Archive for Downsizer For an ethical approach to consumption
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Nick
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Company cars.I currently have a company car. It adds 9,000 to my tax P11D each year, so it costs me 3600, as I pay 40%. Work kpay everything for this car, so aside from the tax, it's free. This includes unlimited personal mileage.
I'm currently toying with the idea of opting out of the car policy, and they'll pay me an extra 400, or so, per month as salary. That would be taxed at 40%, so I'd get, net, 2880 more, plus I wouldn't pay the 3,600 in tax. I'd be 6480 better off annually, but I'd have to buy and run a car out of this.
They will contribute 40p per mile for the first 10,000 miles I do and 25p a mile after this. My petrol bill is currently less than 20p per mile. I do around 25,000 miles a year, so my cost is 5,000, and they'll pay me 7,750. This is an expense, so not subject to tax.
This will leave me 9,230 better off. I have to buy/rent/lease a car, insure, tax, fuel and service it, and factor depreciation. My thoughts are that if I go for a new car, it's going to crash in value (due to mileage), but a smaller, older car should leave me quids in.
Question is, have I missed anything glaring? Does anyone have any experience of this, and any advice, please?
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vegplot
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Sounds about right. Until recently we claimed business mileage from private vehicles as this was more cost effective. However, we recently bought a vehicle on company lease, which is different to a company car as it's our business.
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mochyn
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The old chap did this swap a few years ago. The only problem was the company insist that any car he drives on business is less than 6 years old.
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RichardW
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As you will be nearly £10k per year better off you could buy a new £15k car every 3 years & pocket the £15k left over. Even if the car is worth nothing (should be worth £3-5k min) at the end the running costs will be minimal over 3 years.
Justme
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Cathryn
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Depends on the smaller older car and how you cost in the comfort, safety, tardis like boot capacity...
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Rob R
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I am picturing the scene, a quiet summers day & Nick rocks up in an old three wheel van, back firing as he comes over the bridge... 
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Chez
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It sounds about right.
Is someone going to set one about how many one legged men it takes to fill a bath, now?
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Treacodactyl
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Re: Company cars. | Nick wrote: | | Question is, have I missed anything glaring? Does anyone have any experience of this, and any advice, please? |
Will it be far more hassle, for example would you need to keep accurate details of business mileage, fill out a tax return etc?
I also wonder if the 40p/m / 25p/m will keep up with fuel prices if they carry on rising to say £2/litre, that's the rates I used to get several years ago.
Depending on engine size the VED could be quite expensive and if you're using the car for moving stuff about for work would the insurance be quite high as well?
Even so, it still looks like you'll save a fair bit of money.
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Nick
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I have a Golf I can use, V plate, but low mileage. Tidy and cheap. I reckon I can use this for a year, to save enough for something bigger/newer. I'm helping write the policy to allow me to do this at work, so I have advised them that if the T&Cs are not acceptable, I'll go back into the scheme, so, whilst it must be suitable for carrying most of my stuff, age can't be stipulated.
I also have access to my wife's Freelander for when I must carry the very largest bits of kit.
I just wanted to check I hadn't missed some huge, daft tax thing, or whatever.
I guess I'll have to keep mileage records, but actually, my diary is that, pretty much. No tax return will need to be done, as it'll be expenses and PAYE, as I am now.
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Treacodactyl
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It might be worth a call to the Inland Revenue then, just to ensure you've not missed anything.
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Jonnyboy
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Are you sure about the 40ppm? I thought that was for people using their own cars so included depreciation etc, etc,etc.
You are getting a set amount every month that is designed to pay for these elements, so unless they have missed a bit of a hole you might need to be careful.
Or i could be completely wrong.
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Helen_A
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Have you got insurance quotes for the distances involved inc. business miles? If you are occasionally to use freelander you will need it on there as well, especially if you are carrying kit, *and* you'll need to be the first named on that policy (for the majority of insurers, there are a few where the second named on a policy are also covered for business miles, but they are rare) too. You'll probably find that most of the 400 post tax/NI will disapear into those insurances, especially if you have to have a car less than xx years old.
ATM the 25p a mile is less than the cost of fuel +insurance+roadtax+maintenance for most of the peeps that DP works with who are driving a lot due to having to visit bureaux etc. as they are having to drive vehicles less than 8 year old (I think!).
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Bebo
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We have the option of a car allowance (added to basic pay) or a company car. Everyone where I work goes for the cash for exactly the reasons you have set out Nick.
Will they still cover the petrol costs for personal use? They don't in our scheme. If you do a lot of personal mileage and you have to pay your own petrol costs you could be worse off (but I think you'd have to do an awful lot of personal mileage to do that).
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happytechie
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A guy I used to work with did this a while ago. He got a corsa on a private lease deal that included tax and servicing for a monthly fee and made a fair wedge of cash over the year. Watch out for an increase in insurance if you declare the company use (which you should) and max mileages on the lease agreements.
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Nick
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| Jonnyboy wrote: | Are you sure about the 40ppm? I thought that was for people using their own cars so included depreciation etc, etc,etc.
You are getting a set amount every month that is designed to pay for these elements, so unless they have missed a bit of a hole you might need to be careful.
Or i could be completely wrong. |
Yeah, I'm talking about getting my own car. 
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Jonnyboy
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| Nick wrote: |
Yeah, I'm talking about getting my own car. |
I know, but you are getting a car allowance to pay for it is my point.
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RichardW
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Some companies offer interest free / low interest loans to buy the car.
Justme
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Nick
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| Jonnyboy wrote: | | Nick wrote: |
Yeah, I'm talking about getting my own car. |
I know, but you are getting a car allowance to pay for it is my point. |
Not sure what it matters for tax purposes, but I'm getting a hike in salary, instead of the car allowance they'd normally spend, plus the 40/25ppm as expenses.
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Jonnyboy
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| Nick wrote: |
Not sure what it matters for tax purposes, but I'm getting a hike in salary, instead of the car allowance they'd normally spend, plus the 40/25ppm as expenses. |
If it's shown as a car allowance rather than a simple increased salary then you might have problems, I don't know. i do know that when these schemes were first set up the tax office were very quick to still treat it as a benefit in kind.
If it's a simple salary increase and not logged as anything else then you should be OK.
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RichardW
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I though benifits in kind were treated the same as wages any way?
Justme
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Nick
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They are, but if I'm getting it as a benefit in kind, might the 40ppm expenses be allowed, too?
Maybe I should ring the tax man. God, I hope he doesn't recognise my voice, I owe thousands....
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orangepippin
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Whilst you are about it, ask him when he will be increasing the 40ppm/25ppm allowance to reflect the current cost of petrol. Those bands were set years ago when petrol prices were far lower.
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Nick
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Aye, we've already asked several times. Apparently, it's 'under review'.
Tossers.
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