Company Car Decision, Help!

[D1bram]

Hi,

I currently have company car, which tbh I think is a bit naff;

2006 56reg Golf 1.9TDI SE.

I've had it since it was a year old (company buys newish cars for company use).

Anyway, I've been peeved with it for a while, and also worked out that with the car allowance I would receive in lieu (and tax code adjustment I would be approximately £280/month better off.

Money is tight at the moment (as with many people I guess) with the wife being on restricted hours, so freeing up a little extra monthly cash would be good and I also reckon I could drive a more fun vehicle.

To set the scene fully we also own a 2004 XType Estate, which does all the practical, smart, respectable we need for work or hauling gear about at the weekend, so 'my' car does not need to be so practical, and infact, due to the golf having less room for the dog and luggage etc.. we often end up using our car for long weekend trips rather than the fully expensed company car. Which seems silly really.

Long story short, I now have the opportunity to hand back the car due to a new employee starting who wants a company car.

New car wise I am looking to budget around £3k, I don't want too much tied up in the 'second' car and fancy being in a position where I can chop and change it when I fancy.

I am thinking MX-5, but open to alternate suggestions.

Problem number 1 is insurance though

I have around 7/8years no claims, but this is tied up in the Jag. So me, 30, wife almost 27, no claims convictions etc.. and the cheapest I am being quoted on a 1.8iS MX-5 is £800 which tbh is putting me off the whole idea as it will sap a large % of the extra monthly income (then need to factor in running costs).

So the questions I have (sorry for the long post) are:

1. Do you think I will be financially better off with the car or the allowance?
2. Any tips on getting the insurance down?
3. Is a MX-5 my best option, or is there something else I should consider?

Thanks.

[bigdods]

if you have been driving a company car and had no accidents you can ask the company insurers to write you a letter stating this. You will find plenty of insurers who will mirror this as NCD on a new policy.

[D1bram]

Thanks for the reply, that sounds worth considering.

Also the jag is insured with Direct Line, and I know they do deals on a second car, but so far have been unable to get through on the phone today.

[D1bram]

OK, thanks to the above, I now have it down to around £600. Still seems a lot mind for a 10year old £3k car being driven by a 30year old with a clean licence and no accidents in the last 8years.

Any other suggestions for fun cars which could be used as a daily driver, £3k, low insurance and reasonable running costs.

[bigdods]

try aviva for a quote. They are offering 2 months free insurance so you only pay for 10 months. Cheapest I could get for my 3.0 Omega was £400 fully comp 25k miles per year, aviva did it for £300.

[D1bram]

£890

At £600/ year for insurance I'm also budgetting;

£500 - Servicing/MOT
£200 - Road Tax
£500 - Brakes/Tyres etc..

Doing 10k miles/year. Reasonable?

Giving me a cost overall of around £150/month, putting me an extra £130 in my pocket. (and driving a more fun car).

Anyone agree/disagree with the above?

[VolvoT5]

D1bram said:

£890

At £600/ year for insurance I'm also budgetting;

£500 - Servicing/MOT
£200 - Road Tax
£500 - Brakes/Tyres etc..

Doing 10k miles/year. Reasonable?

Giving me a cost overall of around £150/month, putting me an extra £130 in my pocket. (and driving a more fun car).

Anyone agree/disagree with the above?

TBH those costs seem quite high to me, £500 a year for tyres and breaks? Are you gonna change them every year regardless?

MX5 is generally reliable, I can not see it being that expensive to run.

However, even with those figures £130 a month is a lot of extra cash considering the way the economy is.

[Deva Link]

D1bram said:

...and also worked out that with the car allowance I would receive in lieu (and tax code adjustment I would be approximately £280/month better off.

Your allowance must be pretty crap if that (after tax) added to your tax saving is only £280.

If you take the allowance, will you be doing many business miles in your own car, and what rate will you be paid?
Do you do many non-business miles?

Does the company have rules about how old your own car can be - often it's 5 years?

[pmanson]

Mk1 MX5.

£2k should get you a good one.

