Company cars - Worth it?

[NeilF]

Those are small numbers though, what sort of car are you actally running today and how old?

We have a Ford SMax... It cost us about £11k a few years back and is now about 6-7yrs old. I suspect in a few years we'll sell it and get another 4-5yr old one etc etc... and keep that sort of process up.

Depreciation: Say £1200 pa
Insurance: Say £300
Road tax: Say £125
MOT: Say £50
Misc costs: Say £500 (tyres, repairs, service)
= £2175

If a company car is going to cost over £3000, that doesn't appeal to me!?

 

[Mercenary Keyboard Warrior]

We have a Ford SMax... It cost us about £11k a few years back and is now about 6-7yrs old. I suspect in a few years we sell it and get another 4-5yr old one etc etc...

So your not comparing like with like.

Its probable that the existing one will cost you less, at the end of the day its a middle aged car.

The newer the car you more you would pay, you have to decide if you want a new car, if you want a new car your comprison would be the cost of running a brand new Smax for 3-4 years against the costs of the new company Smax.

 

[[TW]Fox]

No not at all.

The brief point (and I've never massively looked into company cars as I've never been offered one) is that for some people the £3k a year for a new plate on a generic hatch is well worth it.

They are made up numbers for the sake of argument though, he isn't saying it would actually cost him £3k a year for a company car. He doesn't know at this stage.

£3k a year doesn't really get you very far in my opinion with any car when you fact in insurance, tax, tyres, servicing, repairs, warranty, depreciation etc....

£3k gets you miles when it comes to running a nearly new diesel Golf. 4 tyres are 350 quid. Tax is 35 quid a year. Servicing is every 2 years. Repairs are not relevant. etc. Warranty is 350 quid a year. If you are in receipt of a car allowance it is very possible you could buy your own generic diesel hatch for less than the net cost of the company car.

Your own figures are so far removed from the sort of car in this discussion that they do nothing but cloud the waters.

 

[Peerzy]

Your own figures are so far removed from the sort of car in this discussion that they do nothing but cloud the waters.

You're telling me the OP isn't looking at getting a Bentley for his company car

 

[pepsilol]

The cost of my tyres, service and warranty was just in there as it's fresh in my mind as I was speaking to them yesterday about it.

My tyres, service and warranty this year will cost me £265. Therefore I spend less which means I have more money, which means I'm richer!

How's that for logic!

 

[NeilF]

So your not comparing like with like.

Its probable that the existing one will cost you less, at the end of the day its a middle aged car.

The newer the car you more you would pay, you have to decide if you want a new car, if you want a new car your comprison would be the cost of running a brand new Smax for 3-4 years against the costs of the new company Smax.

I'm comparing like for like in virtually all areas, except for a license plate in reality

I believe the company car taxation is about £176 a month for the same 2.0TD Titanium SMax we currently have. If that then also hypothetically costs say £1200 (take home) loss in car allowance that means the same car (suspect it will be more!), a different license plate will be costing us over £1000 more a year.

I'm personally not fussed about a couple of digits on a license plate, so seems daft to throw away a thousand or more pounds a year.

Quite happily rolling around on a 5-9yr old car. ie: Buy 5yrs old, sell when 9yrs old. Repeat. If every year we're generally £1000-2000 better off.

Anyway, I'll get the specific of the company car scheme and see what the actual annual cost is. If it does mean losing the car allowance, then it just seems too expensive

 

[Peerzy]

I'm comparing like for like in virtually all areas, except for a license plate in reality

I believe the company car taxation is about £176 a month for the same 2.0TD Titanium SMax we currently have. If that then also hypothetically costs say £1200 (take home) loss in car allowance that means the same car (suspect it will be more!), a different license plate will be costing us over £1000 more a year.

I'm not fussed about a couple of digits on a license plate, so seems daft to throw away a thousand or more pounds a year.

Quite happily roll around on a 5-9yr old car. ie: Buy 5yrs old, sell when 9yrs old. Repeat. If every year we're generally £1000-2000 better off.

Anyway, I'll get the specific of the company car scheme and see what the actual annual cost is. If it does mean losing the car allowance, then it just seems too expensive

I'm probably missing something but wouldn't your company tax, insure, replace tyres, service, replace brakes, take the depreciation hit and keep the car in warranty for that extra £1000 a year?

 

[NeilF]

I'm probably missing something but wouldn't your company tax, insure, replace tyres, service, replace brakes, take the depreciation hit and keep the car in warranty for that extra £1000 a year?

From my noddy understanding...

Company car cost for a SMax:-
eg: Car allowance lost of £2500 (need to find out exact figure)
eg: Taxed at £176 per month.

Annual cost = 2500 at 60% + 12x176 = £3612


Cost for personally owning a SMax:-
Depreciation: £1200
Insurance: £300
Road tax: £125
MOT: £50
Misc: £500 (service, tyres, repairs)

Annual cost = £2175


So every year, given the rough examples above, we'd be £1500 better off. We could buy a replacement say 4-5yr old car, and sell it 4-5yrs later and repeat.

Only thing not considered in this is our money tied up in the car. Obviously if we went company car route, we'd free up 6-11K of money. But even if this was put into the mortgage, it would make marginal difference to the difference above.

 

[Peerzy]

From my noddy understanding...

