ARRON BIRD

Hi folks.
Gotta buy a cheap runaround for her indoors.
She is on the books so is in the standard tax bracket.
The car I`m looking at is a 1.9 TDI golf thaty lists at £15100 and has a liability of 15%.
How do you exactly work out how much it will cost her on unlimited fuel etc??

jbwrx300

http://www.comcar.co.uk/

all the company car tax calculators you will ever need, including fuel

ARRON BIRD

TA

minted_aye

dont waste your time, just buy the car and bill the company 40p per mile, that way you will avoid the tax and the benefit in kind.

ARRON BIRD

Maybe but I will be suffering at the hands of all depreciation....fuel costs as you cant claim it twice all servicing etc.
Company car tax is sometimes well worth paying.

jbwrx300

Depreciation is a myth when it comes to company cars. The truth is, it simply isn't cost effective for 9 out of 10 people.

If you buy a £14600 (list) golf tdi, this would work out around £350/month on my company's car scheme, and tax of £40/month assuming you're a basic rate tax payer, that is £400/month near as damn it or £440/month on HR tax.

So after 3 years, you've paid at least £14400 - you dont own the car, and you have paid £200 less than it would have cost you to buy the car in the first place.

Insurance and servicing should run to less than £1500 over 3 years, so in total you will have paid £12900 for a car that at the end of 3 years you have no financial interest in the car and its worth nothing to you. That to me is depreciation of £12900!!!

You are better off buying the same car, 12 months old and getting a loan. The car will still be worth £6/7k after you paid the loan off after 3 years - and thus depreciation is miles less than the co car.

Trust me, I have pored over every figure, working out the tax position and cost effectiveness - I just cant make it work to my advantage. A colleague is in the same boat and the only reason a company car is feasible for him, is because he has a pretty poor driving record and his insurance costs about £1500/year for a clio diesel!

T5NYW

iTrader: (4)

Gosh Arron, her indoors!! And I thought you were Gay LOL

Tony

Ps Oooops sorry M8, But this is the longest I've ever seen one of your Threads be sensible How you keeping long time no see

ARRON BIRD

Mate I only have to worry about the tax cost **** all else as I own the firm!!

ARRON BIRD

I am a ravin iron mate the missus is a pseudo name for my special friend Tarquin

Diablo

Ok,

Leaving aside the fact that its Arrons business so the comparison is irrelevant, lets look at the numbers.

Assume it costs you an average of £150 pa for servicing (£450) , 1 full set of tyres in 3 years (say £250 fitted), road tax for 3 years (say £465) and insurance at £500 per annum (£1,500)

That is running costs of £2,665 over three years.

Add the interest on your £12,000 loan (lets say £2,000 by the time you've added in all the fees) and your total running and finance costs amount to £4,665.

For many company car schemes, the quoted monthly cost is gross(or changes depending on your tax rate). In other words its deducted befor your income is taxed. So what you pay in tax (assuming a car around this level) roughly equates to the tax you "save" on the reduction in taxable income.

Additionally, you don't pay NIC on the car, but you may on the cash alternative.

My old car scheme would get you a TdI Golf for around 350 a month also. the tax more or less cancelled itself out.

For three years you would pay say 350x36 = £12,600.

To buy (and lets just run with your second hand example) over three years you pay cost (£12,000) finance and running costs (£4,665) = £16,665

Which is approximately £4,000 more than the company car route.

Assuming you can get £6,000 third hand when you sell it you are now only £2,000 better off buying the car.

I agree it is still cheaper at this point, but for the last year of ownership you are probably out of warranty. If you have an "old" golf you can be assured of something needing fixed.

If you are under 30 and living in a less than ideal post code your insurance will be much more than £500 per year.

The company car buyer gets a brand new golf, not last years model.

Oh, and your servicing costs, in reality, will probably be double what I've quoted.

So you may, on a good day, be £500 better off. For 100% hassle free motoring, that is a price worth paying.

At the end of the day you pay the money and you make a choice, but it is certainly no where near as black and white as it seems.

Why else would all of the big 4 accountancy firms be actively promoting the company car? If anyone can figure it out objectively, its an accountant.

jbwrx300

It may be cheaper in this case if you get the car still through the company, but designate it as a pool car. Thus you have no personal tax liability and I think i'm right in saying you can write off depreciation against your company's accounts.

Wahey, problem solved.

ARRON BIRD

Ahhh no not good idea coming away from that now!!!
Thats why were back into tax as she has used a pool car for a while now and the revenue dont like it