[Ali Shiralian]

Originally Posted by jusdorange

A few of you here have the f30 on a company car scheme

How exactly does it work? Is it part of the job? Or a perk ? Or in lieu of a higher salary?

I looked it up but got confused

I own my own company, so I use it to go to work and also take clients to entertain and so on... So 100% write off

[Chris Peacock]

Originally Posted by 335i nthehouse

It depends on engine and car value. I'll set out my eg:

Co car: Nissan qashqai 1.5dci
Given as part of salary, based on 159 co2 value and 25k list price it cost me about 4500 off my tax code (this is the BIK) Therefore it cost me bout £200 per month in real cash as I am a higher rate payer. If I was in lower tax bracket, Id pay half that.

This meant £200 per month was going out of my post tax earnings to fund a car that bored me shitless. The more expensive and higher co2 your car is - the more this BIK figure works out at

Shows how clean the BMW engines are as we are paying the same where as my car was £34.5k P11D value hence why the fleet drivers love the German cars.

[....,,,,..,,..]

Originally Posted by Chris Peacock

Shows how clean the BMW engines are as we are paying the same where as my car was £34.5k P11D value hence why the fleet drivers love the German cars.

It is quite amazing just how low a band the average BMW sits.

How many are on Opt Out?

If I had of went the Company Car route, my options were kind of limited to like of Lexus, jaguar or discovery's.

So preferred negotiating an Opt out package.

Having never had a company car as such, it does make a major difference to things, however it can be a double edged sword for some people.

These days you pretty much need a car and if work provides one (no matter the route) it is a major incentive.

28 years of lucky dip from MT pool of cars is a bit like the last hour in a night club, you might hit lucky or you get the nightmare.

[Mr NSB]

Originally Posted by jusdorange

I'm confused

How much is it costing you in lost earnings / tax ?

Read mine and Chris Peacock's earlier posts, my car and Chris's car are costing us £200 per month or £2400 per year.

[jaffab]

A couple of things to add - when you do a company lease (either through your employer or your Ltd Company if self employed) then the lease costs per month are typically lower because there is less risk (of the company not paying) and the VAT element is written off (the company pays the VAT, but it is offset against their own VAT bill).

With a personal lease or PCP, the lease costs are higher (more risk) and will have VAT added. So a F32 may cost £500 personal lease, but will be quoted at a company rate of between £250 to £330 depending on size of fleet (the more cars, the more the discount).

But, a company lease means that it has to go on the books in terms of P11D, personal tax etc and the company also has to pay more NI contributions for the car as its a perk therefore part of your salary. With a personal lease, there is no P11D, no extra Ni payments, but higher monthly cost - so its swings and roundabouts.

Of course, if you have your own LTD company, its just easier to personal PCP lease it, lift the monthlys as a dividend, and just eat the VAT charge which cannot be written off as its not going through the company.

The maths are awful complex, which is why there are personal vs company calculators all over the web, such as here...

http://www.lookerscontracthire.co.uk/tax-calculator

[gtsussex]

Originally Posted by jaffab

A couple of things to add - when you do a company lease (either through your employer or your Ltd Company if self employed) then the lease costs per month are typically lower because there is less risk (of the company not paying) and the VAT element is written off (the company pays the VAT, but it is offset against their own VAT bill).

With a personal lease or PCP, the lease costs are higher (more risk) and will have VAT added. So a F32 may cost £500 personal lease, but will be quoted at a company rate of between £250 to £330 depending on size of fleet (the more cars, the more the discount).

But, a company lease means that it has to go on the books in terms of P11D, personal tax etc and the company also has to pay more NI contributions for the car as its a perk therefore part of your salary. With a personal lease, there is no P11D, no extra Ni payments, but higher monthly cost - so its swings and roundabouts.

Of course, if you have your own LTD company, its just easier to personal PCP lease it, lift the monthlys as a dividend, and just eat the VAT charge which cannot be written off as its not going through the company.

