New role , company car

scottomus0 · 17 Apr 2015 at 21:35

I'm starting a new job in the next couple of weeks which requires me to travel some distances daily!

My first dilemma:

I recently purchased a polo on pcp in November last year, is there anything at all I can do with it, take it back, pay it off and sell privately (worth it with early fees etc) or am I stuck with it until the term is up?

There is no option for a cash alternative due to the miles I will be doing, and it seems private Miles are included too as standard.

For the first 6 months, I will be driving a hybrid Yaris! Gonna be fun at 6'4

But then after that, from vague conversations so far I can have anything up to 30k

This is where I'm stuck with deciding! Looking at so many options, some cars tax differences are neglible but some are alof more obviously! My salary will be 23k, what should I be looking for roughly each month, inclluding private miles?

Appreciate any info!

MooMoo444 · 17 Apr 2015 at 21:47

Long distance driving in a Yaris doesn't sound like much fun to me. Sorry to hear that.

Tinders · 17 Apr 2015 at 21:49

Current yaris isnt a bad car and its quite roomy for the driver.

Tinders · 17 Apr 2015 at 21:51

You'll pay BIK tax on the fuel card if they are saying your private miles are covered. Company cars arent really the perk they were 15 years ago.

You will also pay tax on the car itsel.

scottomus0 · 17 Apr 2015 at 21:52

Yeah I was quite shocked to hear it myself! It is the 1.5 hybrid automatic

My brothers girlfriend has a Yaris. It certainly is a step up from the last!

I guess it's just due to emissions? as my boss is getting it on a 6 month lease as there is no fleet cars available!

lordrobs · 17 Apr 2015 at 21:58

Tinders said:
You'll pay BIK tax on the fuel card if they are saying your private miles are covered. Company cars arent really the perk they were 15 years ago.

You will also pay tax on the car itsel.

Exactly this. You will pay BIK on having private mileage (at a flat rate) or have to pay your company a ppm rate for your personal miles. I have to pay for all my own fuel and claim back business mileage which worked in my favour until the latest drop to 11ppm

Does 6 months also happen to be your probationary period? I got lumbered with the company run around for 6 months as they got burned by someone who ordered a new lease car then left before it even arrived! I get either an Insignia (for a year) or my choice of motor in just over a weeks time. I think I'll be lumbered with the Insignia

As for the Hybrid Yaris, at least the BIK will be low

mjt · 17 Apr 2015 at 21:59

Havana_UK · 17 Apr 2015 at 22:05

Unless you do LOADS of private miles (around 20K / year) do NOT allow your company to pay your private fuel as you'll be much worse off because of the additional tax burden.

scottomus0 · 17 Apr 2015 at 22:10

lordrobs said:
Exactly this. You will pay BIK on having private mileage (at a flat rate) or have to pay your company a ppm rate for your personal miles. I have to pay for all my own fuel and claim back business mileage which worked in my favour until the latest drop to 11ppm

Does 6 months also happen to be your probationary period? I got lumbered with the company run around for 6 months as they got burned by someone who ordered a new lease car then left before it even arrived! I get either an Insignia (for a year) or my choice of motor in just over a weeks time. I think I'll be lumbered with the Insignia

As for the Hybrid Yaris, at least the BIK will be low

Yeah it's basically my probationary period.

Havana_UK said:
Unless you do LOADS of private miles (around 20K / year) do NOT allow your company to pay your private fuel as you'll be much worse off because of the additional tax burden.

Is that an option they will give me? Or can they decide to cover private miles and that's that? Isn't the tax on fuel roughly £60-70 or is that entirely car dependant?

Havana_UK · 17 Apr 2015 at 22:42

scottomus0 said:
Yeah it's basically my probationary period.

Is that an option they will give me? Or can they decide to cover private miles and that's that? Isn't the tax on fuel roughly £60-70 or is that entirely car dependant?

Fuel benefit is taxed as a percentage (determined by the car's CO emissions) of a flat rate of ~£22K AFAIK. The breakeven point for most company car type of cars is 15-20K private miles to be better off having your private fuel paid.

scottomus0 · 17 Apr 2015 at 23:01

Who travels that many private miles!

I will be travelling from wigan to worthing possibly once a month , that's a 500 trip but will never hit them figures!

Tinders · 18 Apr 2015 at 01:59

Dont forget home to work is private miles too.

Sone · 18 Apr 2015 at 08:30

at 20% tax fuel would be worth taking imho.

30k car, i earn a lot more and get a lot less for a car

Havana_UK · 18 Apr 2015 at 08:40

Sone said:
at 20% tax fuel would be worth taking imho.

