Who gets company cars?
Discussion
Blown2CV said:
Car manufacturers are the ones to work for if you want a good deal. I have heard of schemes where you can lease them for next to nothing, pick all the options at little extra cost and then change it every 6 months or so. Maybe they don't do em like that anymore but they are the best employers to get a car from!
They always sound good when someone down the pub is telling you about them but one of my neighbours gets a manufacturer car and he said the deal gets worse and worse each time and he's not sure it's worth it now, other than the convenience and lack of hassle. I still haven't got to the bottom of the tax side of things - he used to say there wasn't any as technically they own the cars, but now he's saying he has to watch the emissions level as it affects his tax!
OldSkoolRS said:
The biggest pain is that if you 1 pound over the 40% tax threshold, your company car (and fuel card if you have one) doubles. One of the Engineers I supervise went from 136 pounds per month for a car and fuel card to 272 pounds per month as he got a rise that took him over the threshold (which is lower this year than previously). Worse thing was he'd only just gone over the threshold, so in fact he ended up worse off after tax than before his rise...I had the unfortunate job of telling him this rise and how it might effect his tax. 
That (tax on the car doubling) would only apply if his pay rise was worth more than the BIK value of the car.The BIK value gets added to your gross salary so for what you wrote to be correct, he must have been way under the 40% theshold before his pay rise.
Also, the 40% theshold is lower, but the personal allowance has gone up by the same amount so they cancel each other out.
OldSkoolRS said:
Good job I just said that he should seek advice regarding how it might effect his tax...obviously my advice isn't to be trusted. 
From what you've said, he must already have been paying at the higher rate before his rise (I wasn't his supervisor last pay rise).
It's a feasible situation - the BIK value on the car could be, say 15% of 20K = 3K. So if his salary was 3K under the 40% threshold and he got a 3K payrise then all of his car BIK would be taxed at 40%. From what you've said, he must already have been paying at the higher rate before his rise (I wasn't his supervisor last pay rise).In reality it's the pay rise which is being taxed at 40%, but people tend to look at car BIK value as 'on top' of their salary.
What doesn't happen (which your post suggested) is if the total is 1 over the threshold then the whole lot gets taxed at 40%. In that case only 1 would be at 40%.
Sorry for the OT.
I knew that the 40% tax is only paid on the salary above the threshold, but I was talking about if you had a situation where you go 1 pound over the threshold (including the BIK figure) and instead of paying 20% BIK on the car you pay 40% so that part of your tax deductions would double. What I hadn't appreciated was that the BIK is added to the salary, so given that our cars are around 28-32K and the pay rise in question was just over a grand he would already have been paying 40% rate previously.
Bottom line is that he is a little better off due to the rise and that many people haven't had rises this year (or last for that matter).
I knew that the 40% tax is only paid on the salary above the threshold, but I was talking about if you had a situation where you go 1 pound over the threshold (including the BIK figure) and instead of paying 20% BIK on the car you pay 40% so that part of your tax deductions would double. What I hadn't appreciated was that the BIK is added to the salary, so given that our cars are around 28-32K and the pay rise in question was just over a grand he would already have been paying 40% rate previously.
Bottom line is that he is a little better off due to the rise and that many people haven't had rises this year (or last for that matter).
OldSkoolRS said:
Sorry for the OT.
I knew that the 40% tax is only paid on the salary above the threshold, but I was talking about if you had a situation where you go 1 pound over the threshold (including the BIK figure) and instead of paying 20% BIK on the car you pay 40% so that part of your tax deductions would double.
For clarity, that doesn't happen. If you go 1 over (including the BIK figure) you'd only pay 40% tax on 1. I knew that the 40% tax is only paid on the salary above the threshold, but I was talking about if you had a situation where you go 1 pound over the threshold (including the BIK figure) and instead of paying 20% BIK on the car you pay 40% so that part of your tax deductions would double.
