Company car or allowance?

[Dr Who]

don't understand what you mean , if you mean that a car allowance won't count towards pushing over a tax threshold then unfortunately it does

If you have a good accountant or know the system you can usually claim enough business miles to more than offset the car allowance..

Compared to a co.car you are usually better off and get to drive what you want...

Remember diesels pay a lower mileage rate (from employers) than petrols, so when assessing what you will be better off with, usually the petrol comes off better...

I am still trying to unravel the tax situation with my last "lease" car that was done through my employer... best off sorting it yourself...

Co.Car tax is now insane, but cheaper than buying your own car with no allowance

 

[wassap]

Are you likely to use the car for many business miles or is it just a perk as such?

I have just opted to go into the scheme, as my trip to and from the office is being classed as business mileage (im home based sort off)

I don’t actually pay company car tax as our scheme is a bit of a fiddle, im basically getting a tax free loan to buy the car over 3 years, im having an ST3 which will cost me £66 a month for the next 3 years then I get to hand it back, I only pay tax on the fuel card, which will cost me 85 odd a month.

What you have to weigh up is what your company expect you to do with a privately sourced motor, ours have to be 4 seater, and under 7 years old, we have to have a car at all times for work, so if my private car breaks down I have to ensure I have a replacement, for me I would have got 400 notes a month, I didn’t find it economically viable to opt out, as if I rack up mega miles on a nearly new private car I lose money anyway.

For example in the company car scheme I pay 150 a month all in, that’s 1800 ish a year, for a privately sourced motor, say a nice sporty beemer, 325i on a 02 with 40k on the clock, that’s going to cost me 14k ish, over 3 years £388 a month (that’s with out a loan) so that’s basically most of my allowance gone, maintenance and servicing,tax,mot is on top of that, and if you are going to do 25k a year running costs and depreciation are going to be quite high even on a kraut motor.

I would personally stay in the scheme, get a fuel card and drive like you stole it everyday and let someone else pick up the tab, the a4 is a nice classy motor so go for it, get yourself a track day monster for the weekend.

I still cant believe work are giving me a ST3 for 150 a month fully paid up, that is so cool!!

Oh if you are getting a choice of petrol or diesel, go for the petrol audi, the FSI is pretty economical i got 37mpg out of my demo A3.

 

[clv101]

personally, I take a car instead of an allowance, 120 quid in tax a month for hassle free motoring.

It's not £120 though is it, you're £420 down each month for the benefit of the car.

My allowance is £455 and for me taking the cash is a no brainer - My Fabia VRS costs only a fraction of the £273 I see after tax. Allowance 12x273=£3276. Cost of Fabia ~£400 insurance, ~£200 servicing, ~£200 tires, £115 tax, ~£1000 depreciation = ~£1915. Net benefit = £1361. Okay, that's driving a Fabia VRS and not an Audi A4 - I can live with that hardship!!

 

[MrMoon]

you could easily get a porsche or a range rover sport for £500 a month on contract hire when I got a company car we used vehichle options they are quite good i found

 

[Rich1988]

you could easily get a porsche or a range rover sport for £500 a month on contract hire when I got a company car we used vehichle options they are quite good i found

not after 40% tax surely?

 

[Rotty]

if you dont you will gain around 420 a month ( 300 after income tax on your 500 allowance + the saving in tax you would have paid for having a company car )

.

plus amap relief

 

[mcmad]

It's not £120 though is it, you're £420 down each month for the benefit of the car.

Net benefit = £1361.

thats true, I forgot to add the allowance back on..

but your net benefit, for me anyway is hardly worth the bother, I have no bills for the company car & never will, no risks at all. I couldn't care less what happens to it so the extra is worth it for piece of mind (IMO) for me I use it as a way of getting a new car for the misses every three years.

I guess salary would play a part in this as well, if the extra cash is gonna come in useful then go for the allowance & put aside some cash for repairs etc...

does your 200 quid for insurance cover business travel ? thats pretty damm good if it does.

 

[clv101]

It's ~£400 for the insurance (with business use).

The way it works out for me is that if I take the allowance I’m 12 x (60%x£455) = £3,276 better off each year.

If I were to take the car I would lose that and also have to pay approximately 12 x £120 = £1440 company car tax. So in total I would be £3,276 + £1,440 = £4,416 a year out of pocket.

The question is what can I get for £4,416 a year (£14,148 over three years). On the one hand I can drive a new company car, something like a BMW 120d or Audi A4 2.0 TDI then give it back and have nothing to show for it. Or I could buy privately – private purchase of something similar 6-12 months old then selling it after 3 years would be much cheaper (maybe half) the cost of the company car scheme with increased flexibility.

