01-18-2011, 03:03 PM | #23 | |
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UK company car tax on the X3 is currently 21% and rises to 22% soon. So for anyone contemplating a company car in the UK the way it works is (roughly): 1. Start with the full cost of the vehicle (including VAT etc) which is £34,800 for the spec I'm looking at. 2. Multiply by the car tax of 21% = £7308 3. Deduct annual PUCs (12 * £160) = 7308 - 1920 = £5388 (P11D value) 4. Apply income tax to P11D at 40% = £2155 = £180 per month So, per month I'll be paying: £160 in PUCs £180 in car tax Plus I lose out on the car allowance of £350 (after tax) The monthly cost in real terms is £690 for a car I don't own. That's $1100 US per month so after 36 months I've paid $39,600 for it. Every option I add increases the PUCs I have to pay AND it increases the taxable value of the vehicle. I can't sell it, it's not mine it's a lease. After 3 years it goes back. On the plus side, this includes all running costs except fuel so insurance, road tax, servicing, tyres, breakdown, replacement vehicle etc are all covered. On the fuel front there's another downside. My employer reimburses fuel costs at a mileage rate of £0.13 per mile. If it was my own car this would be more like £0.45 per mile. Keep in mind that I do some 15,000 business miles a year and that's a big difference. There's really not much in it. The only reason I stick with the car scheme is because it's hassle free and I don't want to raid my savings for the initial outlay of buying a new car. I'm not being ungrateful or moaning, just explaining why I'm not that excited about adding on loads of options. |
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01-18-2011, 03:15 PM | #24 |
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The pence per mile calculation is set by the inland revenue, not your employer and as you only pay fuel is a contribtuion to fuel. If ran your own your own car running costs would be more like £0.45 per mile (depreciation, wear and tear, fuel etc)
Company cars are not the perk of the 1980's (back in the day Directors had a car, so did wifes and some children - absolutley tax free)
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01-18-2011, 03:44 PM | #25 |
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Cheers chaps. Some real world experience to backup what I've heard. Interesting to see a full example of how it works out. I know a few people who now just take the allowance and put it toward a private purchase but I can see the attraction of having everything arranged and hassle free as TuffLittleUnit points out. I usually go for a combination of a dealer loan and interest free balance transfers which effectively gives you a 2.5-3% APR loan for the balance due.
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01-18-2011, 03:59 PM | #26 |
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Based on a purchase price including options at over £41k my company car tax at higher rate will be £276 per month (x12 at £3312 per annum)
Cant think of any other way of running a £40k plus car inclduing all running costs (not fuel) for this amount. Colleagues are paying over twice this amount for new X5 40d and I see the X3 as a decent combination of tax and prestige (simialr to my 5 series)
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01-18-2011, 04:12 PM | #27 |
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There was clearly a lot I didn't understand there and I assumed that the words used matched things with which I was familiar. Apologies for my mistake and thank you for the detailed explanation. I think I understand what you were saying well now.
At first, misunderstanding the reality of the situation, it sounded like a pretty darn good deal to me and stood in stark contrast to the losses I've taken recently being forced to sell 1 and 2 year old cars when I was reassigned just to buy new ones again after a year. (Of course, I could have bought used cars and saved myself a bit; so that part was my choice.) Guess I was a bit prickly about the whole thing. Apologies and thanks once again. I think I'd look at it the same if I were in your shoes. |
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01-18-2011, 04:18 PM | #28 | |
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Employers can, I believe, choose to reimburse company car mileage at more than the HMRC rate but mine doesn't, probably for its own tax reasons. |
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01-18-2011, 04:28 PM | #29 | |
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A company car is STILL a benefit but even here in the UK a lot of people don't realise that this doesn't mean a "free" car - the driver will always be paying tax and quite often is also paying PUCs (lease payments). |
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01-19-2011, 02:11 AM | #30 |
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Thanks for post Fedinant! A very good video overview indeed! Have been waiting for something alike. They have several parts by the way..watching through all of them with pleasure
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