Company Car or extra money- anyone able to help?

[luke123]

I am currently in a company car with my employer, it's on an averaging scheme as we change car so often.
I have just had my P11d come through which i believe is the taxable benefit deducted from the tax free allowance...
It says £3681.00

So I am under the impression that to have a company car this is costing me 20% of £3681.00 or 40% depending on my income tax
brackett?

My question is if I was to come out of a company car and receive £2000 extra wages would I be better off?

Thank you for any help!

 

[sawtooth]

I've been taking the cash equivalent/ allowance for many years now. When I did the maths a while ago I calculated that I was paying around £300 a month in tax when I had the car (benefit in kind). The monthly cash allowance I get is a little under £600 but of course this is subject to income tax so will knock it down to around £360.

For me it worked out cheaper to run my own car and I would also own an asset at the end of it.

The downside is that I tend to stick with the same car longer and miss having a new car every 3 years. Also it was great not worrying about breakdown, repairs and fuel. Just flash the PHH card and everything would be taken care of.

Ironically I now fancy going back into the car scheme (after several years opted out )but our company car policy changed. All they offer now is cash allowance.

In your case I would probably stay in. The £3681 gets added to your income so you pay the tax on that at the basic rate ( if your total earnings are less than the higher rate tax threshold) or at the higher rate tax if you go above the threshold.

Your cash equivalent is only £2000 which is subject to tax. You need to ask yourself can you run your own car for that a year? Assuming you have a car already.

I think I would stay in if I were you but go for the most tax friendly vehicle when your car is up for renewal.

 

[DCB]

Been there, done the calcs, you will still be taxed as a benefit in kind, so, ba careful. In my case it was the annual mileage that me me keep the company car rather than run my own car into the ground. Remember, you'll need full commercial insurance , breakdown cover, replacement car cover and anything else your employer deems necessary. 2k isn't enough to cover it IMO. We were on almost £400 a month car allowance which sounds a lot, but isn't really when you look into all it goes on. I stayed in with the company car as that was more cost effective, I only did 14k private miles in a year but 30k business, so in a three year lease I'd have killed the car ☺

 

[Lump]

Be smart, Lease a car while the company pays for it. If you shop around you can get some very very nice motors. A couple of my friends have just handed back an M135i and a Golf R. Both have just opted for a BMW M4 this time roundoo:

 

[louise_a]

I had a company car for 25 years, and then was offered £5K a year to give it up, I did the maths and decided I would be better off although I did downgrade from a Passat to an Astra, but I didn't really need something as big as a Passat.

as an additional bonus, when I was made redundant a couple of years later, I had a car, instead of having to go out and get one.

 

[masterosouffle]

I had this decision to make this month, I have opted out and get £415 / month allowance, approx £300 after tax. As I am not 'into' cars in the slightest I am happy having a slightly older one, plumping for a 10 plate focus with 40k on the clock, this will cost me £250/month for 2 years, everything after that is a bonus, and hoping to get 4+ years out of it as I only do 20k miles / year. I also get 20p per mile so I concentrated on getting the most economical model I could find!
I just couldn't see any benefit to a company car...

 

[Hobbit]

The company I'm with started the opt out of the company car scheme several years ago. All the maths, and gossip from those that opted out immediately, said opt out was more beneficial. However, just before I plumbed for it I needed to replace all four tyres between Christmas and New Year. £550 at the wrong time of the year!

If you are disciplined enough to manage the finances, maybe taking a cc that you pay off each month and is there for emergencies, go for it.

I didn't, and I'm happy as is.

 

[BubbaP]

Worth also factoring in if you claim for mileage and rates for company cars vs. allowance.

https://www.gov.uk/expenses-and-benefits-business-travel-mileage/rules-for-tax

 

[USER1999]

Mrs mogs opted out a long time ago, but then she is weird. Bought a car in 2002, and still has it. She has trouser ed the 500 plus allowance ever since. Her car is over 200k and she still thinks she will get a few more years out of it.

That said, it remains scary quick, and she has had the suspension rebuilt twice, and a complete respray two years ago.

 

[Hacker Khan]

I had the choice and went for a company car as I could get a new Audi and therefore I could look like a cock and not have to worry about things like tyres and accidents. Double bubble.

 

[USER1999]

I had the choice and went for a company car as I could get a new Audi and therefore I could look like a cock and not have to worry about things like tyres and accidents. Double bubble.

Surely for the same money, you could have been an even bigger clock in a BMW?

 

[rickg]

Surely for the same money, you could have been an even bigger clock in a BMW?

I got a 640 M sport coupe with my company car allowance.......does that make me forum distance? :rofl:

 

[USER1999]

I got a 640 M sport coupe with my company car allowance.......does that make me forum distance? :rofl:

It makes you something!

 

[GG26]

If your company pays all the fuel for your car you will also need to factor in the car fuel benefit. It's worth doing the sums to see if you would be better off paying for the fuel yourself and just claiming the fuel back for business mileage.

 

[Smiffy]

Mrs mogs has had the suspension rebuilt twice, and a complete respray two years ago.

She is looking very good on it too Murph....