I have had company cars since 1988 as i am a field based engineer,Nothing exciting Astra`s vectras mondeos etc.The last 3 cars have been VW golf estates.
What annoys me is the taxation based on the retail price of the car mine is a boggo s spec with a retail of over 18K,in the real world you would never pay anywhere near that for a car of that spec,but you get taxed on that amount.
Thankfully mine is the low CO2 1.6 bluemotion so i get a rebate for that.
What annoys me is the taxation based on the retail price of the car mine is a boggo s spec with a retail of over 18K,in the real world you would never pay anywhere near that for a car of that spec,but you get taxed on that amount.
Thankfully mine is the low CO2 1.6 bluemotion so i get a rebate for that.
I get a choice of either taking a car from a very dull list or taking the cash. Most people seem to rush out and the car (which must be under 160g's emission)....and then up having to contribute lots to spec it up.
I've taken the cash and bought myself an Integra Type R with it - the monthly money I get more than pays for MOT, Tax, Insurance and also pay's for lots of track days a year (along with the associated costs of fuel, tyres, brakes etc). I just couldn't drive a brand new Golf TDI in lieu of taking a fully funded track day toy which also doubles as an interesting daily drive.
I'm also safe in the knowledge that my car probably isn't really depreciating as it's pretty much reach the bottom of it's depreciation curve.
I've taken the cash and bought myself an Integra Type R with it - the monthly money I get more than pays for MOT, Tax, Insurance and also pay's for lots of track days a year (along with the associated costs of fuel, tyres, brakes etc). I just couldn't drive a brand new Golf TDI in lieu of taking a fully funded track day toy
which also doubles as an interesting daily drive.I'm also safe in the knowledge that my car probably isn't really depreciating as it's pretty much reach the bottom of it's depreciation curve.
Deva Link said:
For clarity, that doesn't happen. If you go 1 over (including the BIK figure) you'd only pay 40% tax on 1.
So at what point do you start getting the bigger deduction of the 40% BIK? For example, if you look on BMW's website they have a tax calculator: You select the model, auto/manual, fuel card yes/no and 20% or 40% tax. In the case of a 320d Touring it goes from 85 per month (car only 20%) to 170 per month (car only 40%). So if you were earning 1 pound under the threshold including the BIK, then you would have 85 per month deducted. If you went 1 pound over (funny pay rise of 2 pound, but bare with me
), then you would have 170 deducted. I understand that you would pay 40% on the extra pound, but not the rest of the salary, it's the car deduction that I'm not so sure about.Am I being really thick here, or am I missing something?
<Probably just being thick...it's been a long week>
I've had allowances for the last 10 years, and to be honest I'd rather have the car now, especially with upwards of 30k pa miles - you need to tie in for 3 years on a lease deal to make it affordable and stay in something relatively new to get the allowance. Not many employers can turn round and say you're safe for 36 months in the current climate
OldSkoolRS said:
So if you were earning 1 pound under the threshold including the BIK, then you would have 85 per month deducted. If you went 1 pound over (funny pay rise of 2 pound, but bare with me ), then you would have 170 deducted.
....
Am I being really thick here, or am I missing something?
I think what you're doing is including the BIK value for the 20% tax payer but then assuming the 40% tax payer is paying 40% based on their salary only. ), then you would have 170 deducted. ....
Am I being really thick here, or am I missing something?
There's no 'snap' from 20% to 40% for the BIK. Say a person earned 2K less than the threshold and the car had a BIK value of 3K. Only 1K would be taxable at 40%.
Deva Link said:
I think what you're doing is including the BIK value for the 20% tax payer but then assuming the 40% tax payer is paying 40% based on their salary only.
There's no 'snap' from 20% to 40% for the BIK. Say a person earned 2K less than the threshold and the car had a BIK value of 3K. Only 1K would be taxable at 40%.
