, repairs etc.
You can only really decide which option is best once you've identified which company car and which "owned" car you're considering, and applied all the relevant costs of each to the calculaton.
THIS!A company car costs you money. You pay tax on the car and fuel benefit, and that comes off your gross pay.
A car allowance will also cost you money, because your allowance is taxable, so that £500 per month will become £400 or even £300, depending on your tax bracket. That isn't enough to get you a decent lease, so you'll have to dip into your own pocket to make up the difference. If they are going to continue to pay for your fuel, then you'll still get taxed on that allowance. If not, then you should get x pence per mile, but from that, you need to account for fuel, insurance (including business use), VED, tyres, servicing, repairs etc.
You can only really decide which option is best once you've identified which company car and which "owned" car you're considering, and applied all the relevant costs of each to the calculaton.
No one can advise you because no one knows your particular circumstances.
For example, I live in London and have 2 teenage sons who need to be able to use the car occasionally. They are covered on my company car, with agreement of the fleet insurers, but to insure a car myself with them as additional drivers would be £3-4K on a dull car. So a company car is a no brainer for me.
bogie said:
You are better off on the fuel if you opt out as its not taxed on Co2, but on the cash value of the fuel
So if you do 15K miles in a diesel @ 40mpg, say 375 gallons at £5 = you pay the tax on £1875 ...which is a bit better than the previous "fuel benefit" based on car tax band whether you use it much or not
Then if you do any business miles, you claim them back on your tax return as an expense at .45p a mile
I'd say it's fairly unusual to have private fuel supplied on your own car. So if you do 15K miles in a diesel @ 40mpg, say 375 gallons at £5 = you pay the tax on £1875 ...which is a bit better than the previous "fuel benefit" based on car tax band whether you use it much or not
Then if you do any business miles, you claim them back on your tax return as an expense at .45p a mile
Anyway, let's say the £1875 figure is correct for fuel used, he'd actually be better off just buying his own fuel as he's paying £2042 in tax on fuel benefit now.
TwigtheWonderkid said:
No one can advise you because no one knows your particular circumstances.
For example, I live in London and have 2 teenage sons who need to be able to use the car occasionally. They are covered on my company car, with agreement of the fleet insurers, but to insure a car myself with them as additional drivers would be £3-4K on a dull car. So a company car is a no brainer for me.
I've never worked for a firm that has routinely allowed employees kids to drive company cars but the general point about circumstances is right - it seems a straight-forward decision but the variability when weighing up whether to opt or not is vast.For example, I live in London and have 2 teenage sons who need to be able to use the car occasionally. They are covered on my company car, with agreement of the fleet insurers, but to insure a car myself with them as additional drivers would be £3-4K on a dull car. So a company car is a no brainer for me.
Certainly our younger employees in the SE faced high premiums if they opted out and coming unstuck over poor credit records when applying for finance on a car was common too.
The weird thing was that quite a few people who opted out then PCP's or leased exactly the same car as they could have had as a company car, and then found at the end of the day the overall cost was about the same.
You can make money out of it though - to the irritation of the HR Director, a number of our fairly senior people, whose standard car was a mid-level 5 Series, opted out and bought used versions of far cheaper cars. One of the women got a Polo!
Sheepshanks said:
TwigtheWonderkid said:
No one can advise you because no one knows your particular circumstances.
For example, I live in London and have 2 teenage sons who need to be able to use the car occasionally. They are covered on my company car, with agreement of the fleet insurers, but to insure a car myself with them as additional drivers would be £3-4K on a dull car. So a company car is a no brainer for me.
I've never worked for a firm that has routinely allowed employees kids to drive company cars For example, I live in London and have 2 teenage sons who need to be able to use the car occasionally. They are covered on my company car, with agreement of the fleet insurers, but to insure a car myself with them as additional drivers would be £3-4K on a dull car. So a company car is a no brainer for me.
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