Company Car & Tax Advice

[Gojuryuben]

Hopefully somebody can give me some advice regarding company cars & tax. Basically my employers have advised that the company owns a 2010 focus which they will give me to use as a company car.

 

The thing I need advice on is whether it is worth taking the car with regards to the company car tax and private mileage costs that I will have to pay. From what I've read I will have to pay 20% of the cars new value and 11p per mile private car mileage.

 

Is what I've read correct or can somebody with an in depth knowledge on this subject provide me with further advice.

 

Cheers

[Bargepole23]

I believe you will be taxed on the purchase price of the car when it was new.....not a great deal for you on a 6 year old car, paying a load of tax for an old banger. Quite frankly, they are taking the <removed>. Company cars should be no more than 3 to 4 years old.

Edited February 25, 2016 by Groose
masked swearing

[SMITHIE]

Hi, as no-one else has responded, here is my two pennorth. What you are saying is about right,I think, but you can put all the details in here : http://cccfcalculator.hmrc.gov.uk/ (hope it works but if not go to gov.uk company car calculator and you will find it). You need a bit of info about the car though, eg purchase price and emissions. Thing is, doesn't matter how old the car is, you will be taxed at the original price . So it may be quite costly. Others please feel free to correct me.

 

---------- Post added 24-02-2016 at 18:14 ----------

 

Whoops didn't see other reply

 

---------- Post added 24-02-2016 at 21:06 ----------

 

So.....was the response from bargegpole23 and me of help ? It's really nice to have an acknowledgement -thank you.

[Allen]

It's a no brainer...take it!

I had a company car for 28 years.

Consider this......

 

I assume it's a diesel car.

If you are charged 11p a mile for private use you would pay £5-50 to travel 50 private miles.

If using your own car you would pay £4-40 for the diesel at today's prices for the same mileage.

You then pay the company car tax.....

 

The company buys the tyres, pay for all repairs, cover any breakdown/recovery costs, pay the VED (tax) and the insurance. They replace the car when it is knackered.

You're in a win win situation....

 

I'm now retired and have all those things to pay for as well as putting money aside for replacement costs.

 

Anyone offered a company car would be a fool to refuse it.

[Kevski35]

You shouldn't pay anything up front, it just lowers your tax code. I did get our HR department to fill out the form for me. For example, I got a new Vovlo V40 and my tax code is now 586L to allow for the benefit in kind of a company car.

 

The mileage allowance is not what you pay but what you claim for business miles driven per month. It is based on engine size and is reviewed quarterly by the taxman. Currently my allowance is 9 pence per mile for 1600 cc or less. Keep a record of the mileage you do every month. At the end of the month, I claim on expenses 9 pence per mile so say I have done 1000 business miles its £90. Any privivate miles done you don't claim anything. If you try and claim for all miles covered you get whacked further on tax so it's best to do it this way.

 

Drive your car economically and it means private miles cost me about £30 monthly! Saves a fortune having a company car as all services etc are just charged to the lease company who provides our cars. I don't pay anything.

 

Hope this helps.

[Gojuryuben]

Thanks for the advice folks. So in conclusion even though the car is getting on a bit for peace of mind it's worth taking ?

 

I suppose when you way up what a private car would cost for Tax, insurance, fuel, general reapairs etc then a taking the company car would work out cheaper over all.

 

The car is only 1.6ltr Diesel

[Coops42]

I would say you're in a win win situation. If it's a 2010 car it is surely at the front of the queue for replacement, if you had started the job in a 1/2 year old car you would have been worse off !

[willman]

You'll feel like you've been hammered on tax - as in you will notice the big drop in take home pay. Its not a big issue if you currently fund a vehicle or public transport as it often offsets the loss of direct income. But if you get a lift or even have a monthly HP to make on a private car it will have an impact.

I pay 11p per mile (every 3 months at my company)for my private mileage - if i'm honest that's a fairly common method, if you can journey plan and keep records its also the simplest to do, i submit my postcode destinations(Google maps works out the distance if i forget to keep a record) and that's it done.

Don't forget travel to and from work isn't classed as business mileage usually.

[Cyclone]

It's a no brainer...take it!

I had a company car for 28 years.

Consider this......

 

I assume it's a diesel car.

If you are charged 11p a mile for private use you would pay £5-50 to travel 50 private miles.

If using your own car you would pay £4-40 for the diesel at today's prices for the same mileage.

You then pay the company car tax.....

 

The company buys the tyres, pay for all repairs, cover any breakdown/recovery costs, pay the VED (tax) and the insurance. They replace the car when it is knackered.

You're in a win win situation....

 

I'm now retired and have all those things to pay for as well as putting money aside for replacement costs.

 

Anyone offered a company car would be a fool to refuse it.

 

Unless the alternative is a payment instead, which it often is.

For example, company car, or £300/month company car allowance in lieu.

 

---------- Post added 25-02-2016 at 13:22 ----------

 

Some indicative figures (had to guess some values)

 

Tax Liability indicator: 20% 40%

 

Company Car Tax (2016/2017) £1,015.40 £2,030.80

 

Annual figures, so if you're a 40% tax rate payer then you lose £170/month from your net income.

 

---------- Post added 25-02-2016 at 13:27 ----------

 

I guess from that £170/month figure, you can then compare it to the cost of owning and running a car yourself, including reclaiming business miles at 45p/mile for the first 10k.

If there's a potential payment in lieu you can also take that into account.

[Eater Sundae]

Unless the alternative is a payment instead, which it often is.

For example, company car, or £300/month company car allowance in lieu.

 

Yes, I had an option something like this when the company offered me a company car or cash. It suited me to carry on using my own, small, cheap(ish), old(ish) car than go with the company's larger, more expensive company car on which I'd have to pay tax.

 

In the OP's case, it's not clear whether there would be this option. Also, what does the poster do now? Do they have a better car already that they would need (or just want) to keep, or is this company car a step up from their current car (assuming they have a car at all). Is it a long term situation? Are they being offered the car just because it is there, or is it part of a bigger scenario and it will subsequently be replaced by a newer car. Do they expect to stay in this job for a long time? If they are selling an existing car when they take the company one, then they will need to buy another one when they stop having a company car. There are costs in selling one car and ultimately buying another which they may not have needed to do if they were just carrying on with their own car.

 

I think there are potentially a lot more issues than just tax. But tax is relevant, especially if you are charged on the brand new value, but only get a 6 year old car - I think it would make me think I was being charged over the odds for the privilege.