Dangle_kt
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| posted on 12/2/12 at 07:49 PM |
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Company Car or Cash allowance Q
Its highly likely I'll be returning to the private sector over the next couple of months, and the opportunity of a company car.
But it seems to have got a bit more complicated since I last had one (nearly 4 years ago), in as much as they are costing more and more in tax!
I think I have understood correctly that the lower the co2 the cheaper the %, and that all the thresholds are about to change, basically making
everything more expensive.
I will be working from home at least 1 if not two days a week, will be working locally (5 mins) on projects, regionally on projects (30 miles away)
and the odd national bit of travel - maybe once or twice a month, anywhere from Edinburgh to Southampton - so I don't imagine mileage will be
much over....10k per year, maybe 15k at the absolute outside.
I am completely undecided about how to do it - I see a few options:
Take the cash allowance, keep running my little c3 (70mpg), and pocket the extra to fund a fun toy of some sort - maybe an mx5 or a cheaper kit
(plus), but the c3 is really uncomfy on long journeys (minus)
Take the company car, and swallow the tax hit - I will get one of the leavers company car from my band or above, so A4, Passat, accord sort of
thing(wont be able to control what co2 for about a year - then I can order a new one) (minus), but no stress of maintenance bills, insurance, or it
going POP(plus)
Take the cash allowance, sell the c3 and buy something nice, quick but respectable maybe a 330, or similar... but then its my problem if it goes wrong
etc.
Anyway - has anyone had to make a similar decision recently, and what did you do and Why?
Also any advice in general about the choice would be gladly received.
Thanks 
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r1_pete
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| posted on 12/2/12 at 07:57 PM |
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I made the switch from Co. car to personal car about 8 years ago.
I've bought 18 month old vehicles, and changed them after 2.5 - 3 years, including running costs I have change from the cash alternative, and a
car to sell on or trade in, but, my allowance is almost 40% of my salary, so really you need to do your own maths...
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big-vee-twin
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| posted on 12/2/12 at 08:04 PM |
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I don't think you will do enough mileage for the benefit. I gave up my company car 8 years ago, at that time it was costing me £100's a
month in Tax admitedly it was an exceutive limo and all petrol was expensed.
Personally I wouldn't go back.
Duratec Engine is fitted, MS2 Extra V3 is assembled and tested, engine running, car now built. IVA passed 26/02/2016
http://www.triangleltd.com
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Dangle_kt
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| posted on 12/2/12 at 08:11 PM |
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Interesting... I think I'll be looking at anywhere between £110-180 in tax on a company car a month - and thats without fuel (my last one had
that, and boy did I abuse it!!).
I don't know what the cash alternative will be yet, a friend only gets 10%!!!  I hope its more reasonable!
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whitestu
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| posted on 12/2/12 at 08:25 PM |
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I'll have to make a similar choice soon - betweek £6.4 kpa allowance or a company Golf.
I suspect the cash will be the best bet.
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mad-butcher
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| posted on 12/2/12 at 08:42 PM |
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A mate of mine is a fitter for one of those sky lift companies, he had a company van and was really stung by the taxman, after being there a few
months he realised although the job description was fitter he didn't need to carry all his diesel fitters tools it was more laptop, circuit
boards etc, So he bought a new Kia and settled for mileage allowance, he reckons he's never looked back as the cars paid for itself twice over
and he could still sell it and make an extra proffit.
tony
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Ninehigh
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| posted on 12/2/12 at 08:59 PM |
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Sounds like you might want to trade you C3 for a C4...
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Proby
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| posted on 12/2/12 at 09:58 PM |
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I'm running a company car at the moment, I changed jobs in July 2010 and lost the option to run my own car. I picked a low Co emission vehicle
(Volvo S40 RDesign, but a 116PS Diesel), I binned the fuel card, as I could not do the mileage to break even (costing me £80/month tax just on fuel
card), and the Volvo costs me £24/month in tax (although that is going up in April). If I had the choice, I'd run my own car, used to do it
before buy a 12/18 month old car, run it for 12 months and change it. The other option is take the allowance and lease a car, no tax to pay and no
servicing costs/tax, just insurance. The only problem then is your committed to it for 2/3/4 years.
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bj928
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| posted on 12/2/12 at 10:01 PM |
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a friend of mine was paying a lot of tax for his company car C-class merc, so the last time he needed a new company vehicle he got a nissan navada top
of the range, dropped is tax to just £500 a year, don't know if the rules have changed, that was a few years back now, it had satnav, leather, 4
doors, and a nice driving position, depending on your job, may or maynot be the right image.
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Proby
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| posted on 12/2/12 at 10:07 PM |
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Yep, rules have changed I'm afraid. They used to be classed as a van/commercial with a flat rate of £500/year. Once the vehicle was over 3 years
old it dropped to £300/year. HMRC soon cottoned on and changed the rules.
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Dangle_kt
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| posted on 12/2/12 at 10:26 PM |
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quote:
Originally posted by Proby
Yep, rules have changed I'm afraid. They used to be classed as a van/commercial with a flat rate of £500/year. Once the vehicle was over 3 years
old it dropped to £300/year. HMRC soon cottoned on and changed the rules.
Thats a shame, as that was one of the types of vehicles I was considering (to shift my MX bikes about, and kids quads etc)
hmmm...more thinking required I suppose.
Thanks for the replies so far.
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Blackbird Rush
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| posted on 12/2/12 at 10:36 PM |
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Switched to Co Car last summer for the first time and went from a focus 2.0 Petrol Auto (owned fully by me) to a Leased C Class sport Estate 220 CDI
blue efficiency, the focus was starting to get pricey with fuel & bits going wrong.
