Company car drivers - do you have a choice?
Discussion
I had a discussion at work with a colleague who has a company car about the level of emissions our respective cars emit. His was about 150CO2 and mine was 270CO2. Based on our annual mileage his car actually pollutes the atmosphere more than mine.
This got me thinking. Prior to 2002 company car tax was based on the number of business miles per year. The higher the business miles the lower the tax charge, over 18,000 miles being the lowest rate, fewer than 2,500 being the highest rate.
This system was effectively designed to penalise company car drivers who covered very little business miles (cars provided as a perk more than a requirement). This is my opinion (I advise on taxable benefits for employees). I can remember back the day a business man claiming over 18,000 business miles in his Maserati (but quickly sold the car before I could check the mileage).
Anyway the introduction of emission rating cars for taxable benefit purposes has effectively encouraged more company cars on the road, as there is no business mileage requirement. Therefore the lower the emission rating the lower the tax charge.
My question is that if you were covering say 4,000 business miles or less, would you opt for a low emission car or receive a cash allowance and drive something a little more interesting. I just wonder sometimes when I hear someone say, oh I’ve got a company car. I think what for. This is bearing in mind that you can claim 45ppm for a business journey using your own car.
I would opt for the cash allowance, as company cars provided where I work are mainly for senior positions and the occasional business journey is required.
This got me thinking. Prior to 2002 company car tax was based on the number of business miles per year. The higher the business miles the lower the tax charge, over 18,000 miles being the lowest rate, fewer than 2,500 being the highest rate.
This system was effectively designed to penalise company car drivers who covered very little business miles (cars provided as a perk more than a requirement). This is my opinion (I advise on taxable benefits for employees). I can remember back the day a business man claiming over 18,000 business miles in his Maserati (but quickly sold the car before I could check the mileage).
Anyway the introduction of emission rating cars for taxable benefit purposes has effectively encouraged more company cars on the road, as there is no business mileage requirement. Therefore the lower the emission rating the lower the tax charge.
My question is that if you were covering say 4,000 business miles or less, would you opt for a low emission car or receive a cash allowance and drive something a little more interesting. I just wonder sometimes when I hear someone say, oh I’ve got a company car. I think what for. This is bearing in mind that you can claim 45ppm for a business journey using your own car.
I would opt for the cash allowance, as company cars provided where I work are mainly for senior positions and the occasional business journey is required.
The Government recommended level is 45ppm, but a lot of places offer much less than that. My company offers 30ppm, and has done for many years, not taking into account any inflation in running costs. At tax year end, I can squeeze a few more hundred from HMRC by claiming the tax on the 15ppm difference. My current job, albeit a secondment, would really merit a company car as I do well over 1k miles a month travelling round the south-east but the company is very tight and won't commit to it. If I was offered one, it'd be a nuisance in a way, as I'm only in the early stages of a finance plan on my current car so I'd likely either take a cash alternative or go for the absolute cheapest monthly BIK tax on a car still suitable for motorway hauls.
Generally people doing average mileage are better off with an allowance rather than the company car as they will be paying tax on the bik and losing the additional allowance, in addition some company's charge personal usage.
I keep my company car only because I drive 40-50 k per year otherwise I would have opted out a longtime ago.
I keep my company car only because I drive 40-50 k per year otherwise I would have opted out a longtime ago.
Yes but each renewal the choice gets less. 7 years ago I was able to have an Octavia vRS, last change 3 years ago the best option was a 320 Efficient Dynamics but my next choice is down to 1.6D VAG cars or a 1 series.
The cash for car substitute has not risen in 8 years and that car must be less than 5 years old.
Time to move job?
Steve
The cash for car substitute has not risen in 8 years and that car must be less than 5 years old.
Time to move job?
Steve
We sort of have the illusion of a choice because at the end of the day we end up with something the md can get a good lease deal on 
I took a polo 2 years ago with a measly 59bhp but I don't do many miles. The tax is something silly like £20 a month so its effectively a free car. When I got it I was moving and saving for a wedding so a free new car appealed massively - 2 years later its bloody annoying having such a slow car. I'm going to push for an m135i next time if the deals are still about
I took a polo 2 years ago with a measly 59bhp but I don't do many miles. The tax is something silly like £20 a month so its effectively a free car. When I got it I was moving and saving for a wedding so a free new car appealed massively - 2 years later its bloody annoying having such a slow car. I'm going to push for an m135i next time if the deals are still about
I've had company cars since 2008. For 4 years it was a need car as I was doing upwards of 20k business miles a year. I drove the usual A3/3 series diesels as they provided the best overall car size/type, low emissions so low BIK and decent quality and comfortable interiors to spend many miles. Since 2012 my business mileage is probably sub 1000 miles a year but I still take the company car option but rather than carry on upgrading I have done the opposite and got an Audi A1 tdi. I even take the fuel card. I'm doing about 12k per year all in. Mpg is atrocious 
and the car is used as the daily, run around, call it whatever you want. I don't worry about it breaking or having to spend any onerous time looking after it. A quick sponge and hoover every couple of months is enough. If you can choose the right car with low enough C02 so low BIK then they csan mak sense still even if you do few business miles. For the fun stuff I have something else and it also means you can DIY stuff, take your time over fixes, and experiment with mods.
and the car is used as the daily, run around, call it whatever you want. I don't worry about it breaking or having to spend any onerous time looking after it. A quick sponge and hoover every couple of months is enough. If you can choose the right car with low enough C02 so low BIK then they csan mak sense still even if you do few business miles. For the fun stuff I have something else and it also means you can DIY stuff, take your time over fixes, and experiment with mods.I think these days if you have a company car you can't avoid diesel unless you want to pay through the nose in BIK. If you're doing 10k+ it's a no brainer to get a diesel but the choice is likely to be limited as a company car and odds are it'll be a crap spec.
