Salary equivalent for company car... no business mileage

[RebelRed]

Hi all, have seen lots of info on the equivalent value of a company car compared to salary with all kinds of figures being mentioned. What I can't find is any info on if you don't do any business miles, and so not pocketing any mileage.

I am looking at a BMW 116d EfficientDynamics. BIK is £90 per month. I don't do any business miles (or very very little if I ever do).

My car allowance is about £4,500 per year.

So question is, if I had to buy the same car, insure it, tax it, service and fit tyres would I be better off taking the money or taking the car?

[BoostMonkey]

RebelRed said:

Hi all, have seen lots of info on the equivalent value of a company car compared to salary with all kinds of figures being mentioned. What I can't find is any info on if you don't do any business miles, and so not pocketing any mileage.

I am looking at a BMW 116d EfficientDynamics. BIK is £90 per month. I don't do any business miles (or very very little if I ever do).

My car allowance is about £4,500 per year.

So question is, if I had to buy the same car, insure it, tax it, service and fit tyres would I be better off taking the money or taking the car?

Take the car allowance and buy yourself something interesting, this is Pistonheads after all.

Remeber though the £4,500 will be taxed, so £3,600 @ 20% & £2,700 @ 40%

[CYMR0]

How many miles do you do?

You can lease a 116d for about £275 per month with £1,500 down.

That means that for your £315/month (£225 salary loss after 40% tax + £90 tax saving) you'd have £40 to fund

... insurance (guessing at £40 a month but really no idea)
... tax (nil on the ED)
... tyres (£65 a corner Hankook Ventus Prime2s on the ED - so maybe £15 a month)
... servicing (£20 a month ish)...


So if you took the cash, you'd be down the deposit and your insurance would have to be under a fiver to be better off ... although you're not so far off that it might not be worth getting the cash and something more interesting for the same money.

(Hell, even an SLK can be had for less).

Edited by CYMR0 on Thursday 26th July 11:27

[RebelRed]

Thanks guys, that makes sense. Believe me I would love to take the money and blow it on something nice! I have my eye on a lovely S2000 up the road, but needs must.

Currently running an Alfa 166 3.0 V6 and although loving it, it's hard to keep it above 20mpg! The reason i am looking into the company car is to save money. Basically the 116d ED is the cheapest decent car I can find and should give me mid 50's mpg. Not too fussed on lack of power, wet roundabouts will make up for that!

[xRIEx]

The benefit to taking a car allowance is getting the 45p per mile on business mileage - if you're not doing any business mileage you'll be financially better off with a company car, but obviously don't have an open choice.

ETA: According to our payroll department, you pay NI as well as tax on a car allowance; you just pay BIK tax on a company car.

Edited by xRIEx on Sunday 29th July 17:31

[GadgeS3C]

xRIEx said:

The benefit to taking a car allowance is getting the 45p per mile on business mileage - if you're not doing any business mileage you'll be financially better off with a company car, but obviously don't have an open choice.

ETA: According to our payroll department, you pay NI as well as tax on a car allowance; you just pay BIK tax on a company car.

Edited by xRIEx on Sunday 29th July 17:31

Careful! My last company only paid about 14p a mile if you could have a company car but opted out.

[northandy]

GadgeS3C said:

Careful! My last company only paid about 14p a mile if you could have a company car but opted out.

If your a higher rate taxpayer you can claim tax relief on the difference between that and the 45p

[northandy]

BoostMonkey said:

Take the car allowance and buy yourself something interesting, this is Pistonheads after all.

Remeber though the £4,500 will be taxed, so £3,600 @ 20% & £2,700 @ 40%

The op would save the bik tax which at £90 x12 would be another £1,080.

Seems a bit tight for an allowance, im starting a new job and mines £6,960 a year as an allowance,mwhich makes the allowance a much better option.

[RebelRed]

Yah mate, exactly what I thought, £4.5k is a bit stingy for an allowance which is why I think I will be better off with the car.

At the moment I'm spending £370 a month running my Alfa (servicing, tyres, tax, insurance, fuel), and with the 116d that would come down to under £200 (BIK & fuel).

[Deva Link]

northandy said:

If your a higher rate taxpayer you can claim tax relief on the difference between that and the 45p

You can do the same if you're a lower rate tax payer - but the amount you get back is half what a 40% tax payer gets.

[Deva Link]

RebelRed said:

What I can't find is any info on if you don't do any business miles, and so not pocketing any mileage.

I think http://www.cashorcar.co.uk would do the calcs for you.

[HeatonNorris]

RebelRed said:

Yah mate, exactly what I thought, £4.5k is a bit stingy for an allowance which is why I think I will be better off with the car.

That's generous compared with my opt-out!

Mind you, our policy is very carefully worded to force people into company cars, rather than taking the cash.

[northandy]

Deva Link said:

You can do the same if you're a lower rate tax payer - but the amount you get back is half what a 40% tax payer gets.

Oop's yes your right, i knew that but brain to finger interface wasnt functioning properly