New Job (which company car?)

[RyanMuller]

Hi all,

I am taking a new job in June which requires 1 day in the office and 4 from home.

I'll be doing around 300-400 miles a week and currently the only car I own is my C32 AMG which is pretty thirsty.

I'm fortunate enough to get an allowance for a car but I don't know whether to just buy a car and use the allowance to keep it running, or get a lease / finance deal.

Considering the mileage isn't absolutely massive and I'd still like something fun, can anybody recommend a car or give me some advice please? I've never had a company car before.

Thank you!

Ryan

 

[CRBXF]

Sorry but am slightly confused[emoji849] Are you being provided with accompany car or are you getting a "car allowance" in your salary? The tax treatment is very different and so will affect the advice.

Sorry pedantic accountant trying to help [emoji6]


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[JAT350e]

E350e, I wish I waited as I needed the extra space.

 

[wemorgan]

Also, what's your budget?

 

[RyanMuller]

Hi and thanks for the quick replies!

£350 a month and it's an allowance to put toward a car

 

[JAT350e]

Oh if your budget is £350 a month then get something like a Skoda Superb on lease. Or a second hand passat/mondeo/superb etc.

I was in the same situation but had only £300 a month after tax, so chose a company car as I do 25K miles a year.

 

[wemorgan]

That's about 15k business miles a year, so makes sense to save the C32 for nicer occasions.

If you want to lease then this site is a good starting point.

https://www.contracthireandleasing.com

£350/month works out at 9+23 £260 or 9+35 £290

Something like

https://www.contracthireandleasing....reen-leasing/mercedes-benz/c-class/161405494/

Or

https://www.contracthireandleasing....ers/yes-lease-limited/skoda/superb/151235815/

Stretch the budget if you want a larger engine

https://www.contracthireandleasing....t-hire-and-leasing/audi/a4-allroad/169635435/


Just be aware of the key differences between PCP and PCH.

Or a £12k loan over 3yrs is £350/month and you'll own the car at the end.

 

[219]

What sort of work , do you have to carry equipment , or just yourself
?

While lease costs may be similar , different classes of vehicle , such as electric ( Tesla ? ) or pick up trucks ( Mitsubishi L200 ) attract vastly lower BIK tax ( can be £50 as opposed to £250 monthly BIK tax ) .

The Tesla can cover 300miles per charge , there are fast chargers just about everywhere , and £5 of electricity charging at home takes you that 300 miles - how much fossil fuel to cover that distance .

Here in Scotland charging is free everywhere else , so with care you can just about run the car for no fuel cost - many employers now have free charge points at work too .

A colleague just got a Tesla and raves about the above , together with interest free Scottish government loan to buy the vehicle and grant to have the charge point installed at home .

7.5% BIK tax on electric vehicles , free VED .

What's not to like ?

 

[wemorgan]

There's no BIK on car allowances, just income tax, which I assume the £350 is after tax.

 

[st13phil]

OK, my personal take on it is that from your description the car is effectively a tool to do your job so you need to factor in what happens if its unavailable.

If you have your C32 as a backup, then you could use that if the company-funded car is out of action, which means that running an older used buy could be viable. If not, then I'd suggest running a lease car so you always have the availability of a dealer's courtesy car if your work car is in dock.

Is the £350 / mth a pre-tax allowance or net? You need to do the maths carefully, taking into account all the running costs including servicing, tyres, etc. and it's easiest to do that with a lease car as you're not guessing how much a car you've bought will be worth in the future. I take it that business mileage is claimable?

 

[Deleted member 6183]

OK, my personal take on it is that from your description the car is effectively a tool to do your job so you need to factor in what happens if its unavailable.

If you have your C32 as a backup, then you could use that if the company-funded car is out of action, which means that running an older used buy could be viable. If not, then I'd suggest running a lease car so you always have the availability of a dealer's courtesy car if your work car is in dock.

Is the £350 / mth a pre-tax allowance or net? You need to do the maths carefully, taking into account all the running costs including servicing, tyres, etc. and it's easiest to do that with a lease car as you're not guessing how much a car you've bought will be worth in the future. I take it that business mileage is claimable?