The maths are awful complex, which is why there are personal vs company calculators all over the web, such as here...

http://www.lookerscontracthire.co.uk/tax-calculator

It's bloody complicated when it's your own LTD company. I've got one car that's personal (Disco because car tax just daft) and BMW's company car (as BIK quite low). Mini's company office pull car. Companies paying for fuel can claim back the VAT whereas individuals cannot (when claiming on expenses) - the amount we spend on fuel a year, that makes a big difference. Throw in costs of ancillaries being covered as well (and VATable) and for me, it made sense to do on BMW.

As you say, it's not a 5 minute calculation and is very much dependant on how many miles you're doing.

[jaffab]

Originally Posted by gtsussex

Companies paying for fuel can claim back the VAT whereas individuals cannot (when claiming on expenses) - the amount we spend on fuel a year, that makes a big difference. Throw in costs of ancillaries being covered as well (and VATable) and for me, it made sense to do on BMW.

As you say, it's not a 5 minute calculation and is very much dependant on how many miles you're doing.

Another reason for self employed to stay well clear of a car through your company. The way that HMRC are treating small companies at the moment (compared to the kid-gloves to multi nationals that cant be arsed to pay any tax), its well worth staying away from the fuel conversation. Who pays for the fuel, was the fuel completely and entirely for company business, prove it, double prove it, we dont believe you, etc. Far simplier to fuel it personally, then claim the 45p per mile.

[jusdorange]

Originally Posted by Mr NSB

Read mine and Chris Peacock's earlier posts, my car and Chris's car are costing us £200 per month or £2400 per year.

Let me rephrase

Where is the rest going? A 335 isn't 200 a month, even a 320 isn't

Does the company pay it.? Are you losing income? Gov scheme?

[jaffab]

Originally Posted by jusdorange

Let me rephrase

Where is the rest going? A 335 isn't 200 a month, even a 320 isn't

Does the company pay it.? Are you losing income? Gov scheme?

Doing some very basic maths - what he means is that the £200 is the tax payment he is making per month from his salary in terms of extra tax for the BIK for the car (and I assume a small contibution to perks or fuel). So the company will be paying £300-£400 a month for the actual car lease, and he is also paying £200 a month in tax/additions.

At least, that is what my calculator is telling me (but I could be wrong).

[gtsussex]

Originally Posted by jaffab

Another reason for self employed to stay well clear of a car through your company. The way that HMRC are treating small companies at the moment (compared to the kid-gloves to multi nationals that cant be arsed to pay any tax), its well worth staying away from the fuel conversation. Who pays for the fuel, was the fuel completely and entirely for company business, prove it, double prove it, we dont believe you, etc. Far simplier to fuel it personally, then claim the 45p per mile.

Ah, I pay fuel benefit as it would cost me more than the £80 a month charge to actually take the time to document

I whole heartedly agreement with your sentiments re HMRC and small companies - ridiculous the amount of time we spend documenting everything to ensure we're all above board whilst big companies get away with murder

[johno]

Originally Posted by jusdorange

Let me rephrase

Where is the rest going? A 335 isn't 200 a month, even a 320 isn't

Does the company pay it.? Are you losing income? Gov scheme?

The company pays the whole cost of the car.
The 200/month is the tax he is paying on the benefit of getting a company car.
He is effectively exchanging salary for a car.

In the olden days there was hardly any tax payable on company cars, which made them a very popular perk. Nowadays the benefit is harder to quantify because it is more realistically taxed. But people like having new cars, so many companies still provide them. Mine doesn't, not to anyone(almost all of our customer visits involve a plane ride). But (in theory at least) I get paid more instead.

[oop north]

Hmm - I read the first post of this thread a couple of days ago and got confused myself - even though I am an accountant with my own company, and I do loss of earnings calculations for clients (clinical negligence / personal injury) including company cars (and also vehicles through the business of self-employed people... and I have spent many an hour trying to work out whether it is worth putting a car through my company. For me, with about 6000 business (claimed from my company at 45p per mile) and 8000 private miles a year I would have to have a car I don't want (e.g., Mitsubishi Outlander PHEV) to make it properly worthwhile. A 330d would be the nearest interesting possibility but doesn't quite work out worthwhile - could only be worthwhile if adding things like winter wheels / tyres at a later date so getting the VAT back on them but not paying benefit in kind charge on them