I think you have that wrong - if you are a 40% tax payer you pay 40% on the whole car BIK. and the car benefit level takes away from your tax free allowance meaning there is a point where it can make a massive difference. Similar to things like stamp duty, some of our tax brackets can be very 'stepped'. There's no 'snap' from 20% to 40% for the BIK. Say a person earned 2K less than the threshold and the car had a BIK value of 3K. Only 1K would be taxable at 40%.
http://www.parkers.co.uk/company-cars/news-and-adv...
Blown2CV said:
Accelebrate said:
The majority of BMW employees I know from the factory here use the company scheme.
A family member agreed to do a weeks work a year for an organisation in exchange for some money and a company car. In the end he only ended up doing a couple of days work and the payment was ceased after a couple of years, but the car remained for eight or so years, replaced by the lease company every two.
Car manufacturers are the ones to work for if you want a good deal. I have heard of schemes where you can lease them for next to nothing, pick all the options at little extra cost and then change it every 6 months or so. Maybe they don't do em like that anymore but they are the best employers to get a car from!A family member agreed to do a weeks work a year for an organisation in exchange for some money and a company car. In the end he only ended up doing a couple of days work and the payment was ceased after a couple of years, but the car remained for eight or so years, replaced by the lease company every two.
Not all of them!
Super Injunction said:
I think you have that wrong - if you are a 40% tax payer you pay 40% on the whole car BIK.
Well, yes, if your salary on its own takes you into the 40% bracket, but not if it's below and it's only the BIK value that takes you over.Super Injunction said:
..and the car benefit level takes away from your tax free allowance meaning there is a point where it can make a massive difference.
The way you work it out makes no difference - in practice you do take the BIK value from your personal allowance but all that does is lower the level at which you pay higher rate tax. You only pay higher rate tax on your taxable income (including the BIK value) over the threshold. If the total is 1K over then you pay higher rate tax on 1KApologies for the hijack but I've been taking a car allowance for a few years now which I just regard as extra salary as I had a private car I was more than happy with.
I don't do "business miles" beyond the commute to work which is a 60 mile round trip.
Recently my employer got around to putting its company car scheme rules on our intranet and there's an ominious warning about how employees receiving an allowance but using a private car need to provide evidence of an mot, roadtax, annual service and proof of having business travel car insurance. "Failure to do so will result in suspension of your allowance".
Except of course I don't have such proof because I don't do business miles and just have normal domestic car insurance.
I'm sorry if this sounds a bit confused, but I'm guessing my employer wants all that stuff to prove to the HMRC the person receiving the allowance does actually own/use a car for business purposes.
Except I don't really; at least not in the visiting clients/doing sales pitches sense...so...am I actually...legally entitled to an allowance...?!
I don't do "business miles" beyond the commute to work which is a 60 mile round trip.
Recently my employer got around to putting its company car scheme rules on our intranet and there's an ominious warning about how employees receiving an allowance but using a private car need to provide evidence of an mot, roadtax, annual service and proof of having business travel car insurance. "Failure to do so will result in suspension of your allowance".
Except of course I don't have such proof because I don't do business miles and just have normal domestic car insurance.
I'm sorry if this sounds a bit confused, but I'm guessing my employer wants all that stuff to prove to the HMRC the person receiving the allowance does actually own/use a car for business purposes.
Except I don't really; at least not in the visiting clients/doing sales pitches sense...so...am I actually...legally entitled to an allowance...?!
DavidJJ said:
Apologies for the hijack but I've been taking a car allowance for a few years now which I just regard as extra salary as I had a private car I was more than happy with.
I don't do "business miles" beyond the commute to work which is a 60 mile round trip.
Recently my employer got around to putting its company car scheme rules on our intranet and there's an ominious warning about how employees receiving an allowance but using a private car need to provide evidence of an mot, roadtax, annual service and proof of having business travel car insurance. "Failure to do so will result in suspension of your allowance".
Except of course I don't have such proof because I don't do business miles and just have normal domestic car insurance.
