DELETED_110867

[Havana_UK]

There are pros and cons to both options.

I'm just leaving a company car scheme for the first time in ~15 years, and I've done this for several reasons, but mainly because of the tax changes which force you into an ever narrowing range of options based purely upon emissions (unless you're prepared to pay a lot of tax, which I'm not).

A company car is total peace of mind in exchange for a higher tax bill. You don't have to worry about anything, but in exchange you pay a fair bit to ultimately end up owning nothing (and not accruing insurance NCB in the process).

With a personal car you are responsible for everything, and depending upon your personal circumstances this may be something you're uncomfortable with.

A company car may, or may not, be your best (not necessarily cheapest) option. We'd need more info to give you any concrete examples.

What are your company's car scheme rules, both for cash alternative and company car choice. How many miles will you do, what is your insurance likely to cost if you take the cash, etc.?

 

[rodenal]

I just got the possibility to get a company car. I thought it was pretty much a no brainer with pretty high insurance costs etc but now I'm confused.

Anyways I'm quite keen on the worry free brand new company car but the tax bands change every year - does that mean I'll end up paying an unknown amount (but more than likely more) of extra tax every year?

If so I really don't understand how it's supposed to add up to cheaper than me taking the money and getting my own car!

It's unlikely to work out cheaper than taking the money unless you are a high rate tax payer with a very low allowance or your commute is very long and personal miles are covered. Of course that doesn't mean you wouldn't take the car anyway

There's no easy way round it unfortunately - you just need to do the sums and see what you prefer.

I haven't had a co car or allowance for a few years now but in general I took a company car when I was doing lots and lots of business miles because I just didn't want to put 30kpa on something that I actually owned and paid to repair myself. I was also given some rather favourable fuel card terms that you'd never get away with now.

I took the allowance when I didn't commute very far to work and done little to no business miles. I didn't spend all of the allowance+tax difference on a car either, so effectively used it as a salary bump

 

[Windle]

What's the allowance if you opt out of the company car? Unless it's very low, and/or you would be doing a lot of miles you are normally better taking the allowance.

 

[Hagar]

I just got the possibility to get a company car. I thought it was pretty much a no brainer with pretty high insurance costs etc but now I'm confused.

Anyways I'm quite keen on the worry free brand new company car but the tax bands change every year - does that mean I'll end up paying an unknown amount (but more than likely more) of extra tax every year?

If so I really don't understand how it's supposed to add up to cheaper than me taking the money and getting my own car!

Company car tax is paid at your marginal rate (20% or 40%) on a percentage (BIK%) of the new car OTR price. The BIK% is forecast to rise at 2% per year over the next four years and is based on the CO2.

So if you are a 20% taxpayer and the CO2 is 100 on a £15000 new car, you pay 20% of 13% x 15000 or £390 per year in tax. This rises to £570 in 2019.

Also you will not be getting the £380 after tax per month. £300 approx, so your actual difference is 300 + 390/12 = £332 per month in disposable income.

Company car tax is always based on the 'new' car price when it was released so even a second hand car will still attract the original valuation.

My example uses a mid priced company type saloon but lowish CO2, could be higher.

If you get fuel benefit in kind as well, you pay another tax amount.

So the calculation is can I fund, tax, insure and maintain a car for the car allowance plus the amount I would have paid in tax and when I sell it, not be too out of pocket with depreciation also.

The company car goes back and you have no other car.

http://www.nextgreencar.com/company-car-tax/bik-rates/