[TuffLittleUnit]

Originally Posted by sfax

Company cars in the UK don't work like that. You get hit so hard on the tax that it's often better to take the car allowance instead and put it towards buying a car yourself privately. It does depend on the company, CO2 and mileage but if you owned the company and the car was for you for example, it would only be worthwhile for something like a SmartCar! It used to be lucrative but not any more

Correct. You only get an allowance of so much towards the car, everything over that threshhold is addition money I spend and known as a Personal Use Contribution (PUC). I already have to pay £120 per month for the basic X3 2.0d SE Auto any every option I add increases both the PUC and the tax.

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.

[BIMMER UK 76]

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)

[sfax]

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.

[BIMMER UK 76]

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)

[Nahoa]

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.

[TuffLittleUnit]

Originally Posted by BIMMER UK 76

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)

Yep, you're right. My post was already starting to feel a bit wordy so i tried to keep it short. Whilst the purpose of the payments (fuel versus running costs) is different it's still an important factor in an opt in/out decision because if you run your own car then you're getting more than the fuel costs (well, for now at least ... who knows where fuel prices are going to be soon) so this is a difference in the overall running costs of company versus personal car.

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.

[TuffLittleUnit]

Originally Posted by Nahoa

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.

Not a problem. I went into detail for the UK folks who may not be fully conversant with this (there will be loads of lurkers on the forums). I wasn't trying to rant or flame (I'd already noted that the original post had gone).

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).

[ayio]

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