I will clock up around 50-60K in the 3 years of the lease and the way I look at it is, I would have had to get a new(er) car anyway and for the same
money as the tax will cost I wont be able to get anything anywhere near as nice, taking into account the cost, running and depreciation over the same
period.
With the co car I get a brand new car to my spec, no cost for running except private fuel miles and tax and if it does go wrong I get an instant
replacement no hassles.
For me it works as I can decide what my expenditure is (director & shareholder of my firm), but everyone's circumstances are different.
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nick205
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| posted on 12/2/12 at 11:06 PM |
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I opted out last year after 8 years of co. cars as the tax was going up and my mileage was going down. At the start I was clocking up anywhere up to
40k miles a year so an expensed car was a no brainer. Also the HMRC business fuel rates meant you were making on the fuel all the time (assuming you
drive sensible).
By 2011 the tax was getting ever highrer even after switching to a 99g CO2 Volvo V50 Drive model. My mileage had dropped to 15k a year and the HMRC
fuel rates meant fuel was costing rather than making you money most of the time.
I looked at a private lease, but being tied for 3 yrs just wasn't an option for me. I went for a 4 yr old Passat with 60k on the clock and now
claim the HMRC rate of £0.45/mile for business mileage. Dictated by changes to the company and my role my mileage has now increased, probably to 20k
a year which means the fuel rate is helping to pay for the car.
In summary IMHO, if you're looking at big miles then a co. car makes sense, but choose very carefully to minimise the tax burden. For normal
miles an allowance and private car makes more sense.
One final note (you've been there before so I'm sure you know) always make ABSOLUTELY certain that HMRC are informed in writing and
acknowledge by return anything to do with co. cars. I know this from painful and ongoing experience with this inept bunch of wallys!
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Dangle_kt
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| posted on 12/2/12 at 11:13 PM |
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quote:
Originally posted by nick205
I opted out last year after 8 years of co. cars as the tax was going up and my mileage was going down. At the start I was clocking up anywhere up to
40k miles a year so an expensed car was a no brainer. Also the HMRC business fuel rates meant you were making on the fuel all the time (assuming you
drive sensible).
By 2011 the tax was getting ever highrer even after switching to a 99g CO2 Volvo V50 Drive model. My mileage had dropped to 15k a year and the HMRC
fuel rates meant fuel was costing rather than making you money most of the time.
I looked at a private lease, but being tied for 3 yrs just wasn't an option for me. I went for a 4 yr old Passat with 60k on the clock and now
claim the HMRC rate of £0.45/mile for business mileage. Dictated by changes to the company and my role my mileage has now increased, probably to 20k
a year which means the fuel rate is helping to pay for the car.
In summary IMHO, if you're looking at big miles then a co. car makes sense, but choose very carefully to minimise the tax burden. For normal
miles an allowance and private car makes more sense.
One final note (you've been there before so I'm sure you know) always make ABSOLUTELY certain that HMRC are informed in writing and
acknowledge by return anything to do with co. cars. I know this from painful and ongoing experience with this inept bunch of wallys!
I'm currently paying £180 a month to repay a cock up either my old company or HMRC did on my last company car 3+ years ago  So I absolutely
agree.
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Davg
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| posted on 13/2/12 at 12:03 AM |
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If you have on offer, co van, 99% twincabs still count as vans, some other nice 'real' vans avail, tax benefit is minimal in comparison to
a car. Also if you get fuel provided charge for that is washers.
cheers D
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Simon
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| posted on 13/2/12 at 12:52 AM |
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I'd go privately as local mileage insignificant, but bigger journeys could you bill employer at 40p/mile?
ATB
Simon
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hughpinder
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| posted on 13/2/12 at 09:44 AM |
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I did a little spreadsheet in excel - costs in one column and income in the other.
Dont forget your car running costs if you run your own car come out of you after tax salary - so add on tax at your highest rate! In fact be careful
about what you get pre and post tax in all cases.
Consider how much value you place on having a new car. If you don't mind running a 10 year old car thats fully depreciated it will almost
certainly be cheaper to run your own car.
I found that by the time I'd costed depreciation, insurance and road tax we were already better off taking the company car, assuming we would
have run the same type/age of car privately.
Will you be able to do private mileage in the car, and if so, how many private miles do you do per year?
My missus can, and we do quite a lot of private mileage in the company car, and I run a cheap/old (14yo polo, so no depreciation) car for myself -
effectively we used to run one cheap car and one 'nice' family car, and now the company car does the duty of the 'nice' one
and we only run the cheap one for me to get to and from work. Although we still pay fuel, we save insurance, road tax, tyre costs and other
maintenance and also depreciation on a car of our own. That used to be (say, approximately) 2k pa on depreciation, 330 insurance 150 rd tax, 600
tyres, 300 other maintenance AA+ breakdowns on top. Remember that is out of your after tax income
Regards
Hugh
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mookaloid
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| posted on 13/2/12 at 01:50 PM |
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It depends on how much you get for an allowance and how many miles you will be doing.
When ever I have looked at this in the past, it has always worked out that for a low mileage user it is probably better to take the allowance because
the maintenance cost will be low.
For a high mileage - say 20k pa or more it is almost certainly better to keep with the company car because the real cost is hugely expensive (tyres,
servicing, insurance for business use etc) and not covered by the allowance.
"That thing you're thinking - it wont be that."
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