Company Car expert needed

[caveman]

Any experts here on company car or car allowance / mileage allowance.

[Mr_love_monkey]

Any experts here on company car or car allowance / mileage allowance.

Depends on what you need to know - when I spoke to my accountant about my company buying a car for me to use, this is what he said :

The vehicle will be treated as a benefit in kind to you. In other words it will be treated as if it is a monetary payment from a tax point of view. The value of the benefit will be calculated on the cost of the car when new and on it's CO2 emissions. This value will then be added to your earnings and your tax code will be adjusted to ensure that you will pay tax on the benefit.

which can make it quite expensive... he says that the company car allowance has been hammered just recently making it more expensive, and that claiming back the mileage from your own car is a better bet.
I can currently claim 40p per mile for the first 10,000 (I think - will have to check)

[laptopsrd]

Waves hands and says.. well i work for an Employee Car Ownership Co. (alternatives to Co Cars)

Wouldnt say i'm an expert but i'm pretty clued up.. what you need to know/advice on?

[caveman]

Currently on a 206 company car and the 3 years are up and I'm being offered another 207. I would like a better car and when I mentioned it to other employees, I was told that I would be better of with the car allowance the 10p a mile and then claim a handsome tax rebate from the IR.
Well after my research I think they were wrong and it makes no difference.
I am allowed £3250 and 10p a mile. I can claim the excess of my 20,000 miles from the IR and to my reckoning that would give me £990 in my pocket.
I calculations are £3250 less tax and insurance = £2180. I do 20,000 a year and the IRr allow me to claim first 10,000 miles at 40p and the remaider at 25p = £6500 less £2000 the company reinburse me for petrol = £4500. Now that is the mute point is that £4500 a tax rebate or as I suspect £4500 tax relief = £990. If that is the case then £2180 + £990 =£3170 hardly buys me a car when I will have tax and insure it as well. If that is the case I may as well take another company car.
Or are they right that I get £4500 tax rebate. If you go to the site
http://times.cashorcar.co.uk/ it suggests they are right and I would have £500 a month to spend on a car. Who is right?

[altis]

Horse's mouth:

http://www.hmrc.gov.uk/cars/

[bob_a_builder]

Normaly they will give you tax relief on the difference between what your company pays as a mileage rate (10p) and the IRs figure of 40p/mile (for business miles)

If your company reimburse you for fuel than that complicates it and err.. I don't know ...

And I went for the car again not the cash ..

[Tricky]

and when you claim the difference they will tax that too :)
I went for the car too

[SMHarman]

This is waay more complicated.
So your company will give you the 207. You need to work out which model that would be and the OTR cost and CO2 number.
To answer this i'd also need to know the personal mileage on top of the business mileage. Driving to and from your usual place of work is commuting and personal, not business. Is that 20k business + personal.

If you take the company offered car what do they do for business mileage. Do you have a company fuel card, or do you claim a fuel allowance of 10ppm.

Does your company allow you to make a capital contribution to your company car to buy a better car than the one they offer.

What car are you thinking of buying as an alternative. New. Used?

Your huge mileage you put on the car each year. I'm guessing about 75k over the 3 will mean that your personal vehicle will be worth a lot less after 3 years than say a more perk company car user (yours is more of a necessity for your job).

30mpg at 4 a gallon is 13ppm. Now I know there is a tax break to factor in there, but if they are only paying you 10ppm for fuel and you are spending 13 then your driving for work is actually costing you money! 20,000 x 3ppm £660 a year!

Your calculation is kind of mixing up two sets of numbers also. Car benefit and fuel benefit. You might need to think about what if your role changed in the next 3 years and your mileage dropped dramatically.

Am I right in thinking you take the company car you get taxed on the cost of that car and you still get the 10ppm.

You take the cash and you still get the 10ppm

In that case the 10ppm numbers are a bit of a wash as that is a constant.

Does your company allow company cars to run to such high mileages. Many companies want to chop cars in at 36k miles and replace them. If the company leases the car they may find that they are paying huge mileage surcharges on your lease and should be swapping your car more often (this is more of a problem for them than you, but parts of this might be in the car policy).

My instinct on this one is that as your mileage is so high relating to company car usage it does not make as much sense for you to own as the benefit that you own the car asset (liability) is heavily outweighed by the liabilities that come with that of 60k miles of maintainance and a heavy depreciation hit for putting that many miles on a car in 3 years.

Answers to some of the questions in this might change that though.

[caveman]

This is waay more complicated.
So your company will give you the 207. You need to work out which model that would be and the OTR cost and CO2 number.

207S 1.4 HDi 70 A/C 5 Door CO2 120
To answer this i'd also need to know the personal mileage on top of the business mileage. Driving to and from your usual place of work is commuting and personal, not business. Is that 20k business + personal.
20,000 Business 1,000 Personanal (only at home weekends and I have a beer or two
If you take the company offered car what do they do for business mileage. Do you have a company fuel card, or do you claim a fuel allowance of 10ppm.
I send them petrol receipts and monthly miles bus / pers sheet and they reinburse me say 95% in cash in my salary (ie. no personal miles paid.
Does your company allow you to make a capital contribution to your company car to buy a better car than the one they offer.
I could upgrade if I wanted (say £50 month for 308) but I chose not to last time.