30k car, i earn a lot more and get a lot less for a car

Actually, that's a valid point. If you'll be paying 20% tax (based on the salary you've stated you will be, but bonuses could take you into the 40% bracket) then the break even point will be somewhere between 8 & 10k miles on a typical company car.

snitcher · 18 Apr 2015 at 09:52

lexus hybrids would be the answer assuming you do not do a lot of motorways etc in which case a diesel would be better suited.

iaind · 18 Apr 2015 at 10:19

Regarding the first question of the car on PCP, it's going to depend on the deal you got on it in the first place. You'll need to pay any outstanding repayments plus the balloon payment in order to clear it. They will often reimburse some of the interest if you clear it early. In my eyes a PCP should be structured so that your outstanding is always more than the cars worth - although this isn't always the case and the depreciation obviously isn't linear. So in short, if you considered the PCP properly then getting rid might not be too bad although you might suck up a bit of the deposit you put in. If you just looked at the monthly payment and took the first rate the dealer offered then you may be eating quite a lot of it! The other problem is you need the finance company's permission to sell the car - so you might need to find some way of paying it off before you sell it. Again, this will depend on the company and the value - if they deem the current value to be less than the balance they'll probably say no. Depending on the value and your credit rating, paying it off on credit card or a flexible loan might help - although don't do this until you have a buyer!

30k, assume that's P11D value is a decent budget but at a 23k salary you want to be conscious of the BIK value - even though you're not paying high rate tax, each percent BIK would make a reasonable dent in your take home. Sorry if I'm teaching you to suck eggs but to explain, BIK is benefit in kind. Take the value of the car at list price with all the options you select and multiple that by the BIK rate. The BIK is defined by the CO2 output. You're probably looking at between 15 and 20%. You then pay the tax at your current rate on this value. So a 30k car with 18% BIK rate means a £5400 BIK. At 20% tax that's £1080pa or £90 a month.

BMW 318d wouldn't be a bad shout as they have decent business edition specs normally and are very good for CO2. The skoda superb is in budget and would be a great place to spend a lot of miles and you'd get a nice spec for 30k, but the CO2 and thus the BIK starts at 20%. If I was in your shoes I'd probably be heading to the latest Volvo dealer - the V60 is designed for this spec. The new D4 is a stonking engine - 180bhp but it's only 15% BIK! The new mondeo also looks really nice although not really experienced one, definitely worth a look though

atpbx · 18 Apr 2015 at 11:19

You do not want to be paying tax on a 30k car with a 23k salary.

Ryan-3 · 18 Apr 2015 at 12:02

Tinders said:
Current yaris isnt a bad car and its quite roomy for the driver.

I have quite a few inches above my head when driving the parents. Hate the thing, though.

Lopéz · 18 Apr 2015 at 12:22

Havana_UK said:
Unless you do LOADS of private miles (around 20K / year) do NOT allow your company to pay your private fuel as you'll be much worse off because of the additional tax burden.

How do you work that out? I think it's got to be significantly less than that.

For example my monthly BIK for private fuel is about £80 for my Passat. The way I drive that would last me just over 700 miles. So annually that's 8400 miles, less than half what you are quoting.

Havana_UK · 18 Apr 2015 at 17:13

Lopéz said:
How do you work that out? I think it's got to be significantly less than that.

For example my monthly BIK for private fuel is about £80 for my Passat. The way I drive that would last me just over 700 miles. So annually that's 8400 miles, less than half what you are quoting.

I may be wrong, I don't claim private fuel, but my understanding is that it's emissions dependent and you pay income tax on a percentage of ~£22K / annum (same percentage as your BIK for your car).

A worked example based on a Passat 2.0 TDI SE (19% BIK) would be:
19% of £22,100 = £4199
20% income tax = £839.80 (£69.98 / month)
40% income tax = £1679.60 (£139.96 / month)

If you're averaging 50MPG in this car then, at current average diesel cost, your cost / mile is:
£1.189 / litre
4.55 litres / gallon = £5.41 / gallon
50 miles / gallon = £0.108 / mile

20% tax @ £839.80/£0.108 = 7776 private miles / year to break even
40% tax @ £1679.60/£0.108 = 15551 private miles / year to break even

Of course, if your percent BIK is lower, or your MPG is lower those break even points will be lower. Conversely, if your BIK is higher or your MPG is higher the break even points will be more miles.

Private fuel benefit multipliers can be found here, under point 10:
https://www.gov.uk/government/publi...d-tax-credit-rates-and-thresholds-for-2015-16