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Question for the company car drivers


Swarf

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Been invited to interview for a new job which includes a 'fully expensed company car'. Now, I'm no accountant but I know these things cost somehow so, in as plain/laymans/thick twat language as possible can anyone explain the financial implications of this?? 

Please ta.

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Just now, Swarf said:

Thanks, so it's subject to a lot of variables then.

It’s always complicated. As the other thread is concluding, there’s a greater argument than ever for electric, given the huge difference in BIK. 

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How much depends on value and emission tax rate - If you have a choice of vehicle then choose very carefully. Hybrids/Electric are the way forwards, Diesel or Full on Petrol will see you reamed like a prison newbie.

Simple example would be as follows.. This is based on my next change of car although doesnt include private fuel:

Mercedes GLAe Petrol Hybrid worth about £39K

BIK Tax Rate about 10%  If you are a 20% tax payer this means £39k x 10% = £3,900 @ 20% = £780 per year or roughly £65 per month additional tax.

Substitute for GLA 220 Diesel at around 32% BIK then £39k x 32% = £12,480 @ 20% = £2,496 per year or roughly £208 per month.

 

 

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Mr.Incredible

Jeez. Anyone else remember the good old days when you only paid tax on 35% of the list price of the car, reduced by two thirds as long as you did over 18,000 business miles? 
 

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Can you not ask for a car allowance instead and provide your own vehicle and save all the tax aggro?

 

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3 minutes ago, Herr V. said:

Can you not ask for a car allowance instead and provide your own vehicle and save all the tax aggro?

 

It's a sales job, looking at around 30-40k a year so doubtful it'd work out well.

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3 hours ago, millerich said:

It’s always complicated. As the other thread is concluding, there’s a greater argument than ever for electric, given the huge difference in BIK. 

Yeah, I think the mileage will bugger that idea though. Hybrid would be a goer though. 

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The main key is, are you working from home or an office? 

If its from home, every mile to a business appointment is a business mile. 

Every mile to your office is a private mile and if company pays for all your fuel, including private, you'll get reamed.

Opt to repay your private fuel usage. 

The car plus fuel benefit will be added on top of any salary, if that's floating around the £50k mark, you'll then breach the 40% tax band, either earn so much it doesn't matter or ensure your salary and benefits do not pass £50k.

In my opinion, go for the cheapest petrol and lowest co2 car, don't add accessories as this gets taxed on too. 

Unless you are flying all over the UK for business, get what I would term a 'skateboard' the cheapest thing on the list and save your pennies in tax for something you'd really like. 

I've got just over a year left on a diesel Arteon, about as expensive as you can get in our list in bik. 

I'm going for something like an Audi A1 or A3 Electron next time. 

Having the best car in the list is awesome choice, but the tax liabilities are a frigging joke these days, also cash option is available, have a look at that. 

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couchcommando

If you only use it for work ask them to fit a tracker and let the tax man know there’s zero personal use. Only really works if you have your own car though. The whole company car thing is bollox if you want to drive something nice for yourself out of work unless you don’t mind getting hammered in work. 
You sure you want to do 40k miles a year on the roads these days ?

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To be honest.. 'fully expensed' is very rare nowadays. Most mean you get a fuel card but then have to do a monthly mileage report which separates your business and personal miles and charges you for the personal fuel.

I have a Merc C220 sport and I cannot remember how much I pay but I have done 50k this year so need somewhere that is a decent place to be..my monthly personal diesel cost is around a tenner..so if your new job is genuinely fully expensed tell them to poke it unless you do mega personal miles

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I opted out of the fully expensed at beginning of lockdown, as I was doing 250 miles / week private miles going back and to my office. 

I opted out and paying back my private miles has left me about £120/month better off (£200 tax reduction / £80 private fuel paid back to company) 

Our company uses the TMC mileage capture system, I always use the app and book every business mile. 

Taxation is complicated for company cars if your not used to one, any new managers I take on who have come from a van, I always advise them to not take the most expensive car, as tempting as it is as most won't realise the tax implications of a company car, along with the fuel. 

If the company has a fleet manager, he/she should be able to advise. 

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I've had company cars on and off for the last 20 years, apart from the few years I was doing 40k miles a year, I've been better off opting out. It's a complicated minefield with everything having a tax implication.

My last company car was a hybrid, turns out it wasn't as tax efficient as you'd think. Combine that with it's thirst and a ridiculously small fuel tank (because batteries) I got very friendly with the guy in the Shell station down the road, became boring very quickly. 

As been said above, unless you do mega personal miles, fully expended is a tax magnet. 

 

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14 hours ago, Ray Von said:

The main key is, are you working from home or an office? 

If its from home, every mile to a business appointment is a business mile. 

