Company Car - how does that work then??(31 Posts)
I know I should know this and I also know it varies. BUT a company car has been offered as part of the deal (along with other nice stuff) but how does it work then? Do you get a choice? Can your partner drive it? How did I get to 43 and not know these things???
I wonder if you had any experiences you could share as we are in the negotiation stages for a big relocation and we need to know the ropes..
and how does it work with tax?
Hopefully someone will be along soon with a full answer but in the meantime I do know that you will be taxed extra due to having a company car.
The amount of tax you have to pay is related to the book price of the care (ie what the particular model with any extras would cost when brand new), the tax category it sits in (this is listed on web and in car magazines, it is strongly related to how fuel efficient the car is and is expressed as a percentage). You also get taxed more if you receive a fuel allowance.
As far as I am aware your partner can drive it but you would need to double check with your employers.
Car not care!
If you google benefit in kind in company car you will get lots of information.
Thank you so much. Amazing how I have drifted through life and not known these things before!! We are doing a final negotiation next week for the whole package so desperate to be as well informed as possible.
Have a look at your car policy, which will tell you whether you're expected to pay a personal contribution for private use and what the deal is with additional drivers.
I pay 3% of the P11d value as personal contribution and my husband can drive, too.
You'll be taxed on the list price/p11d value, have a look here for details
Also try and find out whether you get fuel benefit, which is what makes it all even more worthwhile
It is an oil company so I am hoping for a fuel benefit!!!!!!!!!
We also need a seven seater..... Next week we get all the paperwork for the relocation/package thing so I will have a look then. Thank you again for that help. We have so much to negotiate because it is a relocation that worried we are going to rush something a miss a trick so need as much info as possible. Slightly panicking to be honest, but what i think is that we need to take the paperwork away and consider and then negotiate a couple of days later.
I have a company car. The rules on who can drive it depend on your own company's insurance, but I would be surprised if they did not let your DP drive it. It is usually "any other qualified driver with your permission".
Whether you get a choice of car is also up to your employer's own system. We used to choose from a limited list, now we just choose "small", "medium" or " large" and they are all silver and diesel. We do get the choice of estate or hatchback though! (If you are public sector, this is likely to be your choices too). So you order say "medium" and wait and see if a Golf, Astra or Focus turns up.
For tax, you are taxed on 1/3 the list price of the car each year, including most extras (iPod dock, leather seats etc). So if the car has a list price of £12K and you earn £40K, then you will be taxed as if you earn £44K.
There are tax reductions for cars with lower emissions - VW/Skoda diesels tend to qualify.
You would need to ask the company these questions, as it differs from place to place. A partner can usually drive the car (but you need to be sure you/they are on company insurance policy) but if the employee's job is to make a good impression with buyers/suppliers and share lifts then they will be expected to use that car, or an equivalent on those trips. I currently use DH's company car and he was able to choose it, but only because that negotiation is part of his job!
Thank you BikeRunSki and GiddyKipper.
I found this: www.parkers.co.uk/company-cars/news-and-advice/tax-advice/2012/october/top-five-seven-seat-fleet-cars/
This is really helpful and explains how much tax you have to pay monthly for each of these cars.....
Company car schemes vary hugely from company to company - and the costing too. I get a car allowance (added to salary, taxed as such), but could choose to have a company car instead which would be any car that fitted into the allowed amount per month. This works out as about a VW Golf, and we can't top up at all.
DHs company restrict them to BMW or Ford, have an amount equal to about a mid range Focus, but allow them to top up.
The cost per month of the lease is a lot more than the cost of the vehicle as it includes tax, insurance, maintenance, tyres etc, but is also dependant on how much the car will be worth at 3 years - so a BMW of equivalent initial value to a Zafira (for example) may be a lot cheaper. Of DHs colleagues, many have a small car as the company one, and the family car as a personal car.
The insurance is often anyone over 21
Do you have the option for a car allowance instead? You get the equivalent in cash (which is taxed) instead of a company car but you can then choose what you want to buy so lots more flexibility.
