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I was more querying on cost, which is a better deal?
my thinking is option 1) costs per year:
7K allowance = +4.2k (after 40% tax)
but I have to pay maintenance, tyres etc, lets say -£500 a year
and personal fuel = 25,000 miles = approx -£3.6k
but I can claim business fuel so lets say 5,000 business mileage @0.45p/mile = £2250 - (£700 actual cost) = +£1.5k
but depriation is going to be something like £-500 a year
TOTAL = +1.1K total BUT obviously assumes I'm driving in an old car that might go BANG
OR option 2) new company car
Car tax Bik = -2.5K approx (using a bmw 1 series as a benchmark)
Fuel tax Bik = -2.2k approx
= -4.7K BUT get to drive around in a spangly new car that is unlikely to go BANG and if it does, its not my problem.
Is this calc correct? or am I forgetting something here?
Edited by henryjames on 15/11/2015 at 11:59
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Running your own car, you're forgetting VED insurance (business use) MOT tests in those figures, depreciation will be higher as will your maintenance costs due to the increased mileage, ie one set of tyres a year unless its a small car on sensible sizes will be around the £300/400 mark alone.
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good point, so strating with +1.1k from before
- MOT (-£50)
- increased depreciation (-£250) (Car is only worth £4500 now)
- extra tyres -£300
TOTAL = +£500 for cash VS. -£4700 company car
so paying £5000 a year for a new car?
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You actual business fuel used would be about 15p mile so at 45p mile you will gain 30p mile - although there are mileage limits before the rate drops and you will be taxed - This gives you an "income" of 4500. You add this to your allowance of 4200 after tax gives you 9700/year. However you then need to take off your own private fuel which is abut 2k (back of fag packet calcs). You can buy or lease a very nice car for £7700 year
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Question really is do you want a new car, all expenses paid BUT pay Tax on all the benefits.
OR
Run a lesser car of your own and make some cash out of the allowance & the mileage?
When I worked I had both - best ever was to buy a modest car and run it for ever.
Last car was bought for brand new, £10.5K down from £15K, as it was the outgoing model. I also ran a weekend car for myself.
Ran the Honda for 93K and employer bought the car 2 x over after taking out petrol, tyres, servicing etc etc. Repairs were next to zero excluding servicing.
Only downside was it was rear ended when it was 2 weeks old which was hard - new car bashed!
Then the 3rd party insurer, Aviva, took 2 years to settle on the eve of court date! Long story with a MB Garage loan car which the driver said "own insurance" amd did not phone their insurer to get cover.
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yep, it does seem the most 'value' route is to buy a reliable, efficient, cheap car and just drive it into the ground, and make as much cash as you can in driving up large business mileages, and taking the cash allowance
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Question really is do you want a new car, all expenses paid BUT pay Tax on all the benefits.
OR
Run a lesser car of your own and make some cash out of the allowance & the mileage?
When I worked I had both - best ever was to buy a modest car and run it for ever.
Last car was bought for brand new, £10.5K down from £15K, as it was the outgoing model. I also ran a weekend car for myself.
Ran the Honda for 93K and employer bought the car 2 x over after taking out petrol, tyres, servicing etc etc. Repairs were next to zero excluding servicing.
Only downside was it was rear ended when it was 2 weeks old which was hard - new car bashed!
Then the 3rd party insurer, Aviva, took 2 years to settle on the eve of court date! Long story with a MB Garage loan car which the driver said "own insurance" amd did not phone their insurer to get cover.
This is what I tend to do, purchase an end of model car new or nearly new and ignore depreciation by writing the car off after so many years (financially that is)
Else where in the thread £500/ year depreciation was mentioned - not a chance on next car especially when doing 30k year - I have found whatever you buy with high mileage no one wants it after 100kmiles!!.
I don't have the option of a company car and have a horrible 64 mile round trip commute - I try to spend about £10k and keep for many years doing about 15k miles/year (I keep my mileage down with a lift share). Before this I used to buy mid term used cars at about 4-5 years - usually ended in tears.