Company car cost for a SMax:-
eg: Car allowance lost of £2500 (need to find out exact figure)
eg: Taxed at £176 per month.

Annual cost = 2500 at 60% + 12x176 = £3612


Cost for personally owning a SMax:-
Depreciation: £1200
Insurance: £300
Road tax: £125
MOT: £50
Misc: £500 (service, tyres, repairs)

Annual cost = £2175


So every year, given the rough examples above, we'd be £1500 better off. We could buy a replacement say 4-5yr old car, and sell it 4-5yrs later and repeat.

That's probably right then, I was looking at this bit:

I believe the company car taxation is about £176 a month for the same 2.0TD Titanium SMax we currently have. If that then also hypothetically costs say £1200 (take home) loss in car allowance that means the same car (suspect it will be more!), a different license plate will be costing us over £1000 more a year.

It looked like from that post you would only be down £1200 on car allowance, instead of the £2500 in your above post which makes the difference.

 

[Dangerous Dave]

From my noddy understanding...

Company car cost for a SMax:-
eg: Car allowance lost of £2500 (need to find out exact figure)
eg: Taxed at £176 per month.

Annual cost = 2500 at 60% + 12x176 = £3612


Cost for personally owning a SMax:-
Depreciation: £1200
Insurance: £300
Road tax: £125
MOT: £50
Misc: £500 (service, tyres, repairs)

Annual cost = £2175


So every year, given the rough examples above, we'd be £1500 better off. We could buy a replacement say 4-5yr old car, and sell it 4-5yrs later and repeat.

Only thing not considered in this is our money tied up in the car. Obviously if we went company car route, we'd free up 6-11K of money. But even if this was put into the mortgage, it would make marginal difference to the difference above.

You should take into account possible repair bills in excess of the £500 which is isn't going to leave a lot for repairs after servicing, tyres and a MOT. A 4-5 year old car may need suspension bushes replaced etc or if a engine issue occurs this could result in eye watering bills.

 

[wesimmo]

You may also want to consider what they will let you buy with a company car and what you will use it for?

When i had a choice of a company car or and allowance, i knew i'd be getting the train to work and walking to the station, the car wasn't required for the job, just a perk of the level i was at.

I'm almost certain that they would not have provided me with the car i bought personally and then fit loads of racing parts to it so i had a weekend / track toy!!

It didn't matter what the financial implications were to me, i wanted the car i wanted for what i wanted..

 

[Theophany]

You should take into account possible repair bills in excess of the £500 which is isn't going to leave a lot for repairs after servicing, tyres and a MOT. A 4-5 year old car may need suspension bushes replaced etc or if a engine issue occurs this could result in eye watering bills.

Buy a third party warranty, which is a no-brainer on a car you're going to be doing high mileage in.

 

[NeilF]

It looked like from that post you would only be down £1200 on car allowance, instead of the £2500 in your above post which makes the difference.

I'm not sure what the company car allowance is...

But what ever it is, it's taxed at 40%. So if you lose it you're only in reality losing 60% of it.
So if it's £2000, you're really only losing £1200.
If it's £2500, you're really only losing £1500.

 

[NeilF]

You should take into account possible repair bills in excess of the £500 which is isn't going to leave a lot for repairs after servicing, tyres and a MOT. A 4-5 year old car may need suspension bushes replaced etc or if a engine issue occurs this could result in eye watering bills.

Suspension bushes on a 5yrs old car? I'd be amazed if it need them by 10yrs old (given the miles we do) We only do about 7-8k miles a year in it?!


But yes, if we up the annual maintenance costs so £800 - knowing many years it will be far less than that - we still end up four figures better off...

If we end up with an "eye watering bill" one year, then we have well over a thousand pounds to play with before even being at a loss that one year.

 

[LiGhTfasT]

Dumped my basic skoda Octavia estate with private use and fuel for a van with no use other than commuting which costs nothing and got my own private car. Every year it seems to go up and have nothing to show for it. The misses needs a car anyway so there was always her car being paid for and sat on the drive.

The benefit in kind also adds to any earning for child tax credits etc

 

[NeilF]

Seems a no go for me at least. Car allowance is £5.5 so if we do the maths!

£5.5k x 60% (allowance) + £176 x 12 (tax) = £5412

That's twice what running our 5yr old car costs including depreciation!

Really don't want to throw away £2-3k a year just for (basically) the license plate!

 

[Hagar]

I had a company car from 1992 - 2008 with fuel and maintenance fully funded for which I paid BIK ending up at about £2200pa tax paid
In 2008 the company changed to providing a lease car for which I was paid in my salary the cost of the lease and maintenance and insurance. Civic 2200 diesel
In 2012 the lease ended and I bought the car for the balloon payment at the end of the lease. It was four years old with 88000 miles and it cost me £3800. I now get a car allowance of £6000pa gross to fund the car. After tax about £300 per month.
I will need to get another car in 2014 due to the company rule on less than six years old. This I should be able to do with a bit saved up and the car allowance continuing.

Company cars were a no brainer a few years ago, now it is more a case of personal preferences as they are no longer cheaper compared with typical car allowances.

 

[Hank_Marvin]

How is tax worked out if you are given a used car, say 2/3 years old, are you still taxed on new list price or a depreciated list price because of age?

 

[[TW]Fox]

P11d value, which is pretty much new list price.