Company Car or Allowance

[Jez]

But I do not have a deposit to place down on a vehicle.....when did I say I want a BMW?

So get a bank loan, with repayments of sub £450 or so, and you will be breaking even on that front, buy a huge V12 monster* with it, and cream it at 40ppm.

Quids in and you get to drive a proper car.


*by this I mean a generally powerful decent car


I do suggest you check this claim of 40ppm though, it seems very, very high. I have never known anybody to get this much on top of an allowance.

 

[IAmATeaf]

How many business miles will you be doing? Don't forget that you'll also get taxed if you go down the company car road.

 

[antijoke]

Hard to say how many miles I will be doing I'd imagine 15k a year.

I only ruled out using my car as I have a 2001 330i, and this is too old for use as a company car (they generally allow cars upto the age of 5 years old if using personal cars).

 

[Jez]

Ask them? It sounds like a nice car and is fairly ideal for use as a company car. You will also make a small fortune on the mileage rate with driving something fairly economical.

 

[LiE]

I do suggest you check this claim of 40ppm though, it seems very, very high. I have never known anybody to get this much on top of an allowance.

Plenty of people were I work get an allowance and claim 40ppm for the first 10k miles.

I use a fuel card, but I know at the end of the year for tax purposes, my mileage is worked out using 40ppm. Each year I get a nice tax rebate

 

[antijoke]

Ask them? It sounds like a nice car and is fairly ideal for use as a company car. You will also make a small fortune on the mileage rate with driving something fairly economical.

I have asked them, it's a no no to use my car.

 

[Rotty]

You'll get taxed on the 40ppm then have to claim it back, I think it's for the first 10k then 25p thereafter

no you won't, you only get taxed on amounts over this, you also get AMAP tax relief if you do not receive this amount

as said though you normally get 40p a mile or an allowance and and amount to cover fuel

I get £462 gross which is £273 net

I do about 10k business a year and get 16p a mile + £960 a year in tax relief

I also save around £3000 a year in company car tax

this gives me about £7250 a year to spend on my car ( not including the 16p a mile fuel )



costs are £7200 in loan repayments less around £3000 a year in accrued residuals plus £1250 a year as proportion of deposit, so £5450 a year, re residuals I have taken a conservative estimate of a 6.75 yr old Cayman S with 65k on and full OPC history fetching £12k

maintenance and consumables run at about £1800 a year

insurance and tax £700 a year

loss on fuel cost of business miles £800

total cost £8750


cost of a Cayman S = £1500 a year


now why is a company car a good idea ?



the only caveat is that I am up the creak if I get a huge repair bill

 

[Participant]

I'm not sure why people are saying that he won't get 40ppm just cause he accepts an allowance for a car. The only distinction made is between company cars and private cars. His would be a private car.

It is indeed 40ppm up to 10k miles, then 25ppm thereafter. The company doesn't have to pay you 40ppm, but if they don't you can get income tax relief on the difference anyway. Edit: as above.

Anticonscience - it's usually better financially to take the allowance, if you are happy with the idea of having to run your own car, i.e. pay for servicing, breakdown cover, insurance, risk of big bills etc.

It's worth putting together a spreadsheet to work out what would be best for you financially, considering income tax, NI, miles covered, private mileage and how it's reclaimed i.e. do you do a lot of private miles and does the company reimburse you for these also (subject to BIK), servicing costs, etc.

 

[Rotty]

I'm not sure why people are saying that he won't get 40ppm just cause he accepts an allowance for a car. The only distinction made is between company cars and private cars. His would be a private car.

It is indeed 40ppm up to 10k miles, then 25ppm thereafter. The company doesn't have to pay you 40ppm, but if they don't you can get income tax relief on the difference anyway. Edit: as above.

.

it is not impossible for that to be the case just very unlikely

 

[Jez]

it is not impossible for that to be the case just very unlikely

Indeed, legally it is fine. In practice it is an astonishingly high rate. See Rotty's 16p, and my 21p.

 

[antijoke]

I would be fine with running my own car and the associated costs with this by taking the allowance. I'm just not sure what the tax implications are of either scneraio really. I just know from previous experience of having a company car I got hammered for tax.

Private miles would be very low, I currently do a lot less than 6,000 a year, so again this is not much of a consideration.

 

[Rotty]

I would be fine with running my own car and the associated costs with this by taking the allowance. I'm just not sure what the tax implications are of either scneraio really. I just know from previous experience of having a company car I got hammered for tax.

.

you pay tax and NI on your allowance

you get tax relief on anything you recieve below 40p a mile for the first 10k business miles and 25p a mile after

that's it

 

[Participant]

I would be fine with running my own car and the associated costs with this by taking the allowance. I'm just not sure what the tax implications are of either scneraio really. I just know from previous experience of having a company car I got hammered for tax.

Private miles would be very low, I currently do a lot less than 6,000 a year, so again this is not much of a consideration.

Assuming a 1.6 TDI 105 S, taxable value is £17,815 and Co2 is 119g/km. BIK is therefore £2,316 and income tax (assuming 20% bracket) is £463.

Sorry, you said SE, so it's £472 tax and £2,361 BIK.

 

[Maccapacca]

If your firm want a car <5yrs old and you don't want to buy new you'll have to buy a 2yr old car then chop it in every 3 years, you should take this into account as buying a 4 yr old car and changing it every year is more risky.

My firm went from 10yr <100k to 8 yr 80 k to 6 yr 60k over 4 years as everyone was driving bangers

 

[Rotty]

If your firm want a car <5yrs old and you don't want to buy new you'll have to buy a 2yr old car then chop it in every 3 years, you should take this into account as buying a 4 yr old car and changing it every year is more risky.

My firm went from 10yr <100k to 8 yr 80 k to 6 yr 60k over 4 years as everyone was driving bangers

ours used to have a 7yr limit but has just removed it

 

[Participant]

If your firm want a car <5yrs old and you don't want to buy new you'll have to buy a 2yr old car then chop it in every 3 years

What's wrong with that? You've probably just described a very large chunk of the second hand market, let alone for those with company car allowances. Rotty's example shows that even with conservative residuals, buying the right car shouldn't result in the five year rule being a deal breaker.

 

[Maccapacca]

What's wrong with that? .

Nothings wrong with that? I wasn't saying there was

I know people that chop and change cars every year as they will only buy a car a year compliant but then end up changing cam belts every year or replacing a clutch

 

[Participant]

Nothings wrong with that? I wasn't saying there was

I know people that chop and change cars every year as they will only buy a car a year compliant but then end up changing cam belts every year or replacing a clutch

So what was your point? Your comment 'If your firm want a car <5yrs old and you don't want to buy new you'll have to buy a 2yr old car then chop it in every 3 years' made it sound like you had a concern about that tactic?

 

[antijoke]

The five year rule isn't strict, it's more of a guideline, they would not mind me buying an 07 plate car and keeping it for 4 years for example.

Assuming a 1.6 TDI 105 S, taxable value is £17,815 and Co2 is 119g/km. BIK is therefore £2,316 and income tax (assuming 20% bracket) is £463.

Sorry, you said SE, so it's £472 tax and £2,361 BIK.

Sorry to be a complete dunce but what does that mean in reality based on a basic wage of £20k?

 

[Pudney]

The five year rule isn't strict, it's more of a guideline, they would not mind me buying an 07 plate car and keeping it for 4 years for example.



Sorry to be a complete dunce but what does that mean in reality based on a basic wage of £20k?

The BIK knocks your personal allowance down. The income tax is the extra tax you'd pay. So there would be an extra £463 of tax because of the BIK.