I've done ~3k of business miles in the last 9 months (and ~4k personal), no point in a diesel for that kind of mileage so it's an allowance and I got a (petrol) 2.5T. Company only pays 'company car' rates for fuel so it's 26p/25p and have to claim the tax back which is slightly annoying but even then I get about 36mpg 'on a run' (which is what most of my business miles are) so I can't complain too much.
Half the allowance goes on the loan, the rest goes towards bills and I'll have paid off the loan in 2 years at which point I'll get something else.
Company does insist that it can't be a sports car (bah humbug) but seeing as I need a bit of room to cart 2 children around that's not the end of the world (although if sports cars were allowed I could have kept my old Mk2 Mondeo estate and bought a 2-seater!)
I've done ~3k of business miles in the last 9 months (and ~4k personal), no point in a diesel for that kind of mileage so it's an allowance and I got a (petrol) 2.5T. Company only pays 'company car' rates for fuel so it's 26p/25p and have to claim the tax back which is slightly annoying but even then I get about 36mpg 'on a run' (which is what most of my business miles are) so I can't complain too much.
Half the allowance goes on the loan, the rest goes towards bills and I'll have paid off the loan in 2 years at which point I'll get something else.
Company does insist that it can't be a sports car (bah humbug) but seeing as I need a bit of room to cart 2 children around that's not the end of the world (although if sports cars were allowed I could have kept my old Mk2 Mondeo estate and bought a 2-seater!)
grayze said:
Generally people doing average mileage are better off with an allowance rather than the company car as they will be paying tax on the bik and losing the additional allowance, in addition some company's charge personal usage.
I keep my company car only because I drive 40-50 k per year otherwise I would have opted out a longtime ago.
That kind of mileage is 200 miles a day, every day for a whole year. Are you a taxi driver, because it can't be effective to have an employee covering that kind of journey then working a full day in the middle. I keep my company car only because I drive 40-50 k per year otherwise I would have opted out a longtime ago.
Fastdruid said:
I think these days if you have a company car you can't avoid diesel unless you want to pay through the nose in BIK. If you're doing 10k+ it's a no brainer to get a diesel but the choice is likely to be limited as a company car and odds are it'll be a crap spec.
I've done ~3k of business miles in the last 9 months (and ~4k personal), no point in a diesel for that kind of mileage so it's an allowance and I got a (petrol) 2.5T. Company only pays 'company car' rates for fuel so it's 26p/25p and have to claim the tax back which is slightly annoying but even then I get about 36mpg 'on a run' (which is what most of my business miles are) so I can't complain too much.
Half the allowance goes on the loan, the rest goes towards bills and I'll have paid off the loan in 2 years at which point I'll get something else.
Company does insist that it can't be a sports car (bah humbug) but seeing as I need a bit of room to cart 2 children around that's not the end of the world (although if sports cars were allowed I could have kept my old Mk2 Mondeo estate and bought a 2-seater!)
I was once asked by a director to advise him whether he would be better off with a company car or receive a cash allowance. There are many factors to consider i.e. number business/private miles, size of car, list price etc. I generally advise that if you do a lot of business miles use your own car, whether it be leased/HP or otherwise. I've done ~3k of business miles in the last 9 months (and ~4k personal), no point in a diesel for that kind of mileage so it's an allowance and I got a (petrol) 2.5T. Company only pays 'company car' rates for fuel so it's 26p/25p and have to claim the tax back which is slightly annoying but even then I get about 36mpg 'on a run' (which is what most of my business miles are) so I can't complain too much.
Half the allowance goes on the loan, the rest goes towards bills and I'll have paid off the loan in 2 years at which point I'll get something else.
Company does insist that it can't be a sports car (bah humbug) but seeing as I need a bit of room to cart 2 children around that's not the end of the world (although if sports cars were allowed I could have kept my old Mk2 Mondeo estate and bought a 2-seater!)
Company cars for me were a losing game - cost me a lot in tax and for no real return. Opted out many years ago, now do 25k miles pa at 30ppm with a generous car allowance.
I get to drive something interesting (currently a Jag XJR) that costs me nothing and every 3 years I sell whatever I am driving and get something newer, with the money from the sale going towards the next car.
I get to drive something interesting (currently a Jag XJR) that costs me nothing and every 3 years I sell whatever I am driving and get something newer, with the money from the sale going towards the next car.
LoonR1 said:
grayze said:
Generally people doing average mileage are better off with an allowance rather than the company car as they will be paying tax on the bik and losing the additional allowance, in addition some company's charge personal usage.
I keep my company car only because I drive 40-50 k per year otherwise I would have opted out a longtime ago.
That kind of mileage is 200 miles a day, every day for a whole year. Are you a taxi driver, because it can't be effective to have an employee covering that kind of journey then working a full day in the middle. I keep my company car only because I drive 40-50 k per year otherwise I would have opted out a longtime ago.
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