Fingers crossed I will be offered a job this week that comes with a fully expensed company car. Always having had to pay my own way on these things, I am unsure as to the penalties that this new 'perk' will bring to my pocket.
Will I be taxed to the point of pain, or be able to put all fuel on the company card without worrying?
Also on another front, I will be sorry to have to say goodbye to my Citroen ZX XUTD. It is the best motoring decision I ever made. All 143k miles of it!
Any comments greatly accepted on either disposing of the ZX, or the pitfalls of the 'perk'.
Regards
Simon
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See the FAQ answer about this. You will have to get hold of the car's CO2 in grams per km and its list price before VED and registration tax, then work out your Benefit in Kind tax position from that.
HJ
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Simon,
Sorry but the ZX isn't the dealers favourite and that mileage has made any sale much more difficult.
Be very very realistic at/below the auction price and try to find a friend/relative/contact who may appreciate a car they know at a rock bottom price. Then at least there is some satisfaction in knowing you've helped out someone with a good deal.
How old is it I wonder?
David
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David,
The car is a 1993 K Aura, which I bought with full Citoen Service history three years ago at 90k miles. Since then I have changed the oil every 6k, along with the oil and air filter. The fuel filter gets changed every 12k, and it gets a dose of Millers Diesel Clean Plus every other fill up. It always returns 45 mpg, whether around town or at 'safe motorway speeds' (I don't want to inadvertantly start another thread!)
What I find disheartening is that I know this is a better buy than most of the rubbish I see in the 1500 quid price bracket.
Simon
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Simon,
Having a company car is a good move for me - but it does depend upon your personal circumstances.
I have an Esso fuel card which is used to pay for any fuel purchased, but
any private (including to and from my place of work) mileage I do, I pay for the fuel used. If I had fully expensed fuel, I would pay more tax, so I'm told!
I cover between 2500 and 18000 miles business-wise per annum, so a discount is allowed on the amount of tax payable
The only downside with the private & business fuel mileage is that I have to keep an accurate and up to date vehicle mileage log - this can be a real pain in the rear.
The fuel consumption is assumed 40MPG (petrol) and 60 MPG (Diesel)
These figures are optimistic and I rarely attain them
Naturally, being a skinflint, I drive a diesel!
I don't have to worry about Insurance, Road Fund Licence, Maintenence etc..
I know the rules regarding Company Hacks is to change with reference to the CO2 g/km figure, which should, hopefully persuade people to choose 'greener' cars.
Diesels will have a 3% penalty levied because they emit less CO2 than their petrol counterparts
Regards
David
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David
I believe that under the new rules coming in there will be no discount on the benefit for higher business mileages. Bizarre really as this favours the 'perk' cars over the people who really need them for business.
Regards
john
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The benefit in kind is the car being available for private use by the tax payer. The amount of miles they do in the car on business has always been a political red herring!
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True. I was just noting the change.
Regards
john
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Simon,
I know exactly what you mean. Your car may really be head and shoulders above the average £1500 forecourt "banger" but try finding a dealer who will value that fact. That's why I wondered if you had a contact who might want the car, there can be an element of pleasure passing on a good car that offsets the low value.
I am just finishing a mid-life overhaul on a ZX TD of the same age as yours but with 95,000 miles. That has been owned from new by the same people and in reality is little different from the day they purchased it. No dents, no rust and drives well after the recent work. The value as you say is less than £1500 but if they traded it for a new Xsara that would lose £4000 as they drove it away from the dealer. Makes a lot of sense to hang on as long as number plate pride isn't an issue.
I helped to advise a friend sell his 1993 Renault 19TD the other month. Sensible miles, a full history and with a Pioneer 12CD system. Did a bit better in the end but it nearly had to go to a dealer for £800ish.
David
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Simon
This is a complex area and it is difficult to give best advice because circumstances vary so much. As HJ says basic information is given in the FAQ section, but I would also mention two other points:
Do ask as soon as you are offered employment if there is a car allowance option. Many traditional fully expensed company car drivers are discovering that it would be more tax efficient to surrender their car in favor of a car allowance, to buy their own car and charge their employer motor expenses for the business use of their own car. Most employers are now offering this as an option, but only at the normal time for a vehicle change, so if you accept a car you may have to wait three years or so until you can change!
Do give careful consideration to allowing your employer to pay for your private fuel. Currently for a 1401cc to 2000cc car you will be taxed on the basis of an assumption that your employer provides you with £205 of fuel each month, a bargain if you happen to use £300 of fuel for private miles each month! But I have done Tax Returns for 40% tax payers who have been paying more in tax for their privte fuel than the cost of the fuel! For most people it is best to pay for your own private fuel and ask for a modest pay increase in lieu, again many employers offer some sort of option, so do ask.
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I cannot imagine a situation where it is better for your employer to pay for your private fuel, unless you have a very long commute.
The other things I would mention is that if you get a car allowance it is treated as extra pay, presumably, and the likelihood is that this is a lower value than the assumed BIK as a % of list price, therefore you pay less tax.
Plus it depends upon what your employers mileage rate is for using what is now your own car. If the rate is below the revenue's allowed rate then you can claim the difference on your tax return.
Its all very complicated and my advice is, ....get some proper advice. ;-)
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This may seem irrelevant, but do you currently have to fill in a self assessment income tax form. If you don't, then when you get your company car you will (your company's notification system will see to that). Once the tax man has you on his books it's very difficult to persuade him to go away. From then on it's a pain in the butt every year.
If you aready fill in a form then please ignore this twaddle!
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Ian
I used to be self-employed, but worked from home, and therefore no commuting miles came into the equation. I have been PAYE for the last few years, and the relief of not having the tax man on my back is great.
The job, if I get offered it, is a 10 minute cycle ride from my house. I feel inclined to cycle to work on every available opportunity. But this is not always the sensible option, as most of the time I will be configuring systems for people and training them at their premises - wherever they might be in the UK.
Sweaty suits are never a pleasant working environment for anyone!
Simon
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