Company Car vs Own Car

[leanback]

Have I got this right???

My tax rate is the standard 20% so:

COMPANY CAR
Car: VW Golf SE Nav 2.0 litre Manual 2017
P11D: £23,465
CO2: 109g/km
BiK Rate: 23%
Company Car Cost: £1,099.80
Private Fuel Set Rate: £22,600
BiK Rate: 23%
Fuel Allowance Cost: £1,059.26

Overall Cost for VW Golf Company Car: £2,159.07 per year

OWN CAR
Car: Ford Focus 2010
Rough MPG: 37
Annual Mileage: 18,150
Claimable Mileage: 7,700 (not including commute)
At Company's 15p Rate: £1,115
At HMRC's 30p Rate: £2,310
Annual Fuel Outlay: £2,760
Car depreciation over 18k miles in 1 year: £750
MOT, Tax, Insurance, Roadside Cover: £750

Overall Cost for Ford Focus Own Car: £835.00 per year


If this is correct - why would I want a company car???

[RammyMP]

Peace of mind if your car explodes or you right it off?

I've not had a company car for 15 years as the tax was getting worse every year, it's not worth it unless you do massive mileage.

[Butter Face]

The main attraction for most is having a brand new car with zero hassle or worry about depreciation etc.

When you work it out like that it would cost you £1300 a year to have a brand new car with zero other costs to factor in. Not too shabby really.

[Buster73]

Do away with the free or not so free fuel allowance and charge the company back your business mileage will be the way to go.

£1100 fuel benefit cost is one hell of a lot of private miles in that type of car .

Do the maths it's quite simple .

[nipsips]

I pay for the private miles in mine at a cost of 14p per mile, deducted from my wages pretax.

But then I run my own car as well as I'm an idiot...

[Gareth1974]

leanback said:

Have I got this right???

My tax rate is the standard 20% so:

COMPANY CAR
Car: VW Golf SE Nav 2.0 litre Manual 2017
P11D: £23,465
CO2: 109g/km
BiK Rate: 23%
Company Car Cost: £1,099.80
Private Fuel Set Rate: £22,600
BiK Rate: 23%
Fuel Allowance Cost: £1,059.26

Overall Cost for VW Golf Company Car: £2,159.07 per year

OWN CAR
Car: Ford Focus 2010
Rough MPG: 37
Annual Mileage: 18,150
Claimable Mileage: 7,700 (not including commute)
At Company's 15p Rate: £1,115
At HMRC's 30p Rate: £2,310
Annual Fuel Outlay: £2,760
Car depreciation over 18k miles in 1 year: £750
MOT, Tax, Insurance, Roadside Cover: £750

Overall Cost for Ford Focus Own Car: £835.00 per year


If this is correct - why would I want a company car???

Unless I've missed it, I don't think you've included service costs or tyres in the sums for your own car.

[leanback]

I'm not a massive fan of having a brand new car... its too showy and I worry about bouncing it off other cars / street furniture / people.

Then again, it keeps me in check and stops me rolling up outside client's offices in a beat up car looking like I don't give a damn. But I could pay someone to clean my car every week and still have change from the money I would save.

Like I said, I do about 7,700 business mileage plus about 10,450 personal miles (including commuting). 10,450 of personal mileage does add up to about the same as the private fuel allowance costs me so I'm not losing out there - in fact if I bought my own car it would be less fuel efficient so cost me more.

As I'm a sub-30 year old professional in a market which really laps up the whole image = power thing I guess it makes sense for me to stick with the company car. But I just don't see why it's seen as such a 'benefit' these days.

I guess at least it gets me out of doing a self assessment tax form...

[leanback]

Gareth1974 said:

Unless I've missed it, I don't think you've included service costs or tyres in the sums for your own car.

Well spotted Gareth,
Tyres - 4 per year @ £80 = £320
Oil, gaskets, filters = £150
Bearings, brakes & fluids = £150
Bulbs, fuses & plugs = £50

Total annual cost £670

Added to the original annual cost of £835 = £1,505

Still £650 short of company car cost but as already pointed out the two cars aren't really comparable... Having said that I've already allowed £750/year depreciation on what is probably a £3k car which is pretty harsh.

[greggy50]

Do you not get a cash allowance for opting out? As that is usually the case...

If not the company car is a no brainer for the piece of mind

I turned down a £5,200 allowance to go back in a company car as by the time you pay insurance, tax, petrol etc. they was not much in it for me and I get to drive a brand new car with no worries at all.

[interstellar]

leanback said:

Have I got this right???

My tax rate is the standard 20% so:

COMPANY CAR
Car: VW Golf SE Nav 2.0 litre Manual 2017
P11D: £23,465
CO2: 109g/km
BiK Rate: 23%
Company Car Cost: £1,099.80
Private Fuel Set Rate: £22,600
BiK Rate: 23%
Fuel Allowance Cost: £1,059.26

Overall Cost for VW Golf Company Car: £2,159.07 per year

OWN CAR
Car: Ford Focus 2010
Rough MPG: 37
Annual Mileage: 18,150
Claimable Mileage: 7,700 (not including commute)
At Company's 15p Rate: £1,115
At HMRC's 30p Rate: £2,310
Annual Fuel Outlay: £2,760
Car depreciation over 18k miles in 1 year: £750
MOT, Tax, Insurance, Roadside Cover: £750

Overall Cost for Ford Focus Own Car: £835.00 per year


If this is correct - why would I want a company car???

ref this bit

"At HMRC's 30p Rate: £2,310"

you dont get £2310 back you get tax relief on this amount so in your case (20% tax payer) you can claim £462. That changes things.

