Opting out from using company car?

26
Posted 8th Jan
Hi everyone, I’m after a bit of an advice as I have never done this before:
I basically have a company car and a fuel card. I very recently received a new contract from my employer with the option to opt out with a £5100 per annum (lunar pat) if I opt out, I will see £500 bet extra on my pay, while still keeping the fuel card with no tax as it is going to be used for business trips only with a tracker.
So I will have to buy my own car, and pay for my own insurance.
I am thinking to opt out as the maximum I will be paying for insurance is around £90 depending on the car, which leaves me with around £410 a month for the car, wear and tear etc....
anyone done this before? Is it worth opting out? Any watch outs?
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26 Comments
Wouldn't you be taxed on the £500 extra on your pay?
sparx198108/01/2020 15:58

Wouldn't you be taxed on the £500 extra on your pay?


£500 is the net extra from the opt out and from the car tax that I wouldn’t be paying anymore. I have taken all deductions into consideration
Self-funding insurance may be prohibitive if there is a combination of no attainable transferable no-claims discount and the business environment is classed as high risk by the insurers.
How many miles do you do? What company car do you have? Was it new when you got it and how long do you have to keep it currently?
not at all sure about this.
any way of finding out what liability the employer has if you had an accident both in the opting out and opting in schemes?
I must be missing something here? How on earth would you get insurance for £90? Baring in mind it would need to be declared as "Business Use" insurance?

It's certainly an 'interesting' offer so I don't blame you in investigating it.
I know of colleagues who have done this (without the fuel card).
Contact some leasing companies and see what you would be paying for a fully maintained car for the mileage you are doing. Then go from there. The only real gotcha is that you would now be resposible for making sure you had a car. If it broke down or was off the road for repairs it would be your responsibility to get from A to B, at the moment its your companies. Also if you leave the job you will have to buy yourself out of the leasing contract or carry on paying for the car.
You may also be able to claim some sort of tax relief on the mileage you do. It may be better to not have a fuel card and the company pay you per mile but you would have to check that out.
How many miles are you travelling?

£500 would be subject to your income tax. Are 20% earner or 40%?
Phsycronix08/01/2020 16:54

I must be missing something here? How on earth would you get insurance for …I must be missing something here? How on earth would you get insurance for £90? Baring in mind it would need to be declared as "Business Use" insurance?It's certainly an 'interesting' offer so I don't blame you in investigating it.


Phsy, is it maybe £90.00 per month the OP is saying for insurance? At first I read it as £90.00 and thought the same - yearly!!
toonsquirel08/01/2020 16:14

How many miles do you do? What company car do you have? Was it new when …How many miles do you do? What company car do you have? Was it new when you got it and how long do you have to keep it currently?


Miles are 30k a year (Business only) the car I have is VW Passat and I got it from new over 3 years ago, I now can return it and order another one or opt out
tardytortoise08/01/2020 16:49

not at all sure about this.any way of finding out what liability the …not at all sure about this.any way of finding out what liability the employer has if you had an accident both in the opting out and opting in schemes?


An accident with a company car cost me nothing (I’ve had 1 accident at fault) car sent for repair and offered a hire car.
Opting out, a claim will be against my own insurance
psychedelicrenegade08/01/2020 17:21

Phsy, is it maybe £90.00 per month the OP is saying for insurance? At …Phsy, is it maybe £90.00 per month the OP is saying for insurance? At first I read it as £90.00 and thought the same - yearly!!



I know some insurance can be cheap (mine for instance was £178 for the year) but £90 sounded very cheap! Hehe. Thinking you may well be correct, judging by a re-read and the reference to the £410 'left' per month. Just over a grand a year sounds closer but I don't know the OP's age, experience or car they might be basing this figure on?
Phsycronix08/01/2020 16:54

I must be missing something here? How on earth would you get insurance for …I must be missing something here? How on earth would you get insurance for £90? Baring in mind it would need to be declared as "Business Use" insurance?It's certainly an 'interesting' offer so I don't blame you in investigating it.


Sorry, didn’t make it clear, it’s max £90 a month, not for the year. I have another personal car where the insurance covers (commuting to and from places of work) and I correctly pay around £55 a month for an Audi A4
paul123edwards08/01/2020 16:59

I know of colleagues who have done this (without the fuel card).Contact …I know of colleagues who have done this (without the fuel card).Contact some leasing companies and see what you would be paying for a fully maintained car for the mileage you are doing. Then go from there. The only real gotcha is that you would now be resposible for making sure you had a car. If it broke down or was off the road for repairs it would be your responsibility to get from A to B, at the moment its your companies. Also if you leave the job you will have to buy yourself out of the leasing contract or carry on paying for the car.You may also be able to claim some sort of tax relief on the mileage you do. It may be better to not have a fuel card and the company pay you per mile but you would have to check that out.


I could go with buying a decent car straight out (used) and the idea I have in mind is to sell it and buy another one every 6 months to a year to retain some of its value, would that be better or the lease option is optimum?
sfndkks08/01/2020 17:30

Opting out, a claim will be against my own insurance


Need to make sure the insurer offers a courtesy car for 'business use' then, in the event you are without your car. How about when the car needs servicing? MOT or repair etc? Would you have to hire a car to cover - as again, the garage doing the work 'may' not cover for business use if 'borrowing' a courtesy car.
Cisco06060608/01/2020 17:09

How many miles are you travelling?£500 would be subject to your income …How many miles are you travelling?£500 would be subject to your income tax. Are 20% earner or 40%?