Decent tyres can be had for £30-£50 a corner fitted and should last you 20k (so two years).

If you're happy to get your hands dirty you can do an oil/filter change on a MX5 for under £50.

Parts are easy to come buy from the likes of Autoline/Boundville and MX5 Parts.

The only issue is that they're not great on fuel. IIRC you're looking at about £40 to fill the tank and I was getting 250 miles from each tank.

Most will be high mileage now but let that put you off - I sold ours earlier in the year with over 190,000 miles on it.

Edited to add we were paying around £400 a year for 10k a year on ours (at the time I was 26 and the wife was 24 with full protected NCD) with Tesco. Tesco will accept a letter from your company as proof of NCD.

Edited by pmanson on Monday 9th August 08:50

[Kevin VRs]

D1bram said:

£890

At £600/ year for insurance I'm also budgetting;

£500 - Servicing/MOT
£200 - Road Tax
£500 - Brakes/Tyres etc..

Doing 10k miles/year. Reasonable?

Giving me a cost overall of around £150/month, putting me an extra £130 in my pocket. (and driving a more fun car).

Anyone agree/disagree with the above?

Yes, you have not budgeted for fuel in your calculations. In a previous post you said the Golf was fully funded, this means all expenses paid including fuel. Your company car tax cost would also include an amount for fuel.

Please let me know your tax code adjustment for the car and the cash allowance and I will work out the difference in your pocket. Email me if you wish. My estimate of the running costs for an MX5 is around £260/month including fuel (10,000 miles per year). This does not include depreciation or cost of finance.

I would suggest that the difference in the take home pay will be somewhere close to the cash allowance, since you pay tax on the company car and also on the cash allowance, often they roughly cancel out.

[D1bram]

My co car package doesn't include fuel, so I pay for that out of my own pocket now, so didn't really consider that to be too different.

Allowance is £4500 PA.

I used an online calculator to work out what my take home would be with the allowance and my tax code reset to standard allowance to work out the £280/month, so I think it should be about right (I will also pay student loan on it unfortunately!)

I realise my costs for a MX5 are maybe a touch high, but I would rather over estimate and end up better off than under estimate.

[CinqAbarth]

Car costs you £54 /month, assuming 20% tax rate - which looks right if the opt-out gives you £280 extra on your pay.

So, by ditching the car, you'll end up with an extra £330 or so in your pay every month.

Taking everything into account:

Higher depreciation (because you're putting an extra 10k miles / year on a private car)
Insurance (Can be high if you need business use)
Servicing
Tyres / Brakes / Consumables
AA-type cover - you'll be wanting the 'full fat' cover at around £150 or so / year

I think you'll do very well to actually profit from opting out.

It'll be a close run thing, and you'll lose peace of mind that if the car breaks, you get it fixed and a replacement whilst it's being fixed.

You also lose the peace of mind of being able to leave it anywhere without having to worry about it, etc.

You don't do enough miles in a year to make an awful lot on reclaiming tax on business miles, either.

I'd stick with the car if I were you.

[D1bram]

Mind is made up now TBH.

I'm not too fussed if I don't end up too much better off, as a large part of the motivation is to drive a fun vehicle. The golf is about as middle aged boring as you could get in my opinion!

[D1bram]

Right, for anyone interested!

Quick update.

Went out this weekend and looked at both a MR2 and MX5, and we decided on the MR2, left a deposit with the intention of picking the car up this Friday.

Arranged with boss this morning to return the company car next saturday, all was well.

Until... boss number 2 (slightly more senior) gets a whiff and decides no, under no circumstances am I allowed to get out of the company car.

Anyway, a lot of huffing and puffing later, the missus and I decided what the hell... we'll have the MR2 anyway.

So, bit of a turnaround, but the outcome is we will now have the company car AND a fun car.

One bonus is, the insurance is a bit cheaper now and the running costs should be even more economical.

The missus is potentially going to give her bike up to help pay for it though (she hasn't used it since she last insured it anyhow - sept 09!!!), and I potentially will just use my bike on the track from now on (a decision I was already contemplating).

So, peeved with work, but happy overall