Wheelman

I am being moved from an annual car allowance to the company car scheme. Can anyone explain in simple terms how this tax business all works, I've never had a company car before. I understand the bit about calculating a taxable value for the car but how does this feed into the tax calc. Is there a useful website? (don't say the Inland Revenue one its c**P).

Thanks.

Neil Smalley

try http://www.lvl.co.uk/features/tax_calculator.htm

RaZe-=Buzz=-

You need some basic info first.

Im assuming you know if its a diesel or not
List price of your car
CO2 emmissions figure for your car in grammes of CO2 per kilometer
Your income tax band ie 23% or 40%

Simple example -

Car worth £10,000. has CO2 figure of 246 g/km. Unusually for the government you round it DOWN to the nearest 5, so it becomes 245

Look on the tables for this year to find out the tax liability :

2002/03 Taxable % of list price
g CO2/kg
165 15*
170 16*
175 17*
180 18*
185 19*
190 20*
195 21*
200 22*
205 23*
210 24*
215 25*
220 26*
225 27*
230 28*
235 29*
240 30*
245 31*
250 32*
255 33**
260 34***
265 35

so 245 = 31% tax

SO - if its a diesel you have to add 3% to that as a "punishment" for having a diesel :| supposedly because it spews out nasty black bits.

Petrol - tax liability is 31% of list price = £3,100, so you pay either 23% or 40% of £3,100 dependant on your income tax band.

diesel - tax = 34% (31+3% punishment see?) = £3,400 @ 23% or 40%

Thats how you work out what you will pay for you car. It gets muddy if you get private fuel allowances, which I dont as its MUCH cheaper for me (you record your own figures, so you can "massage" them a bit )

Next year it will go up by 2% so it would be 33% petrol or 36% diesel tax liability for the same £10,000 car.

Hope that helps.

Buzz

brickboy

Another site that can calculate how much tax you'll pay in a year is www.fleetnewsnet.co.uk

Go to the "tax calculator" button, choose the vehicle & spec and it will show your liability for the next 3 years.

Wheelman

Cheers mate, WRX STI looks expensive! Time for a turbo diesel?

NotoriousREV

How fcuked up is your company? Nearly everyone else in the country is going away from company car schemes in favour of car allowance!

Tell them to stick their car, you want cash.

chiark

Have to agree with the REV, that's backwards! Damn strange. Tell 'em you just want the money. Admittedly, I should give you some credit for trying this already, so what did they say?

Scooby Dooby Blue

How does it work?

Basically, you bend over, pull your trousers down and the tax man...

Diablo

Gotta laugh at the "how backward is your company" comment...

Most companies are moving away because its too expensive to administer the schemes, not because its particularly tax inefficient for the company.

I've worked in the accountancy proffession for the last 12 years, for my sins.

If cash/car is roughly equivelent, I'd take the car every time.

For one, you pay no NI on the car, but you would on the cash (although this may be a mute point if you have high earnings).

Hassle factor is the next issue - I pay nothing but petrol.

My Scoob was a company car. The salary deduction I suffered for the priviledge was not that cheap on a monthly basis.

BUT

I could NOT have run the car more cheaply had I taken the cash instead, and in fact would have been £'000 worse off.

it all depends on the car, type of scheme the employer operates, cash equivelent, etc, etc, etc.....

D

Wheelman

The situation is I currently get £6250 a year, under the new scheme this reduces to £3500 (we were bought by another company and this is part of the realignment process of terms and conditions). Alternatively I take a car, pay no tax, insurance, servicing etc. In this respect it doesn't seem so bad but I have to keep the car for 4 years or 80000 miles.

Diablo

Whats the car on offer?

D

Wheelman

There is a big list although clearly some manufacturers are giving a bigger discount than others. There is also the option of paying a little bit from salary each month and getting a better car or getting a bit of cash back each month and getting a cheaper car. "Highlights" I have noted to date:

VW Golf GTI PD 150bhp (in fact any Golf including the 2.8 4wd)
VW Bora GTD TD Sport 150bhp
VW Passat 1.9tdi
Any Mondeo
Any Vectra
Most Laguanas (includes 3.0 V6 but none of the estates?)
Mini Cooper S
Renault Clio Sport 172 16v

WRX STI UK Prodrive would ciost £225 a month extra!!!

Diablo

WRX UK Sti Prodrive for less than £525 a month has gotta be a good deal

Factor in the tax though.

But remember to take into account that you don't pay the tax on the cash equivelant.

Assume you are on 40%, if you took the 3,500 and didn't pay the £225 extra you would be paying £2,480 tax per year on the cash.

If you take the car, you don't pay tax on the cash, but pay tax on appx 35% (can't be arsed checking actual emisions, but its gotta be close) on £27,500 (list price), or appx 40% of £11,000 = £4,400 per annum

taking account of the net tax position, you would be 4,400 less 2,480 plus 6,192 (base lease cost) worse off per annum, or appx £676 per month.

Hmm....STI7 Prodrive for £676 per month isn't that bad ......

I'd be tempted...

D

Wheelman

Thanks for the figures, I knew I didn't really understand the numbers!

Still sounds to me like a lot of money given I'd be paying that amount per month for 4 years.

Given I could have a Golf/Bora 1.9 150 bhp, pay around £100 a month tax and make no contribution myself, I'm thinking this option looks interesting and keep my existing Impreza using it just for fun!

Any views?

rjh

I'm looking at getting a company car as well. Have a look at the Octavia RS - it's only £15000 and the emmisions aren't too bad so it works out the same tax cost as a Passat TDI SE

Richard

Diablo

Wheelman,

A Golf or Bora instead of £3,500 a year (gross and therefore taxable) plus £100 per month tax sounds to me like a VERY good deal.

Wheelman

Unfortunately Skoda isn't on the list of available manufacturers.

Yes, I thought the Golf/Bora looked a good deal especially given the glowing reviews I have seen on the BBS. Have to keep the Scoob too though.

JackClark

Company Scoob was the best car I've ever owned. Wasn't given the chance again on renewal