Recent cars:-
2001 (Y)Octavia 1.4 16v petrol - bought new for £9k- ran until about 100k miles - still in use for local trips by MRS BJ - now 120k miles - has been bullet proof
2003 (53) Superb 1.9 pd 100 diesel- bought 18 months old for just over £8k- ran until recently(June/15) until about 170kmiles - sold to a friend and it's still going strong
2014 (14)Superb 1.4 tsi petrol- bought 14 months old for just over £10k - we shall see
Even though I do it reasonably cheaply doing this sort of mileage is expensive- If I had the option (which I don't)of a company car with a low CO2 tax band I'd go for that for the lack of hassle. At your high mileage bit of a no-brainer. With your mileage your likely to encounter some expensive repairs in time.
PS be careful re tyres - price them up for whatever car and research how long they may last. I've targetted my 1.4 Superb S as it has 205/55 R 16 that are a common cheap size and will do 30k miles + . On a higher model of the same car tyres are substantially more and do half the mileage! If you pick a car that only does 15k miles out of a set of tyres and they cost £200 each - thats a cost of £800 TWICE a year!
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good point on tyres, currently I have 18" run flats, which cost £760 a set
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good point on tyres, currently I have 18" run flats, which cost £760 a set
They shouldn't, have a butchers on Tyreleader, remarkable how the price has dropped, 17" Conti etc for around £80 each for my sons Beemer, other good makes (not widowmakers) about £70.
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Does that not assume ALOT of business mileage,
I estimate to do at least 26,000 private mileage (I live 60 miles from work,
so most of this in unclaimable commuting)
and approx 5,000 business miles
so actually 5,000 business miles = @ 30p = 1,500 income,
so £4,200 + 1,500 = £5,700 available to lease?
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Does that not assume ALOT of business mileage,
I estimate to do at least 26,000 private mileage (I live 60 miles from work,
so most of this in unclaimable commuting)
and approx 5,000 business miles
so actually 5,000 business miles = @ 30p = 1,500 income,
so £4,200 + 1,500 = £5,700 available to lease?
It does assume ALOT of business mileage. You said 50/50 business/personal at the start of the thread.
If a lot more personal mileage then you would have other costs (not least fuel) - in which case sounds like you would get benefit out of a company car if personal mileage/fuel paid for . Any Hybrids on your company car list?
Edited by Big John on 15/11/2015 at 16:36
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possibly, I'll look into this, I guess that would mean a very low tax band
they quote any bmw/audi/merc (within reason),
I'm going to be doing 26,000 private mileage (long commute) and approx 5,000 business miles, so its looking like compnay car is the way to go here
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As mentioned above, ALL costs for running the company car (including your insurance) should be covered.
So look for a car that emits below 99g/km as that gives you a big saving on BIK tax. The other thing is, it might be worth considering a hybrid for your use as they are very tax-efficient - and it's possible (not confirmed) that the company car tax on diesels may change over the coming years.
Toyota has a range, there's the VW Golf GTE, and Mercedes do hybrids across the C-class range.
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If there is ever a case for taking the company car this is it...
BMW i8 would be nice! But more sensibly a plug in hybrid especially if you can charge it at work.
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hmmm, it seems the options are pretty close
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Right finally done the sums:
Company car :
Tax on car £2200
Tax on Fuel £1800
= £-4000 a Year
---------- VS ---------
Personal Car
+£4.2k allowance
-£4.2k spent on a car per year on Hire Purchase (£350/month)
-£50 MOT
-£200 Car Tax
-£250 Insurance
-£740 Tyres
-£500 General Maintenance
-£2700 Personal fuel (20K miles @ 37mpg)
-£670 Work fuel (£5k miles) Cost BUT Can Clain back @ 0.45p
+£2250 work fuel claim back
= Grand Total of -£2860,
Meaning I'm better off going with Car allowance to a tune of £1140
AND assuming I pay off the car in say 4 years, I'll still have a car worth something (i.e. £15k bought 2nd hand, sell 3/4 years later at approx £6k)
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Has your personal fuel shrunk back to 20k - thought it was 26k?
Forget selling 3/4 years later for 6k you alone will have put 90k - 120k miles on it, depends on the car - don't forget when buying a used car for £15k you have probably given the dealer £3k profit which you won't get back
With that sort of mileage you might end up with some potential expensive repairs even if still under warranty (Clutches, DMF and DPF not usually covered ) . To get the best reliability for your commute, if buying yourself, look at what the taxi drivers are using!