Maybe our scheme just isn’t very good – but is certainly doesn’t work out for me.

 

[Rotty]

don;t forget that to only pay a figure of around 120-150 a month in company car tax severely restricts your choice of car , there is nothing around that figure that would interest me

also a small thing , when looking at the figures for tax it is 41% not 40% because of the extra 1% NI , of course tax relief is just at 40%

 

[mcmad]

also a small thing , when looking at the figures for tax it is 41% not 40% because of the extra 1% NI , of course tax relief is just at 40%

oh aye, forgot about that sneaky extra tax they added...

 

[Beepcake]

I hope you're not implying that the increase in NI was a stealth income tax.. I won't hear of such a thing!

When I opted out of the company scheme I was in (several years ago) they restricted you to cars under 3 years old.. which was a pain. I bought a 5 year old A6, shoved a private plate on, and pocketed the cash difference (I got £780 before tax iirc).

Having a company car is great, as it's completely hassle free; but once you actually start looking at how much money you could have instead, it starts to look like a poor option in most cases.

 

[Dr Who]

don;t forget that to only pay a figure of around 120-150 a month in company car tax severely restricts your choice of car , there is nothing around that figure that would interest me

also a small thing , when looking at the figures for tax it is 41% not 40% because of the extra 1% NI , of course tax relief is just at 40%

What you are forgetting is it isnt £120-150... its £120-150 + the allowance...

So assuming a net allowance of £300, thats £420-450pm that you can spend on a car... thats before the tax relief on the miles... which assuming a 2.0 car, 40% tax, at 10,000 business miles is around £1320 tax back each year..

So you get a total allowance of around £530-560 to get a car compared to the company car tax..

 

[mcmad]

I hope you're not implying that the increase in NI was a stealth income tax.. I won't hear of such a thing!

absolutely not, nothing fills me with joy more than knowing I pay more NI than most for services I will never use

When I opted out of the company scheme I was in (several years ago) they restricted you to cars under 3 years old.. which was a pain. I bought a 5 year old A6, shoved a private plate on, and pocketed the cash difference (I got £780 before tax iirc).

my company have very strict rules about what car you can actualy buy if you take an allowance, basically turn up in a car that is not inline with the cars on the policy & lose your allowance.

Having a company car is great, as it's completely hassle free; but once you actually start looking at how much money you could have instead, it starts to look like a poor option in most cases.

yeah but its great for us lazy asses that cant be bothered looking

 

[Beepcake]

What you are forgetting is it isnt £120-150... its £120-150 + the allowance...

So assuming a net allowance of £300, thats £420-450pm that you can spend on a car... thats before the tax relief on the miles... which assuming a 2.0 car, 40% tax, at 10,000 business miles is around £1320 tax back each year..

So you get a total allowance of around £530-560 to get a car compared to the company car tax..

I think you are arguing the same point.. Rotty was just pointing out that the 120-150 figure being banded around for the amount of tax you'd pay is pretty conservative if you want a nice car

 

[[TW]Fox]

When I opted out of the company scheme I was in (several years ago) they restricted you to cars under 3 years old.. which was a pain. I bought a 5 year old A6, shoved a private plate on, and pocketed the cash difference (I got £780 before tax iirc)

And they didn't notice? Didn't they want photocopies of your documents etc?

 

[Beepcake]

yeah but its great for us lazy asses that cant be bothered looking

Definately, I had mine for about 2 years, and wangled a TT out of it. I only opted out because I was about to resign so wanted to get some cash in the bank

Having a company car is great if you subscribe to the Ostrich method of finances

 

[Beepcake]

And they didn't notice? Didn't they want photocopies of your documents etc?

Nope, I think it was there to stop people buying bangers, my car was still in keeping with the 'image' of the company, so they didn't ask questions.

Most people back then bought diesel golf's.. if it was a choice between an older A6 and a base diesel Golf, I know which one I'd think looked more 'executive'.

 

[Dr Who]

I think you are arguing the same point.. Rotty was just pointing out that the 120-150 figure being banded around for the amount of tax you'd pay is pretty conservative if you want a nice car

Yup think you are right, rotty's post read 2 ways..

£120 tax cost wouldnt get you a very good car if you didnt take the co car...

£120 is little to pay for such a good company car...

I took it as the former..

 

[Ev0]

I'm pretty sure the tax limit thing for paying the higher rate is 31,500? If so then the basic salary + £500 a month allowance comes in at just under this

 

[Rotty]

I'm pretty sure the tax limit thing for paying the higher rate is 31,500? If so then the basic salary + £500 a month allowance comes in at just under this

that may pr may not be good news , you allowance will only be taxed at 22% but your amap relief will only be 22% too so if you are a high business mileage driver then you may be worse off