Tax is at 20%.
Originally the extra bit would be £600, but with the tax the net that will hit my current account is £500
sfndkks08/01/2020 17:32

Sorry, didn’t make it clear, it’s max £90 a month, not for the year. I have …Sorry, didn’t make it clear, it’s max £90 a month, not for the year. I have another personal car where the insurance covers (commuting to and from places of work) and I correctly pay around £55 a month for an Audi A4



It's not your fault, my friend. I've been on here; on & off; for most of the day and my brain is about as sharp as a chipolata sausage now!

May I ask why you wouldn't use your A4 - or is that spoken for by a spouse/partner?
Phsycronix08/01/2020 17:35

Need to make sure the insurer offers a courtesy car for 'business use' …Need to make sure the insurer offers a courtesy car for 'business use' then, in the event you are without your car. How about when the car needs servicing? MOT or repair etc? Would you have to hire a car to cover - as again, the garage doing the work 'may' not cover for business use if 'borrowing' a courtesy car.


I was thinking about this too, but hoping the car passes servicing and MOT first time! Lol I will probably get them done in a weekend when I’m off just in case, if it drags longer then call in sick
Phsycronix08/01/2020 17:38

It's not your fault, my friend. I've been on here; on & off; for most of the …It's not your fault, my friend. I've been on here; on & off; for most of the day and my brain is about as sharp as a chipolata sausage now! May I ask why you wouldn't use your A4 - or is that spoken for by a spouse/partner?


Sounds like you’ve been there... the wife is aiming her scope towards the A4, soon it will be hers as she has finally passed her driving test
Edited by: "sfndkks" 8th Jan
sfndkks08/01/2020 17:41

I was thinking about this too, but hoping the car passes servicing and MOT …I was thinking about this too, but hoping the car passes servicing and MOT first time! Lol I will probably get them done in a weekend when I’m off just in case, if it drags longer then call in sick



Well, that's one way of doing it I guess. I cross everything and pray they'll pass but that doesn't always work!

You really do need to plan for the unexpected.
sfndkks08/01/2020 17:43

Sounds like you’ve been there... the wife is aiming her scope towards t …Sounds like you’ve been there... the wife is aiming her scope towards the A4, soon it will be hers as she has finally passed her driving test



That's great, sfndkks. Tell her congrats.

"Freedommmmmm"
39625619-Bmg2Q.jpg
Right. Now drive me to the nearest drinking establishment, woman!
sfndkks08/01/2020 17:28

Miles are 30k a year (Business only) the car I have is VW Passat and I …Miles are 30k a year (Business only) the car I have is VW Passat and I got it from new over 3 years ago, I now can return it and order another one or opt out


I’d say that lease will be pointless doing that many miles will cost a small fortune. You’d be best buying a 2/3 year old car and keeping it a year or maybe 2. Trouble is for the first few cars you’ll either have to get cheaper car or older or pay more. But with £400 a month you’ll get a good car still and as you slowly build up some equity you’ll get better cars.
Since you do 30k though your company car is pretty good value even at 15k over 3 years your Passat will of lost well over £15k value and you get a brand new car every 3 years that you don’t have to worry about a single thing.
With you doing 30k it’s very likely you’ll have service costs up to £1000 cos most belts need doing now every 40/50k.
sfndkks08/01/2020 17:35

I could go with buying a decent car straight out (used) and the idea I …I could go with buying a decent car straight out (used) and the idea I have in mind is to sell it and buy another one every 6 months to a year to retain some of its value, would that be better or the lease option is optimum?


Buying a car is good as long as you dont mind having the money tied up in a depreciating assett.

When you change the car you will have to make sure you have the replacement in place for when the old one is sold. I would not bother with changing every 6 months, the insurance will probably hit you at change time.

I have heard of companies going to auction to buy 6 month old cars (usually ex rental) rather than leasing. Maybe that is an option?
Phsycronix08/01/2020 16:54

I must be missing something here? How on earth would you get insurance for …I must be missing something here? How on earth would you get insurance for £90? Baring in mind it would need to be declared as "Business Use" insurance?It's certainly an 'interesting' offer so I don't blame you in investigating it.


£90 per month I'm sure he means as he is referring to how much he would save per month
sfndkks08/01/2020 17:36

Tax is at 20%. Originally the extra bit would be £600, but with the tax …Tax is at 20%. Originally the extra bit would be £600, but with the tax the net that will hit my current account is £500


Are you sure?
As a straight up Basic Rate Tax Payer you will pay 20% Income Tax and 11% NI. That’s 31% off your £600 leaving £414 a month extra.
Of course this will vary depending on what you actually earn, not asking you to share here.
There is then your existing Tax code that would improve as you wouldn’t be paying Tax based on having a company car.
You also need to consider. If any of this takes you into the 40% tax bracket. NI roughly will change to 2% but tax will be 40%.
Then as you near £50k a year, if you go over with pay rises and have kids. You will start to get penalised for the family allowance benefit.

Please consider this carefully! There is more to the straight forward maths than you think. 30k a year driving is at least 2 services a year, possibly 2 or more tyres a year, etc. While ~£500 to spend on a car sounds great. Budget wise you should probably only spend about 3/5ths of that to allow for maintenance and insurance.
sfndkks08/01/2020 17:43

Sounds like you’ve been there... the wife is aiming her scope towards t …Sounds like you’ve been there... the wife is aiming her scope towards the A4, soon it will be hers as she has finally passed her driving test


Would you company have any restriction on the age of car or mileage of car?

Audi A4 is a big car, I would have though it would be too big for a new driver and the insurance would be expensive as well...
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