[leanback]

interstellar said:

ref this bit
"At HMRC's 30p Rate: £2,310"
you dont get £2310 back you get tax relief on this amount so in your case (20% tax payer) you can claim £462. That changes things.

Aha!!!! Thank you for this interstellar!!!

I knew I must be missing something!

This makes more sense now....

OWN CAR
Car: Ford Focus 2010
Rough MPG: 37
Annual Mileage: 18,150
Claimable Mileage: 7,700 (not including commute)
At Company's 15p Rate: £1,115
At 20% of HMRC's 30p Rate: £462
Annual Fuel Outlay: £2,760
Car depreciation over 18k miles in 1 year: £750
MOT, Tax, Insurance, Roadside Cover: £750
Maintenance & Tyres: £670

Overall Cost for Ford Focus Own Car: £3,353 per year

That makes the £2,160 annual cost of a company car much more appealing...

[andburg]

As others have said it's the incidentals that get you when opting out. Car breaks down, you need to get a hire car at your expense to continue to work.

If you car blew itself up could you get to work and back and do the business miles? Could you go and buy another car and stand the monthly payments if need be?

If you have a car you don't mind putting the mileage on you can make good money running it but eventually it's going to need a big bill paying.

The alternative is to have a car with no worries, sell your own and do what you want with the cash. There is no right answer only what's right for you

[KarlMac]

andburg said:

The alternative is to have a car with no worries, sell your own and do what you want with the cash. There is no right answer only what's right for you

I've just changed jobs and part of the new package is my first company car. I spent ages pouring over numbers and decided that the amount it will cost me in tax is much cheaper than I would be able to purchase the same or similar car for myself. I've decided that whatever the cost it's worth it for piece of mind.

I'll be doing around 10,000 personal miles per year (god knows how many business miles) and I pay for my own fuel then claim back business miles. The car policy is also reasonably free as well (less than 130kg/cm and 4 doors) so hoping to get something hybrid.

[Sheepshanks]

Buster73 said:

Do away with the free or not so free fuel allowance and charge the company back your business mileage will be the way to go.

£1100 fuel benefit cost is one hell of a lot of private miles in that type of car .

He does around 11K private miles so it's not bad. At around 50MPG he breaks even.

greggy50 said:

Do you not get a cash allowance for opting out? As that is usually the case...

^ This. The 15p is just for fuel. If you're opting out of a company there's normally an allowance as you're saving the company the cost of supplying and running a fully insured and maintained new Golf. On the Golf and mileage indicated it should be at least £300/mth.

[andburg]

I was in same position when I took a company car.

Change of role means I've now lost it with a good pay rise and drop in commute to counteract but Id take the company motor again tomorrow. I would say get the smallest engine in the highest trim level, they will all cruise at 70-80mph. 116ed plus was the sweet spot for me.

[leanback]

The company are not offering any cash alternative so this really hits it home that a company car is the way to go.

Like andburg says - smallest motor with highest trim - hence the SE Nav model of Golf rather than a GTD as some of my colleagues have chosen.

It's an open book - I can have any car. I've picked out the Golf because it's small and has good visibility out the back for reversing (lots of city parking for work), the boot is big enough for my Labrador and it's not too sporty (too many points on my license already).

Only thing that puts me off it is the fact I wont be able to fit my bike in the boot without removing a wheel and roofbars would look ugly and cause problems long term because they mount through the door openings.

[Sheepshanks]

leanback said:

The company are not offering any cash alternative..

In that case it's odd that they'll even allow you to use your own car, and pay your business fuel costs. Do they impose rules on how old it can be etc?

[leanback]

No strict rules however they did laugh in my face when I mentioned getting an old landrover.

It's a medium sized company - large enough to be a bit cagey about the details of such things but small enough not to have a policy set in stone.

[Jonobigblind]

Worth considering a PHEV then as you'll be paying c.9% BiK rather than 23%. I'm switching from my Merc C250d, probably to a Mini Countryman Se and saving myself a wedge in cash each month. Same set up as the BMW i8 just with dialled down power and more chance of getting a bike in the back.

A Merc c350e estate should score highly for practicality and any increase in contribution could be more than easily offset by lower tax for you. On the other plus side it will do 0-60 in around 6 seconds

[hepy]

Jonobigblind said:

Worth considering a PHEV then as you'll be paying c.9% BiK rather than 23%. I'm switching from my Merc C250d, probably to a Mini Countryman Se and saving myself a wedge in cash each month. Same set up as the BMW i8 just with dialled down power and more chance of getting a bike in the back.

A Merc c350e estate should score highly for practicality and any increase in contribution could be more than easily offset by lower tax for you. On the other plus side it will do 0-60 in around 6 seconds

While this is a good idea at the moment, from April 18 the rates increase dramatically, and will add a considerable cost.