I'm sorry if this sounds a bit confused, but I'm guessing my employer wants all that stuff to prove to the HMRC the person receiving the allowance does actually own/use a car for business purposes.
Except I don't really; at least not in the visiting clients/doing sales pitches sense...so...am I actually...legally entitled to an allowance...?!
Yes, this is mostly H&S driven so that if you're in breach of your car insurance policy and crash, the insurer or MIB don't come after your employer; maybe HR are looking to limit the allowance and hoping that some people won't meet the criteria at all. I don't do "business miles" beyond the commute to work which is a 60 mile round trip.
Recently my employer got around to putting its company car scheme rules on our intranet and there's an ominious warning about how employees receiving an allowance but using a private car need to provide evidence of an mot, roadtax, annual service and proof of having business travel car insurance. "Failure to do so will result in suspension of your allowance".
Except of course I don't have such proof because I don't do business miles and just have normal domestic car insurance.
I'm sorry if this sounds a bit confused, but I'm guessing my employer wants all that stuff to prove to the HMRC the person receiving the allowance does actually own/use a car for business purposes.
Except I don't really; at least not in the visiting clients/doing sales pitches sense...so...am I actually...legally entitled to an allowance...?!
HMRC basically see car allowance as extra salary; that's how it's taxed - but employers like it because they don't quote it for pension contributions, life insurance payouts etc. so there's no legal issue.
Just make sure your car insurance covers you for business use; even if you use the car to go to offsite training or to pick up stationery because the photocopier's run out of paper, you need it, and the cost is typically extremely small.
DavidJJ said:
I don't do "business miles" beyond the commute to work which is a 60 mile round trip.
Recently my employer got around to putting its company car scheme rules on our intranet and there's an ominious warning about how employees receiving an allowance but using a private car need to provide evidence of an mot, roadtax, annual service and proof of having business travel car insurance. "Failure to do so will result in suspension of your allowance".
Except of course I don't have such proof because I don't do business miles and just have normal domestic car insurance.
Business class 1 is included by some insurers as standard and where it isn't the cost difference is usually negligible.Recently my employer got around to putting its company car scheme rules on our intranet and there's an ominious warning about how employees receiving an allowance but using a private car need to provide evidence of an mot, roadtax, annual service and proof of having business travel car insurance. "Failure to do so will result in suspension of your allowance".
Except of course I don't have such proof because I don't do business miles and just have normal domestic car insurance.
Do you really NEVER use your car during business hours - you don't pick things or people up for work, go on training courses, visit other locations etc?
DavidJJ said:
Except I don't really; at least not in the visiting clients/doing sales pitches sense...so...am I actually...legally entitled to an allowance...?!
Yes. It makes no odds to HMRC as you and your employer pay tax and NI on the money just as if it was salary. Arguably it's a bit of scam by your employer as the allowance isn't consolidated into your salary for pension and bonus purposes.Wow, thanks very much for your quick responses, both very helpful. Yes, the back story was that (apparantly) at the time there was a 0 payrise policy being maintained by my employer (which I can believe) so my manager back then "pulled some strings" and got me onto the car policy instead, which was more palatable to senior management due to not being pensionable, etc.
I guess I was left with an impression, unfairly I suppose, there was something a bit murky about the arrangement, hence my concern. I'll recheck my policy, in fairness I really don't do any business mileage, not even little trips, and go from there. Thanks again.
I guess I was left with an impression, unfairly I suppose, there was something a bit murky about the arrangement, hence my concern. I'll recheck my policy, in fairness I really don't do any business mileage, not even little trips, and go from there. Thanks again.
i wonder often how many people buy a car from a dealer and don't realise its been a daily hack for a few months.
Hammer67 said:
I get one, usually whatever is on the demo fleet. Have had literally dozens over the years. Regularly get to work to find someone`s sold it and off it goes. I then spend the day rooting around for something to go home in. I only really use it for work, long trips up north or family holidays. Rest of the time I use one of my toys.
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