Some of the things said here are very confusing but I am not sure I have the energy to write a comprehensive answers it is all a very complex situation - for someone such as myself who has a company, it requires consideration of NIC, income tax, VAT and corporation tax

Anyhoo, some comments that might help clarify things:

1. some of the observations on here about cost to an individual are just the tax they pay on the benefit in kind (as noted above), ignoring any cash payments for employees opting out. So a £200 per month "cost" must be tax only

2. some employers have schemes where employees can either have a company car or do without and get no cash contribution from the employer for opting out (which is where the tax only cost is relevant), others have schemes where individuals can choose to opt out (there, A the lost salary net of tax and NIC needs to be combined with the tax on the company car and compared with B the cost of running a car privately, both sets of figures taking account of any payments by the employer for business miles traveled) and there are other schemes set up not to be company cars though the employer makes arrangements with lease companies on behalf of employees (I think AstraZeneca does this)

3. One of my former employers paid £420 per month car allowance or I could have a car (almost entirely free choice) with a lease cost before VAT of £400 per month. The mileage rates were fuel only

4. On a lease cost, a VAT-registered business can only claim back half the VAT on the lease cost but all the VAT back on repairs, servicing, tyres

5. I am surprised at the people having private/all fuel paid by the employer / their own business - the HMRC rates are such that you have to be doing a massive private mileage for it to be worthwhile (though it depends on the car, the figures I have worked out are generally 25000 miles per annum). Anyone doing this through their own business should check to make sure they are not wasting money

6. The VAT reclaim on fuel provided by the company is subject to an adjustment for private use

7. Get a car through your business with CO2 over 130g and you lose 10% of the lease cost as a disallowance on corporation tax. If buying outright, the tax-deductible depreciation for anything over 95g is poor, over 130 it's horrible.

8. Get a car on a cheap lease through your company and you are in danger of spending less on it than you are being taxed on as a benefit in kind - e.g., I spotted the BMW business partnership offer on 330d sport with bus nav at I think 339 + VAT for 10k miles pa. Was tempted until I saw that the income tax payable on the benefit in kind was somewhere approaching £300 per month! At a very simplistic level, you have to make sure that the expense deduction in the company's tax comp is more than you are paying income tax on as benefit in kind

9. If you don't have a car through the business, you can extract 45p per mile tax free for the first 10,000 business miles a year and 25p thereafter (includes fuel and all running costs / depreciation) - you should always factor this in to any comparison. If your employer only pays you say 15p per mile, then you can claim tax relief on the excess - so up to 10k business miles you could get back as higher rate taxpayer tax relief of up to £1,200 pa (10,000 x (45 - 15) x 40%), with reduced benefit thereafter

10. My conclusion is that it isn't worth the bother of sticking a car through the business - at least not for me. I would have to start an insurance policy through the company, for example and stop my personal insurance policy, and I just cannot be bothered!

Hope that is helpful - if anyone has specific questions I will try to answer them

[jaffab]

Originally Posted by oop north

4. On a lease cost, a VAT-registered business can only claim back half the VAT on the lease cost but all the VAT back on repairs, servicing, tyres

Oh yes, forgot about the half reclaim. Its cos I dont do it for my company. I did do my calc at 50% when I was doing my own maths - PCP vs company.

Originally Posted by oop north

9. If you don't have a car through the business, you can extract 45p per mile tax free for the first 10,000 business miles a year and 25p thereafter (includes fuel and all running costs / depreciation) - you should always factor this in to any comparison. If your employer only pays you say 15p per mile, then you can claim tax relief on the excess - so up to 10k business miles you could get back as higher rate taxpayer tax relief of up to £1,200 pa (10,000 x (45 - 15) x 40%), with reduced benefit thereafter

And yes - different bands. Lucky for me - I am my own boss, and very generous on the milage payments at full whack. So whenb I drive to a customers site (sometimes real, sometimes made up for milage to get some cash from expenses - shhhhhhh), I charge the customer 45p, I claim 45p back, so the cost of travel goes my customers account into my poocket - ker-ching.

[jusdorange]

I have a degree in astrophysics from Cambridge

Still lost lol

I think I need to research more