If your job circumstances change you'll be stuck with an expensive Hire Purchase agreement
HOWEVER - company car tax is a black art which changes every year, you would need to find the right car which has reasonable tax costs over the life of it's lease - costs dramatically vary
I think you could make the company car costs fairly close to the allowance especially considering your personal mileage, in addition to your commute do you use your car for other long journeys
Even if company car costs are slightly more could be worth it for the lack of hassle
Edited by Big John on 15/11/2015 at 21:47
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Good point, on a closer look you're right (26k personal)
so its -3.5K Cash Vs -4K Company approx,
and like you say is it worth saving £500 for the hassle of sorting things yourself and hoping I don't run into any massive failures, plus of course, theres the bonus of getting a nice new shiny car (every 2/3 years a new one too!)
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These figures would make sense only if you were doing a much lower mileage. £500 a year will barely cover routine servicing, but your second-hand car will need repairs and replacements as the miles mount up.
Also, finance isn't the only thing to consider. Doing that mileage you need reliability and also enjoyment. I agree with the others - overwhelming case for a company car.
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yep, think you're right on second thoughts,
I suppose I've just never been a fan of not owning something I guess!
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If you buy on HP or PCP, you don't own it anyway until you've paid the final instalment!
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No brainer. I ran my own car for years on the HMRC mileage allowance and always came out well on top. BTW the fuel card for all mileage is all well and good, except that HMRC will count private mileage as BIK and tax you on it unless you repay your company for the fuel.
Buy a good low mileage second hand mile muncher aka Mondeo or similar and buy an extended warranty.
Tax, insurance with business cover, annual service, VED, fuel and some aside for tyres and repairs. You are still ahead financially.
Plus you keep your full personal allowance without BIK worries and have all the choice about when to change etc etc. Personally I would run the car until it drops because it is a mileage cash cow and will owe you nothing after a few years.
Cheers Concrete
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I thought you paid a fixed benefit in kind depending on the CO2 of the car making it not worthwhile for LOW mileage private users. However the OP is planning doing 25,000 miles a year on private use but only 5000 business miles.
Or has it changed again, I'm out of the company car loop now.
comcar.co.uk/newcar/companycar/taxcalc/
comcar.co.uk/fuel/benefit/
Edited by Big John on 18/11/2015 at 22:11
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I thought you paid a fixed benefit in kind depending on the CO2 of the car making it not worthwhile for LOW mileage private users. However the OP is planning doing 25,000 miles a year on private use but only 5000 business miles.
Or has it changed again, I'm out of the company car loop now.
comcar.co.uk/newcar/companycar/taxcalc/
comcar.co.uk/fuel/benefit/
Hello John, the BIK is dependant upon the CO2 output rating of the vehicle of your choice. This only applies to company cars for personal tax. Private cars used for business mileage are unaffected. Extra tax for private cars is collected via the VED for higher rated CO2 output. If the OP is only doing 5k business miles per annum then he can claim £2250 tax free towards the upkeep of his car. Doesn't seem much but at least he keeps his full personal tax allowance and gets about £44 per week tax free. I must admit it worked out for me because I drove about 26k per annum for business. The economy of scale. Cheers Concrete
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Further up the post I did suggest running your own car but then the OP moved the goal posts declaring that private mileage would be 26,000 miles a year - that's an awful lot of fuel(circa £3.5k) and up-keep/depreciation(£lots). You can't do this sort of mileage reliably with a banger.
You would need to choose the right company car though because of the BIK/CO2. Hybrids etc were mentioned further up the post (or in the seperate nearly identical thread the OP posted!)
Normally I would agree though.
I buy a new/nearly new car that's at the end of a model type :-
1)Usually much much cheaper (I've just bought a nearly new-ish 14 month old Superb II tsi for £10k) - timing is all here
2)At the end of a model - any gremlins usually sorted
I then do a highish private mileage (long commute for 25+ years and european travel - but not as high as OP) and then effectively throw the car away.
I bought my last 2003 Superb I pd at 18 months old for just over 8k and recently sold after 10 years use and 170k milesIt was still on it's original battery, exhaust and clutch (and it still is!)
Capital costs £800 / year
Where I work, driving you own car for business mileage is now discouraged and we have to justify why we can't use public transport for a particular journey
Edited by Big John on 20/11/2015 at 19:35
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