Another 'Is a company car worth it' thread!

Thanks for the advice - you lot on here make it clearer than the majority of accountants! :D

I own a car, but it's a 2000 plate Golf GTi 1.8T, great car, but getting on a bit (156k) and would be nice to change to a brand new car for the first time!
 
Hi guys, in the most ridiculously overcomplicated description ever, my accountant has made this twice as hard to understand.

I am looking at a BMW 320d ED model.

As an example, the BMW 320d EfficientDynamics Saloon has a P11d value of £27,845 and incurs a 2011/2012 BIK tax rate of 13%* thanks to CO2 emissions of 109g/km (see BIK tax bandings). This makes the annual taxable benefit of the 320d EfficientDynamics saloon £3,619.85, meaning a 40% tax payer would pay a total of £120.66 per month**.

Vehicle Excise Duty (also known as VED or Road Tax) is also related to CO2 emissions, with cars emitting 130g/km or less attracting no charge in the first year. At 109g/km the BMW 320d EfficientDynamics sits in VED Band B (101-110g/km). Band B vehicles pay no VED in the first year and £20 each following year***



So let's assume, it's costing the company £280+Vat a month

And myself (a 20% tax payer) £60.33 a month.


My assumption now was that, as a person all I pay is having £60.33x12 = £723.96 taken from my 810L Tax code.
So my tax code would be 737L for example.

But that's it?

Yet the accountant has said it will also cost 13.8% of the cash equivalent of the car in Class 1A National Insurance?
As well as a charge for the private use of fuel for the car, and VAT fuel surcharge each quarter.

So it looks to me a lot more expensive - has he got it wrong or could someone explain it in clear English which is something my accountant has failed to do?:confused:
 
A car allowance just gets added to your salary - so yes, it will cost you extra national insurance as well.

I'm not sure what your question is here really. It looks a lot more expensive than what? What are your options? As its your company the usual offer of a car or an allowance doesnt apply really - because any money your company decides to pay you extra in salary still costs you money really.
 
I guess what I meant is, the car will be leased from the business so I just thought the costs would be nice and clear cut, which they are to a point, with someone like me it's figures I need to see to understand as otherwise it all goes over my head...Never was good at maths unless its all clear in front of me :D

So, the cost to the my company = £280+ vat a month for 24 month lease.

The cost to me personally is £60.33 in tax per month - assuming I stay @ 20% and double if I reach 40%.

But it's not an 'allowance' to me as such, as it a leased car for the business, that I am using - I will pay my own insurance and no mileage/fuel will be paid out.

Often I see people mention It is better off paying yourself a bigger salary and buying a car privately - but doing that I would not have a hope in hell of getting something like a 320d on a 12 plate.

Apologies if I am being stupid (I probably am :D) so I would even pay national insurance on a leased car?
 
Go to hmrc company car calculator, find out what the BIK of said car is (you'll) need the co2 emissions, engine size & value.

Take the number that it gives you for the benefit (say around £3000), and add it your salary (before tax). That is your "earnings" and that is what you'll be taxed and pay NI on.

The same site also tells you what you effectively pay per month in tax for both rates.
 
Your accountant is correct, the company has to pay class 1a NI on the car but from your figures before don;t let the company pay for private fuel as the tax to you is way more than the cost of the fuel you use plus company has to pay vat fuel scale charges.

So to summarise

Car will cost you £60.33 per month in tax

Car will cost company

£280 plus vat for the lease
Class 1a NI on the cash equivalent of the car annually
 
According to the details you have provided, the results are:

Car benefit charge (2012/2013) £2,419.00

Car fuel benefit charge (2012/2013) £0.00

In order to calculate the tax due on company car benefit and company car fuel benefit, the amounts calculated above need to be applied to an employee's other income and tax information.

Without additional information it is not possible to give the actual amounts of tax liability, however the following examples provide an indication of the tax that would be due if the full amount(s) of benefit are charged at the basic (20%) and higher (40%) rates only:

Tax Liability indicator: 20% 40%

Company Car Tax (2012/2013) £483.80 £967.60

Company Car Fuel Tax (2012/2013) £0.00 £0.00

Summary of details:

Tax year: 2012/2013

Car availability during relevant tax year: From: 15/09/2012

To: 05/04/2013

Number of days unavailable during the period above: 0

List price (including VAT and accessories): £29000

Employee capital contribution: £0

Employee payments made towards private use: £0

Date first registered: 1998 onwards

Fuel type: Diesel (D)

Engine capacity:

Approved CO2 emissions figure: 109

Does your employer pay for private fuel? No




I put middle of September as it would probably take a few weeks to get sorted out! So it is going from mid-sept to end of tax year 2013 to get that calculation.
 
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