never had one before, not really sure how it works, and i'm being interviewed for a position that may include one as part of the package. lets say £25k + car. what do i need to know? or rather, what questions do i need to be asking them? and what impact is it going to have on my take-home pay? many thanks in advance for any guidance given! cheers.
educate me in company cars...
- Thread starter atomiser
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It will have no bearing on your take home pay I would imagine, your pay is your pay and you receive an allowance for a car.
You'll more than likely get a monthly car allowance and be given a selection of cars you can have.
You'll more than likely get a monthly car allowance and be given a selection of cars you can have.
It all depends on the value of the car & it's emissions.
What happens is that you pay tax on the RRP of the car, what you pay is determined by what emissions the car has, so for instance you went for a new Golf S 1.9TDI 5 door, you would pay ~£50 per month, but if you went to an equivalent Pug for instance, because it is a cheaper car, the tax would be less, same goes if you went for an Audi, it would be more.
All 4x4's are taxed very heavily, as are petrols, so it is wise to go for oil burners
Then there is the fuel to be taken into account, if you pay for the fuel then claim the company miles back, you don't get taxed for using it for personal use, as you are already paying for fuel, BUT if your company pays for the fuel and you have to declare what personal mileage you do, you have to pay tax on that, but depending on fuel prices and how much mileage you do, it can work out cheaper, plus you can always adjust the figures to suit accordingly.
Also remember that any optional extra's like Sat-Nav and leather seats all add to the price of the car, therefore add to how much P11d tax you pay.
Check out each manufacturers websites, as they usually have company car tax calculators built into them somewhere.
Hope that helps!
What happens is that you pay tax on the RRP of the car, what you pay is determined by what emissions the car has, so for instance you went for a new Golf S 1.9TDI 5 door, you would pay ~£50 per month, but if you went to an equivalent Pug for instance, because it is a cheaper car, the tax would be less, same goes if you went for an Audi, it would be more.
All 4x4's are taxed very heavily, as are petrols, so it is wise to go for oil burners
Then there is the fuel to be taken into account, if you pay for the fuel then claim the company miles back, you don't get taxed for using it for personal use, as you are already paying for fuel, BUT if your company pays for the fuel and you have to declare what personal mileage you do, you have to pay tax on that, but depending on fuel prices and how much mileage you do, it can work out cheaper, plus you can always adjust the figures to suit accordingly.
Also remember that any optional extra's like Sat-Nav and leather seats all add to the price of the car, therefore add to how much P11d tax you pay.
Check out each manufacturers websites, as they usually have company car tax calculators built into them somewhere.
Hope that helps!
The car is seen as a benefit in kind and you're therefore taxed on it as explained by Baz.
It is possible to massage the numbers such that your company covers the tax bill (ie. they pay you £x pm more) but depends how powerful a position you're in to negotiate. The alternative is you take cash and sort out your own motor. Yes you'll still get taxed on that cash but after 3 years you could own the motor.
Car tax thresholds are set by the government and enforced by HMRC.
They are classed as a benefit in kind for the job, so you will be taxed as if the car was additional income.
If, for instance, you have a car that has a list price of £25k and produces 160g of CO2 per mile, you will be taxed at the percentage band multiplied by the list price... if that band were 25% (for example - I have the tables upstairs but can't be bothered to go and read it) you will be taxed at a rate that assumes you earn an extra £6250/year.
If you drive a diesel, add 3% onto the threshold for CO2 emissions (i.e. if a petrol car was in the 25% band for its emissions, the same emissions for a diesel car would stick it in the 28% band).
Then there is fuel benefit. If your company pay for your fuel - other than the standard reclaimable business mileage of 40p/mile - you will get lamped with a perceived income of £14400 multiplied by the tax band of your car. If that is 25%, prepared for supposed additional income of £3600. Of course, this only happens if they pay for private usage fuel for the car. But as you can see, according to HMRC, your income will have increased by almost £10k, potentially putting you in the 40% tax band. And hitting you HARD.
Can any of your tell that I have an exam on this tomorrow morning?
They are classed as a benefit in kind for the job, so you will be taxed as if the car was additional income.
If, for instance, you have a car that has a list price of £25k and produces 160g of CO2 per mile, you will be taxed at the percentage band multiplied by the list price... if that band were 25% (for example - I have the tables upstairs but can't be bothered to go and read it) you will be taxed at a rate that assumes you earn an extra £6250/year.
If you drive a diesel, add 3% onto the threshold for CO2 emissions (i.e. if a petrol car was in the 25% band for its emissions, the same emissions for a diesel car would stick it in the 28% band).
Then there is fuel benefit. If your company pay for your fuel - other than the standard reclaimable business mileage of 40p/mile - you will get lamped with a perceived income of £14400 multiplied by the tax band of your car. If that is 25%, prepared for supposed additional income of £3600. Of course, this only happens if they pay for private usage fuel for the car. But as you can see, according to HMRC, your income will have increased by almost £10k, potentially putting you in the 40% tax band. And hitting you HARD.
Can any of your tell that I have an exam on this tomorrow morning?
Well the tax side has been explained so questions you could ask are what the allowance is, what type or car you could get with the allowance and if you can opt out and get a cash allowance paid instead. I opted out of our company car scheme over 3 years ago and now take the £600 per month as a payment, this does get taxed but allows me to choose what car I drive and as others have already pointed out the car is yours at the end of the day.
Opting in or out was for me personally dictated by the number of miles I'd do. 4+ years ago I was doing 20k+ and had no desire to put that onto my own car, these days I only do around 5k+ so opting out for me made better sense.
Opting in or out was for me personally dictated by the number of miles I'd do. 4+ years ago I was doing 20k+ and had no desire to put that onto my own car, these days I only do around 5k+ so opting out for me made better sense.
I do recall when i had a company car about 3years ago i was about £70 a month less in my wages, was on £30k a year and it was a £18k Vectra Diesel Estate. I paid the diesel and claimed the company mileage back each month in expenses. Seemed the best way rather than opting out as i was doing roughly 50k company miles a year at the time.
So regardless of how many miles you do, you get lumped with that?
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You only get lumped with that if you have your personal fuel usage paid for by the company. It is also just the benefit rate, you pay tax (either 22 or 40%) on the benefit amount which is the 14,400 x % depending on vehicle. If you don't use the car for personal use you don't need to pay this tax, but you may have to explain to HMR&C that you have no personal use.
PS IANAA
SO if you do personal mileage of say 5000 miles per year you get taxed the same as someone who does 20000 personal miles per year??
That's really fair!
SO if you do personal mileage of say 5000 miles per year you get taxed the same as someone who does 20000 personal miles per year??
That's really fair!
Tax is never meant to be fair
The same could be said of company car tax itself, when I was doing 20k+ miles per annum only a fraction of that was personal miles but the tax man still classifies the car as a perk rather then a requirement or tool for you to do your work.