| Company Car - tax implications 09:09 - Apr 20 with 1453 views | Zx1988 |
TL;DR - am I missing something here?
I've been offered a new job, and the package gives me the option of a company car or a car allowance. I've done the maths and the decision seems a bit of a no-brainer if I've got it all right.
If I take the car allowance, I'd end up with base salary + £250 each month, but to go with a company car would cause me to lose £475 a month in BIK taxes.
It seems somewhat counter-intuitive, but I'm I understanding the whole situation correctly? |  |
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| Company Car - tax implications on 09:14 - Apr 20 with 1431 views | homer_123 |
Yes but you've got to offset the cost of running your own car vs the BIK taxes. Also, can you use the company car for personal use and what are the implications.
Having a company car isn't as beneficial as it used to be but it can still be very cost effective than running your own.
EDIT: remember the extra 250 is taxable. [Post edited 20 Apr 2022 9:14]
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| Company Car - tax implications on 09:29 - Apr 20 with 1378 views | hype313 |
| Company Car - tax implications on 09:14 - Apr 20 by homer_123 |
Yes but you've got to offset the cost of running your own car vs the BIK taxes. Also, can you use the company car for personal use and what are the implications.
Having a company car isn't as beneficial as it used to be but it can still be very cost effective than running your own.
EDIT: remember the extra 250 is taxable. [Post edited 20 Apr 2022 9:14]
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Also add in that when you get a company car you get a fuel card, and given when you do the allowance you get at best 45p per mile which was fine when fuel was around 1.05 ltr now, and going forward those fuel costs could end up negating the benefit. |  |
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| Company Car - tax implications on 09:32 - Apr 20 with 1366 views | SaleAway |
can you get an electric company car? BIK rate is low for electrics and some hybrids if I remember correctly | |
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| Company Car - tax implications on 10:05 - Apr 20 with 1296 views | ElephantintheRoom |
IF you take on the car allowance which is taxable by the way you take on depreciation, servicing etc. Unless you use that alliance to take on a leading arrangement - then you need to be aware of the penalties for invisible damage, excess mileage etc.
The biggest cost of running a car is depreciation. Your company car should still be a major benefit | |
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| Company Car - tax implications on 11:04 - Apr 20 with 1210 views | ChiefXL |
| Company Car - tax implications on 09:29 - Apr 20 by hype313 |
Also add in that when you get a company car you get a fuel card, and given when you do the allowance you get at best 45p per mile which was fine when fuel was around 1.05 ltr now, and going forward those fuel costs could end up negating the benefit. |
Not all company cars come with a fuel card |  | | |
| Company Car - tax implications on 12:32 - Apr 20 with 1085 views | mutters |
I have had this a number of times in my career. Each time I have come to the conclusion that financially I was better off taking the allowance. However, for me, I would have been traveling to clients sites on a very infrequent basis, and not ever a daily thing. (If I went away it would often be for the week or a few days).
As other posters have said, the wear and tear on the car, if you are doing lots of miles, will have an impact on your own personal car. Also what car are they offering? It is something that you would actually want to drive? |  |
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| Company Car - tax implications on 13:16 - Apr 20 with 1023 views | Ely_Blue |
As a company car driver I lose the tax by way of BIK, however I get a new car every 4 years, pay no service/repair bills, pay no insurance or road tax and can claim back all of the fuel that is for company business, I won’t even entertain taking the allowance |  |
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| Company Car - tax implications on 17:56 - Apr 20 with 856 views | Zx1988 |
Thanks folks, for confirming I've not got it wrong. The additional £250 a month is actually the impact of the allowance upon my salary once tax/NI/student loan is taken into account.
It just seems utterly stupid how the taxation works.
I've been offered a car at Audi A5/BMW 4 Series/Tesla Model 3 level, and a rudimentary search shows that the cost to the business would likely be in the region of £350-£450 a month.
Surely the taxation should be based upon how much my employer is paying to provide me with a vehicle, rather than the cost of purchasing a vehicle outright given that, theoretically, my employer could just give me the cash equivalent for me to lease said car myself?
The Tesla and the stupidly low BIK tax rate appeals, but on the flip side I don't like the internal styling as the lack of any real instrument panel makes it look more like a dodgem than a real car! | |
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| Company Car - tax implications on 18:12 - Apr 20 with 841 views | ArnoldMoorhen |
| Company Car - tax implications on 17:56 - Apr 20 by Zx1988 |
Thanks folks, for confirming I've not got it wrong. The additional £250 a month is actually the impact of the allowance upon my salary once tax/NI/student loan is taken into account.
It just seems utterly stupid how the taxation works.
I've been offered a car at Audi A5/BMW 4 Series/Tesla Model 3 level, and a rudimentary search shows that the cost to the business would likely be in the region of £350-£450 a month.
Surely the taxation should be based upon how much my employer is paying to provide me with a vehicle, rather than the cost of purchasing a vehicle outright given that, theoretically, my employer could just give me the cash equivalent for me to lease said car myself?
The Tesla and the stupidly low BIK tax rate appeals, but on the flip side I don't like the internal styling as the lack of any real instrument panel makes it look more like a dodgem than a real car! |
The tax implications are completely based around two factors:
The list price of the car (not the lease price, or the deal that is done)
and
The emissions of the car
Because it is a multiplier, the tiny % for ultra low emissions vehicles makes them by far the most attractive option when looking at the sums. That is deliberate. Electric cars are not (yet) feasible at the bottom of the market, so the Government has identified Company Cars as the easiest way to make them make sense in the mid-range plus market segment. And as lots of company cars will be driven for above average mileage each year that makes sense, too.
In my opinion you would be mad to look past an electric company car these days if the cost is at all an issue to you. There are electric Audi, BMW, Volvo, Lexus, DS etc etc options in the price range you talk about, if you don't like the Tesla styling. | | | |
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