Company car dilemma

[Piff]

Looks like he is going for the company car.
Tried all 3 Vauxhalls offered
CrosslandX too small internally
Insignia too big
Astra just right
Now needs to talk to his fleet manager about colours & possible extra spec

 

[Red C220]

Realistically he's made the right choice, despite it probably being a dull option it makes sense financially.

Can he buy something interesting as a weekend runaround?

 

[Piff]

Can he buy something interesting as a weekend runaround?

He's not on that league yet!
He does have a wish list though - VW split screen camper van and a Mustang

 

[Petec999]

One thing to be aware of may already know the company car rules changes last April where you no pay the higher amount of the company car or the cash alternative regardless if you still have the car.

So he will pay £244 in tax on £610 which is a big increase on the £162 if the new car is closer to £244 not so bad.

One of the big reasons I opted out as would be paying £85 more in tax.

 

[Piff]

One thing to be aware of may already know the company car rules changes last April where you no pay the higher amount of the company car or the cash alternative regardless if you still have the car.

So he will pay £244 in tax on £610 which is a big increase on the £162 if the new car is closer to £244 not so bad.

One of the big reasons I opted out as would be paying £85 more in tax.

Don’t understand this. He has never had the £610. Does this mean that the employer tells HMRC that he could have a cash alternative? Doesn’t seem right that you could be taxed on something you haven’t had

 

[Petec999]

Don’t understand this. He has never had the £610. Does this mean that the employer tells HMRC that he could have a cash alternative? Doesn’t seem right that you could be taxed on something you haven’t had

If the company offer a cash alternative if you decide to opt out then yep the company have to tell the tax man no getting around it.

It is a stupid rule which a lot were not aware of as there is now no point going for a low emission car to save tax as if the company gives an allowance you are taxed at the higher of the two rates.

It also applies if you extended your lease even if the car isn't changed. Work out the figures is best.

 

[Petec999]

Here is an article explaining it

HMRC takes aim at thousands more company car drivers

 

[Piff]

Here is an article explaining it

HMRC takes aim at thousands more company car drivers

Thanks for that. He will be consulting the company to see if they have advised HMRC of the cash alternative.
He does 30,000 miles a year, probably 85 - 90% of those miles are for the company so the car is a necessary "tool" for his job. In my line of business if I need a "tool" it is fully set against my tax and there is no BIK even if I occasionally use that "tool" at home for personal use

 

[Petec999]

Thanks for that. He will be consulting the company to see if they have advised HMRC of the cash alternative.
He does 30,000 miles a year, probably 85 - 90% of those miles are for the company so the car is a necessary "tool" for his job. In my line of business if I need a "tool" it is fully set against my tax and there is no BIK even if I occasionally use that "tool" at home for personal use

Hopefully all works out I don't think the company has any choice in not advising tbh they may say they won't however I would want something in writing not that they come back for it in a few years. I suspect having it in writing wouldn't make any difference.

It is all a way to claw back money as the tax returns from company cars has dropped significantly as people took up hybrids etc

 

[Piff]

Seems to me an unfair way of collecting tax, taxing someone on income they haven't received. I'm surprised it hasn't been challenged through the courts.

 

[flowrider]

Here is an article explaining it

HMRC takes aim at thousands more company car drivers

This looks like it is only applicable for salary sacrifice cash for car schemes, if the cash alternative is taxed as income then there is no issue.

 

[Petec999]

From my recent experience in my case you had 2 options

1. Have a company car off a list of cars and pay the tax on the car.

2. Have a cash sum / month and pay the tax on it.

From April 2017 the tax rules changed and if your company offers a cash alternative option 2 but your company car is cheaper than the equivalent cash amount after tax you pay the higher amount until such time the car tax amount is equal / greater than the cash equivalent.

The only time this does not take effect is if your company doesn’t offers cash alternative.

Unfortunately that is the new rules in place.