Yes, at HMRC rates for everyone.

 

[moonloops]

I'd get a low cost personal bank loan, buy a fairly new C class and pay it off over 3 years at under £300 per month.

 

[wemorgan]

I'd get a low cost personal bank loan, buy a fairly new C class and pay it off over 3 years at under £300 per month.

Have you checked the maths?

36x300=£10800

I think he's looking at a 6yr old c class. Unless that's what you meant by fairly new?

Edit
My mistake, a quick search on Augotrader shows 2013 C220d for £11k. Seems a fair price.

 

[st13phil]

Yes, at HMRC rates for everyone.

I'm aware of that. My question was badly phrased. I meant does the employer reimburse the employee for business miles in addition to the £350/mth allowance?

 

[such01]

I opted out of my company car scheme in Jan 2014 after having company cars for the best part of 25 years! I had never owned a car previously. My annual mileage is around 25k, so leasing was an expensive option for me.

I took out a loan for £14k at a low 2.9 APR and bought a 2012 Skoda octavia VRS TDI, which cost around £600 to insure for personal & business. This was relatively expensive as I never held my own policy before.

My Car allowance plus company car tax savings more or less covered the monthly loan payments.
I did benefit very nicely from the HMRC mileage allowance for personal vehicles used for business. You get a mileage allowance of 45p per mile for the first 10k per year, then 25p per mile thereafter. You will need to deduct whatever your employer pays.
I was fortunate that I never had any issues with breakdowns / accidents and servicing was done by a VAG indy. Tyres etc were sourced via camskill, so I really did not have any major expense.

I sold the skoda in Sept 16 and bought my current EClass, which costs a bit more to run, less to insure, and more to service.
The big difference vs leasing it that is will be paid for by the end of 2017 so will be mine.
I intend on keeping it for the forseeable, so depreciation is not an issue.

You have the advantage of already owning your own car, so why not just use that, claim the mileage allowance and pocket the car allowance? Its akin to having a £350 per month pay rise.

Also, be prepared to take a big hit on your tax if you choose a company car and pay 40% tax- anything half decent will cost & this will increase every year!
I'm not sure of the current company car tax situation, but my last company car, a skoda superb 2.0TDI (list price £28k) was costing me over £200 monthly in tax in 2015!

 

[RyanMuller]

Hi all,

Thanks for the all the responses and help.

Gives me a bit more information to do some research.

The company pays 25p per mile. No equipment, just me.

Thanks again

 

[wu56Shoozz]

Another point that I did.. I took a low miler vehicle and stuck a private plate on it so nobody knew.. still had all the comforts etc felt good too..

You can - and nobody tells you this, go for a classic car like a UR Quattro or an E Type and claim that back, but I haven't see that done.. be aware though the you don't have to use all the allowance and pocket the difference..

Remember this though:

The allowance is for the purchase of the car and nothing more...

The Pence per mile is to service the vehicle/tyres /insurance etc/ along with running of i.e filling up.. hence a larger amount by return against your fuel receipts.

Now, say they only pay you 25p per mile and you keep all your receipts for the year, you can claim off the TAX People the difference on the first 10k ( i.e 45- minus 25p = 20p x 10k giving you a return of £2000!) not bad huh?

Its up to you though I've used my own car for years but I'm now considering going back to a company car seeing as I had bad failures of other marques.. bills equating to £500+ on 3 or 4 occasions ..but its just your luck I guess...

 

[wemorgan]

Now, say they only pay you 25p per mile and you keep all your receipts for the year, you can claim off the TAX People the difference on the first 10k ( i.e 45- minus 25p = 20p x 10k giving you a return of £2000!) not bad huh?
..

To my understanding at least that is not the correct interpretation of Mileage Allowance Relief. Here's an explanation

https://www.taxrebates.co.uk/mileage-allowance-relief/

In your example you extend your personal allowance by £2000, therefore save the income tax on that amount.

I'm happy to be corrected if I'm wrong.

 

[Deleted member 6183]

You pay less tax.

 

[such01]

as stated above you will get 40% or 20% of £2k as a refund, depending upon your tax liability, or £2k added to your personal allowance.