Company cars

Weststander · Jun 24, 2014

Having a company car with lowish CO2, but meeting all fuel costs yourself, can be a good compromise with a not too penal effect on your tax coding. Car benefit, but not fuel benefit.
Then claim the business mileage at authorised rates.

Superphil · Jun 24, 2014

Weststander said:
Having a company car with lowish CO2, but meeting all fuel costs yourself, can be a good compromise with a not too penal effect on your tax coding. Car benefit, but not fuel benefit.
Then claim the business mileage at authorised rates.

That would depend what your employer pays for mileage. Mine only pays 21p per mile, hence it's important that I get good mileage from my car. Also remember to claim the tax relief on the difference between the government rate and what your employer pays you.

Butch Willykins · Jun 24, 2014

Superphil said:
That would depend what your employer pays for mileage. Mine only pays 21p per mile, hence it's important that I get good mileage from my car. Also remember to claim the tax relief on the difference between the government rate and what your employer pays you.

If it's a company owned vehicle, you can't claim any tax relief on the mileage.

Superphil · Jun 24, 2014

Waino696969 said:
If it's a company owned vehicle, you can't claim any tax relief on the mileage.

Ah, ok, I was replying to the previous post, where they referred to claiming at the authorised rate, which you can do if it's your own car. Wouldn't have known that about company owned cars having not had one since 2005

Beach Hut · Jun 24, 2014

Hassocks Armchair Fan said:
Opted out 6 years ago. Financially very rewarding!

Ditto around 12 years ago and just the £5,500 allowance which is taxable and not salary

The Antikythera Mechanism · Jun 25, 2014

I was paying about £800/month in tax until I bought both my company cars

hans kraay fan club · Jun 25, 2014

Superphil said:
That would depend what your employer pays for mileage. Mine only pays 21p per mile, hence it's important that I get good mileage from my car. Also remember to claim the tax relief on the difference between the government rate and what your employer pays you.

21p IS the government rate, surely?

Superphil · Jun 25, 2014

hans kraay fan club said:
21p IS the government rate, surely?

As I understand it, it's 45p per mile, then again, I don't profess to understand matters of taxation, from the HMRC guide.

"Car mileage. For tax purposes: 45p for the first 10,000 business miles in a tax year, then 25p for each subsequent mile
For NICs purposes: 45p for all business miles"

No idea what an NIC is, don't think I'm one.

Garage_Doors · Jun 25, 2014

I always thought NIC was national insurance contributions ?

KRJ7 · Jun 25, 2014

Midfield Minton said:
Hi guys
Does anyone else have a company car and on average how much do they pay a month,this includes to use as I like and with a fuel card,I haven't got my list yet but I'm thinking of a new focus or mondeo

To give you an idea, I have a Mercedes C220 Diesel Coupe. Without a fuel card it costs me £140 a month in personal tax. With a fuel card it's virtually double. The allowance is a better option and then either buy a run around to make money or lease a car privately.

Garage_Doors · Jun 25, 2014

TonyW said:
It wouldn't get you a £31,000 golf R though, including insurance.

Is she buying it or renting it?

Garage_Doors · Jun 25, 2014

KRJ7 said:
To give you an idea, I have a Mercedes C220 Diesel Coupe. Without a fuel card it costs me £140 a month in personal tax. With a fuel card it's virtually double. The allowance is a better option and then either buy a run around to make money or lease a car privately.

what is a fuel card? never had them in my day.

Superphil · Jun 25, 2014

Programme_Seller said:
what is a fuel card? never had them in my day.

Ooh, I think the one I had was called an Allstar. Basically a card just for fuel, 90% of petrol stations used to take it, no idea if they have them now, I'm going back to around 1999 when I last had one.

Midfield Minton · Jun 25, 2014

Some of the cars mentioned are not going to be on my list,more fords,skoda and hyundi the skoda with fuel card is about £150 odd a month so I've been told

Superphil · Jun 25, 2014

Midfield Minton said:
Some of the cars mentioned are not going to be on my list,more fords,skoda and hyundi the skoda with fuel card is about £150 odd a month so I've been told

The key if you are going to buy/lease your own car is the Guaranteed Future Value (GFV), that's what gets the monthly payments down, hence a car that will have a better percentage value at the end of the term will cost you less a month.

