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New Job with Car

mrtootough Avatar
9y, 1m agoPosted 9 years, 1 month ago
Does anyone have a clue about the benefit of having a company car would be. I am negotiating a package which may or not include a VW Passat. I hear that the tax man stings you for this so I'm not sure if it is better to take the car or another £2K on my Salary.
I wouldn't be doing that many miles whilst in work - Maybe 50 per week. Don't know if this is important.

What else should I ask for if I choose the car ? Any help would be appreciated.

MrTT
mrtootough Avatar
9y, 1m agoPosted 9 years, 1 month ago
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#1
I have had company cars for the past 10 years and each year the tax man wants more and more. It's not a perk anymore it's a burden. My tax code is always in the negative because of the car and fuel card.

If your only doing 50miles a week then go for the money and not the car but ask for £3.5k not £2k.
#2
You could also work out the figures here.

http://www.hmrc.gov.uk/calcs/cars.htm
#3
stora
I have had company cars for the past 10 years and each year the tax man wants more and more. It's not a perk anymore it's a burden. My tax code is always in the negative because of the car and fuel card.

If your only doing 50miles a week then go for the money and not the car but ask for £3.5k not £2k.


Are you saying that the perk of having the car is equivilent to £3.5K ?

I don't think I would get this much as I have already asked for more. This is where the extra £2K figure comes from.

Thanks
2 Likes #4
Think it's about 2.8k but if you ask for 3.5k you give yourself room for negotiations. Would you be getting a fuel card too ?
#5
stora
Think it's about 2.8k but if you ask for 3.5k you give yourself room for negotiations. Would you be getting a fuel card too ?


From what I gather, there is a fuel tank at the works where it's possible to fill up for free. Is this a problem ?
1 Like #6
Hands up first my experience here is very limited but this is what I've found.

Recently applied for a job which had the option of company cars but they were moving away from them - when chatting with a friend who worked for the company and had a company car his view was exactly the same as stora because of the high amount of tax. They were being given the choice on renewal to take a new company car on or switch to their own one, I was quite surprised at the amount being paid out for the company car. Those choosing to go with their own car could then claim expenses on their mileage. My Dad is forever moaning about his so there's perhaps actually some grounds to it...

I realise that's not much use, stora clearly knows the system well.

John
1 Like #7
Your VW Passat will go on your P11D as a benefit.

This benefit is calculated by using the List Price for the car and the CO2 emissions.

If we look at a basic new Passat @ £15,522 OTR with 180 CO2 Emissions (23%) this will give you a benefit of £3,570 so:

@ 22% Tax Bracket = £785 net cost
@ 40% Tax Bracket = £1,428 net cost

You would have to check the particular model of the car though and bear in mind that older models usually have higher CO2 emissions so higher tax.
Most newer diesels have lower CO2 emissions but these attract a 3% surcharge on top of the CO2 emission chart.

So the simple question is can you run the same type of car for this cost?

Then if you don't take a company car and are doing 50 miles per week for business (not to travel to/from work) then you can claim this as an expense @ 0.40p per mile so £20 per week.
1 Like #8
I have had a company car for years - lucky enough to be driving a Mercedes C180K at the moment.

In monetary terms, in the form of tax, it can cost you anything from between £100-200+ per month (minimum!).

However - you have to look at all benefits. Petrol is much cheaper if you have a Petrol Card (and pay for your own miles!). Don't have to worry about insurance, where you park it, if you lock it (frequently I come back to my car and it is unlocked!!!) or if you have a crash or someone hits you!!!!

I opted out and went for a car allowance a few years back - and opted back in as soon as I can. You forget about things like maintenance (services aren't cheap!) wear and tear (my tyres cost overnearly £300 for 2!) and I had a bump that set me back £700.

I have had a chat with a lot of people, and if you ever look for a job / take a job without a car, then you are losing out on the best part of £5k!!!!!

Basically - you can have lots of care free motoring miles with a company car!!!!
1 Like #9
Its most important to be careful of the private fuel benefit. The rules are that if you get one litre of fuel for private miles the you incur the entire benefit charge for the entire year.

Assuming the figures given by pmcg above and a 1.8l engine the calculation is 14,400 X 22% = £3,168

On which the tax you pay is:

22% £697
40% £1267

So if private fuel only becomes beneficial if you pay more than that for all your private fuel. This will obviously depend a fair bit on how far the job is from home.

I've done these calculations for clients for many years. I've found that people will often keep the car even if its more expensive because of the conveiance factor.

However I've only once had a client paying 40% tax decide to keep the fuel benefit. He did almost no personnal mileage and drove a Porsche
#10
[SIZE=2]Guys, thanks for all the feedback.[/SIZE]
[SIZE=2]I will have to decide on Monday so this is a help[/SIZE][SIZE=2].[/SIZE]
[SIZE=2]Unfortunately, I don't fall into the 40% bracket, so for the example above, I assume I would pay an extra £697/year.[/SIZE]
[SIZE=2]If I took the extra £2K, then I would have to pay about £500 tax and NI[/SIZE]
[SIZE=2][/SIZE]
[SIZE=2]The works is 18 miles away from home and I would occasionally have to go to meetings etc, hence the extra 50 miles/week. If I get a fill of diesel from the works diesel tank, I assume I have to pay some sort of tax.[/SIZE]
[SIZE=2][/SIZE]
[SIZE=2]Rep left for all !!![/SIZE]
#11
mrtootough
[SIZE=2]Guys, thanks for all the feedback.[/SIZE]
[SIZE=2]I will have to decide on Monday so this is a help[/SIZE][SIZE=2].[/SIZE]
[SIZE=2]Unfortunately, I don't fall into the 40% bracket, so for the example above, I assume I would pay an extra £697/year.[/SIZE]
[SIZE=2]If I took the extra £2K, then I would have to pay about £500 tax and NI[/SIZE]
[SIZE=2][/SIZE]
[SIZE=2]The works is 18 miles away from home and I would occasionally have to go to meetings etc, hence the extra 50 miles/week. If I get a fill of diesel from the works diesel tank, I assume I have to pay some sort of tax.[/SIZE]
[SIZE=2][/SIZE]
[SIZE=2]Rep left for all !!![/SIZE]


Be careful, my calculation is only the fuel benefit, not for the car. And yes, if you get any deisel you would have to pay the full years benefit, so make sure your getting at least £700's worth!

Also when working out your tax band the car and car fuel allowances are added to your salary (along with any other benefits) so you may find yourself creeping into the 40% band.
#12
BTW - anyone would be crazy to actually pay the fuel benefit!!!

Always opt to pay for private mileage, and then just do what everyone else does and make sure your private mileage is around the 100-150 miles per month, meaning you have to pay your company back a flat rate (10-12p per mile!!!!!!)

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