What car are you thinking of buying as an alternative. New. Used?
When I was told that the additional money from the IR was cash and not relief, an A3 LOL

Your huge mileage you put on the car each year. I'm guessing about 75k over the 3 will mean that your personal vehicle will be worth a lot less after 3 years than say a more perk company car user (yours is more of a necessity for your job).
My car is 95% for the job, I work away in construction M-F

30mpg at 4 a gallon is 13ppm. Now I know there is a tax break to factor in there, but if they are only paying you 10ppm for fuel and you are spending 13 then your driving for work is actually costing you money! 20,000 x 3ppm £660 a year!
The 10p a mile is only if I took the £3250 allowance. With the 207, as I say they reinburse me my fuel receipts

Your calculation is kind of mixing up two sets of numbers also. Car benefit and fuel benefit. You might need to think about what if your role changed in the next 3 years and your mileage dropped dramatically.
I don't see me leaving them for a while

Am I right in thinking you take the company car you get taxed on the cost of that car and you still get the 10ppm.
No. If I take the company car I only pay car tax which I think is 15% of car value per year. eg. £11,000 X 15% = £1,650 X 22% = £363 per year

You take the cash and you still get the 10ppm
Yes. They would give me £3,250 and 10ppm and I then claim MAR from IR

In that case the 10ppm numbers are a bit of a wash as that is a constant.

Does your company allow company cars to run to such high mileages. Many companies want to chop cars in at 36k miles and replace them. If the company leases the car they may find that they are paying huge mileage surcharges on your lease and should be swapping your car more often (this is more of a problem for them than you, but parts of this might be in the car policy).
Yes. I am due for a new one soon and affter 3 years my 206 has done close to 70,000 miles

My instinct on this one is that as your mileage is so high relating to company car usage it does not make as much sense for you to own as the benefit that you own the car asset (liability) is heavily outweighed by the liabilities that come with that of 60k miles of maintainance and a heavy depreciation hit for putting that many miles on a car in 3 years.

Answers to some of the questions in this might change that though.

[SMHarman]

So on the fuel front, you need to make sure that you car costs less than 10ppm to run or owning is out of pocket on mileage vs the company car. You get 100% of company fuel costs reimbursed but only 10ppm personal which equates to a car that does 40mpg. Thats what you would need to achieve, not what the sticker says.

You could pick up a 24k old A3 for 16k
http://www.carcraft.co.uk/CarDetail.aspx?carID=668663&categoryID=0

Repayments on a loan on that would be, oh somene else can do this maths.

Anyway this would be 500/month. But in 3 years and with near 100k on the clock what would it be worth. On top of that you would need to add road tax and insurance and maintainance.

When I studied this in great detail when I were a boy training to be an accountant, the tax situation was a bit different. You paid a higher rate of tax for a co car that did less than 2500 miles a year, bear with me on this one, it has a point.

That point is. The cash equivilant was because the government put a penal tax rate on such cars. So the employers worked out that they could give these employees cash instead and they could buy there own cars and be better off.

A car like yours would have been subject to lower tax, but as car= bad public transport=good the Labour government (Gordy I'm sure, but maybe the tories) took away this break.

I think you will find that with 70k miles in 3 years TCO will exceed what you recieve from your employer by a reasonable margin. This means you need to decide whether the 11k pugeot 206 or the 15k 307 or whether you can get them to swing the 16k A3 1.9 Diesel for say 60 a month.

People are not going to want to buy your 70k 3 year old car. This is more of a decision to you of if you are willing to put your hand in your pocket to a limited extent to fund driving around in a little more comfort for those 20k miles a year.

So you need to work out what you would buy and what it would be worth in 3 years time with another 70k miles on its belt. What it would cost to insure, tax, service.

What the fuel consumption is and whether the 10ppm will cover that.

You have the income numbers the 3250 (less tax) so and the supplemental tax refund on the mileage (30p and 15p) (990) so you have 3525/12 293/month to cover the costs of buying and owning a car. Your ee will reimburse mileage. You should ignore the 10ppm as it is the equivilant of your fuel receipt reimbursement, not more money in your pocket.

Hmm,

Well it seems you have the option to upgrade and pay. It seems that you will be running the car hard for 3 years. It seems that the 307 upgrade is 50 a month and it seems the A3 is only 1k a year more to buy in the first place.

You could argue that the A3 will hold it's value better than the 307 and as such will cost the company the same to run over 3 years as the 307 (come trade in the 307 is worth say 3k and the A3 4k), so they could buy that for you for little to no cost. Don't know hoow your fleet manager works but they might buy such an arguement. This would change the CO2 of your co car so probably up your tax bill a bit.

However this works the cash which is less than the 1/3 cost looks like a bad deal.

[caveman]

Thanks for the time you have taken to play with my figures. I will as you say go for the company car. I work in the construction industry and to be fair find it very hard to keep the car clean and in good nick.
I can't think of any idiot (and I know a few) who would pay good money for my car after 70,000, bloomed paintwork, well worn interior and the odd small knock. The resale value of an A3 or 307 won't be up to much and that is the cruncher. Maybe if the car allowance had been more eh?
Still another 3 years with a Peugeot. But 3 years of trouble free motoring - that is not worrying about the endless punctures I get and repairs during last year when it is out of warranty (and I've had a few). I would have most probably ended up as a bag of nerves with my A3 on or near the site.
See I've convinced myself already. Cheers.

[SMHarman]

What I would do though is ask for the company car policy and also ask how they aquire company cars, lease or buy. If they are leasing then they are likely to be taking a huge hit on over mileage penalties on your car. Lease companies want cars back with 30k or less on the clock. With a car like yours in a employer that leases you should be changing every 18months.

If you are prepared to pay the 50 a month, I would have a serious chat with your fleet manager and see what can be swung. You spend over three weeks of the year in that car!

[SMHarman]

This is on iii today.
http://www.iii.co.uk/go?c=728cxq&ID=511&SUB_ID=55&v=164251
or
http://www.iii.co.uk/articles/articledisplay.jsp?article_id=6947547&section=Planning&livehome=true&campaign=pfnspecial0001&link=Companycar_PFNspecial_511_55&cp_c=728cxq&cp_v=164251&cp_id=511&cp_sub_id=55
should be the same link but I don't know.