I have made up these prices for illustration purposes, but this is how it works:

Ford Focus, £17500, value in 3 years £5000, means you finance £12500.
Audi A3, £17500, value in 3 years £7500, means you finance £10000.

At the end of the term you can hand the car back, trade it in for a new one (thats what the garage will try to get you to do) or buy it for the GFV. Oh, and if the GFV is actually lower than the value of the car at the end of the term, you can benefit from the difference. If you can flog it for £8500, you keep the difference, if it's only worth £6000, then the garage loses, not you.

In this illustration the Audi actually would cost you less a month than the Ford.

I know I have made up these prices, but that is how the garages do the finance, so it is worth checking with brands that are apaprently more expensive, as they might work out cheaper in the long run. After all, this is a car you will be driving for work, so you want to pay out as little as possible for it.

Saltydog · Jun 25, 2014

Consideration:

Tax liability for "Benefit" includes all running costs (MOT/Tax/Insurance/Tyres/Servicing + **fuel - can include personal mileage subject to your Company car policy)

Allowance - Tax gain + allowance (which is taxed at source 25%/40%/45% which ever apples to you) - now on mileage allowance too - so variable depending on your specific entitlement - 40p for 1st 10K miles then may drop to circa 20-26p etc. You have to cost of purchase & depreciation to bear, the running costs (MOT/Tax/Insurance/Tyres/Servicing etc). You can claim the difference in your mileage allowance vs HMRC's 40p for 1st 10K and then 26p for all other mileage over the 10K {or similar??} if you submit an annual tax return (so if for example your company pays 20p per mile you can claim 20p for the 1st 10K miles and then 6p for all miles above 10K).

Might not be 100% of considerations but sure you get the drift.

I think the break even is if you do <15-18K BUSINESS miles p/a then the company car is the more cost effective option. However it maybe that you like a specific car and accept it will still cost you something but less as you do get some costs covered!

Weststander · Jun 25, 2014

Superphil said:
As I understand it, it's 45p per mile, then again, I don't profess to understand matters of taxation, from the HMRC guide.

"Car mileage. For tax purposes: 45p for the first 10,000 business miles in a tax year, then 25p for each subsequent mile
For NICs purposes: 45p for all business miles"

No idea what an NIC is, don't think I'm one.

45pence per mile is the max an employer can pay tax free, where an employee uses their OWN CAR for business. That's for the first 10,000 business miles each tax year; thereafter at 25 pence per mile.

Using a COMPANY CAR, but paying for all fuel costs personally, the max tax-free rates paid to reimburse the employee for business mileage vary according to a table - examples are 14p per mile for petrol cars up to 1400cc, 16p for petrol cars 1401 to 2000cc, and 12p for diesel cars up to 1600cc.

Commutes to and from home and main place of work never count under any scheme.

Employers can and do pay more or less than these rates.
Paying more, leads to a benefit in kind on the excess paid in a tax a year.
Paying less, just means that's a tight-fisted and unfair employer, when everyone knows the cost of running a car including fuel is high these days.

Superphil · Jun 25, 2014

Weststander said:
Paying less, just means that's a tight-fisted and unfair employer, when everyone knows the cost of running a car including fuel is high these days.

Yup, that's what many of them are to us sales people, their answer is like it or lump it, sell more and you'll earn more, don't sell enough, and you're out on your ear, and they'll find someone else. It's a balancing act I can assure you.

Garage_Doors · Jun 25, 2014

Superphil said:
Ooh, I think the one I had was called an Allstar. Basically a card just for fuel, 90% of petrol stations used to take it, no idea if they have them now, I'm going back to around 1999 when I last had one.

I assume its like a company credit card where the company settles the bill but for fuel only?

I used to just pay for it and claim it back at the end of the month.

Superphil · Jun 25, 2014

Programme_Seller said:
I assume its like a company credit card where the company settles the bill but for fuel only?

I used to just pay for it and claim it back at the end of the month.

Yes, that's the type, only fuel and oil, and the bill went staight to the company. I was fortunate that I was fully expensed for several years, hence a number of driving holidays around the UK, away games all the time, and in cars that weren't particulalry fuel efficient. As the Inland Revenue started taking more and more I downgraded the cars (a bit) but then when the fuel allowance went up so high I went to providing my own car, getting a car allowance in my salary, and claiming mileage allowance.

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