Every mile to your office is a private mile and if company pays for all your fuel, including private, you'll get reamed.

Opt to repay your private fuel usage. 

The car plus fuel benefit will be added on top of any salary, if that's floating around the £50k mark, you'll then breach the 40% tax band, either earn so much it doesn't matter or ensure your salary and benefits do not pass £50k.

In my opinion, go for the cheapest petrol and lowest co2 car, don't add accessories as this gets taxed on too. 

Unless you are flying all over the UK for business, get what I would term a 'skateboard' the cheapest thing on the list and save your pennies in tax for something you'd really like. 

I've got just over a year left on a diesel Arteon, about as expensive as you can get in our list in bik. 

I'm going for something like an Audi A1 or A3 Electron next time. 

Having the best car in the list is awesome choice, but the tax liabilities are a frigging joke these days, also cash option is available, have a look at that. 

It's home based, covering a local patch but quite a few visits expected I think. Selling cutting tooling to engineering shops, a lot of whom seem to have kept going this last year. Quarterly sales meetings in Brum too (I live in East Devon).

13 hours ago, couchcommando said:

If you only use it for work ask them to fit a tracker and let the tax man know there’s zero personal use. Only really works if you have your own car though. The whole company car thing is bollox if you want to drive something nice for yourself out of work unless you don’t mind getting hammered in work. 
You sure you want to do 40k miles a year on the roads these days ?

I'm starting to wonder, haven't done much long distance in the last couple of years.

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1 hour ago, Swarf said:

Sounds like this might end up making me worse off, I'll have to do more digging. Thanks for all the responses chaps. 👍

A company car is going to incur tax regardless. You'd have to weigh up the benefits in having a car, usually less than 3 years old, with no surprise service bills and the benefits that go with that.

It isn't going to be an option with an external sales role and companies will have made a decision on opting out and will be unlikely to make exceptions based on individual cases. It's more likely to happen with a smaller employer.

I was a company car driver for just short of 30 years. I moved across to car allowance 2 years ago, but took a package that covered everything, all I have to do is stick diesel in it (and fucking adblue!), whether I do the same with my next car remains to be seen as there is a premium associated with the deal I struck.

We operate a large fleet and have considered giving drivers the option to opt out. Cars then become a big subject, what's he got, why has mine got 18" wheels and his are 19". You get the picture.

Employers usually distance themselves from tax implications, taking the stance that it's between the individual and the Inland Revenue. We give them a car and ask them to get on with it. If that sounds a bit off, it shouldn't do, it's about focussing on your primary objectives required by your role and not being distracted by incidentals.

When I've had a car (of my choice) that's cost me a few extra quid, I just made the conscious decision to earn more money!

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1 hour ago, GC6269 said:

Cars then become a big subject, what's he got, why has mine got 18" wheels and his are 19". You get the picture. 

This in buckets from grown men acting like kids, I thought it was someone having a laugh, but it was serious shit. People forget where they come from unfortunately. 

Let's not forget, despite the tax implications, it is a free new car that I for one could never afford at that specification, after all my Arteon is a £38,000 car,  I'd never spend that much on a car, plus the peace of mind that if anything goes boom, it will be sorted. 

If you're hacking from the far south west to Birmingham, you want peace of mind, I usually go to our branch on Walsall Road, Perry Barr a very entertaining district of Birmingham, and peace of mind from your car not breaking down is a big plus point 😂

First World problems and all that, it's nice to have a 'free' car with no worries, the days of spending every Sunday rolling around on the floor underneath a Mk 1 Escort are a fond but welcome distant memory. 

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2 hours ago, Swarf said:

It's home based, covering a local patch but quite a few visits expected I think. 

In that case opt out and pay your private mileage back, always fuel up on a Thursday to cover any local runs done at weekends and loose those miles by tagging an extra 3 or 4 miles on to a business journey in the week. 

If you fill up last thing on a Friday, you log mileage on that day, iyswim? 

Little wins and all that. 

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35 minutes ago, Ray Von said:

This in buckets from grown men acting like kids, I thought it was someone having a laugh, but it was serious shit. People forget where they come from unfortunately. 

Aye, that said my BMW has 22s.

So fuck 'em!

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fastfreddybikes
21 hours ago, Mr.Incredible said:

Jeez. Anyone else remember the good old days when you only paid tax on 35% of the list price of the car, reduced by two thirds as long as you did over 18,000 business miles? 
 

I used to druve to Italy 3 times a year just to get the this reduction..,.

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gregtrx

The new land rover defender is coming as a van I think. Should be comfy if not super reliable. 
 

tesla model 3 is the sensible choice, there's no fuel bik so who cares about the cost of superchargers on the rare occasions you'll use em. You get fuck all company car mileage back on electric anyway.

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