Gives you more options, you could buy a new car on a 3yr lease but keep it for 4yrs and therefore have a 'free' year. My company has a car allowance scheme that offers the equivalent of a new, medium-size car on a 3yr replacement and it works well.
It can work well, and is good from the point of view that you don't have to organise road tax, insurance, repairs, new tyres and so on.
But you do pay a lot of tax IME.
We are not sure what they are offering as yet, the details are 'company car included in package'........... we will get the details on Wednesday and then we are going to take some time to think about the whole package and do the sums as we have independent school fees to consider too, although DH will be saving 6k a year on travelling alone!!!!! To be honest I would welcome not having to think about MOTS etc etc as that is always down to me and knocking it off the to do list would be great
I think as DH is a 40% tax payer it would be v expensive to have the cash equivalent? Not sure so will get the details and try to work it out accordingly.
The cash actually works out well for me, and am 40% tax, as I'm not tied to any lease plans etc. If he will do a lot of work miles, then a company car may work out well, but its a balancing act. My colleague needs 7 seats, so she took the cash and has had the same car for 7 years so is much better off than the company car option - but doesn't do a lot of miles
I pay a contribution towards my company car, so it is not super cost saving for more (but is a cost saving, and I do need it for my job, it's not just a perk). What I most love though, is that if anything goes wrong, I just ring up the lease company and they sort it out. Tax disc arrives in post a few weeks before I need it, garage collects from home for servicing, I just handed it all over to the lease company and their insurers and solicitors when I had a crash, courtesy cars turn up when I need them etc
If you do have a cash option, it is worth considering if you will be contracted to drive a certain type or age of car. If is common in that situation to be contracted to have a car less than 5 years old and I have heard of diesel being specified too. Need also to consider the cost of Business Use on your insurance. Before I had a company car, the cost of this used to vary widly from insurer to insurer, think it was free with Direct Line, but also up to £80 with Endsleigh I think.
And think too if you are likely to need to change the type of car (bigger? smaller etc) during the lease period.
pansy - he will still pay 40% on the 1/3rd of the list price of the car.
Alibaba I found that lnk I have posted about with the actual costs for seven seater per month and I might be deluding myself but seems quite good value for us particularly if the mots and services insurance are in that?
It doesn't look too bad, but that is before you've added any options.
I would wait and see what the actual details are from your husband's company. Depending on the value of the package they give him, you might find that you can't get a big enough car without topping up - if they allow topping up, some schemes don't. And some are v.restrictive with which manufacturers etc.
We have had a company car in the past, and also taken the cash allowance. There are pros and cons of each, but you have to weigh up the individual offer before you can really see how it will work for you.
If nothing else it will be X thousand extra salary!
What I will do is when I have the details about it I will post again and get some clever person to help me work it out. The thing is we have never had a new car (not willing to spend that sort of money on depreciating asset etc etc) so it is new territory on every level for us.
This thread has been so helpful because I had NO CLUE and now I at least know about the options...... Thank you all so much. This MN at its best for me because I have really learned something!!!
rather than just gossiped and speculated constantly
UPDATE: Ok the offer is 600 - 700 per month car allowance - that seems an awful lot to me (she says driving a ratty old landrover)
So..... do we have to spend that on a car or can we drive rubbish cars (as we do now) and keep the money??
oh and he gets mileage too..... RESULT!
pansy - depending on what he's doing for the company, there may be an expectation that he drives a decent car as he's representing his company when visiting clients etc.
Or it may just be a perk
If he is getting a mileage allowance then I don't think he will be getting petrol included in the package, ie a fuel card that the company pays. Some pay all fuel, some only pay fuel for business use.
So he gets mileage, it seems to me that he will have to pay for all fuel put in the car, then claim £x per mile company use, back from the company. It will only be a flat charge for the fuel too, not the 42ish pence that people get if they use their private car for company use, as in your h's case the company is paying for the car.
So he's putting all the fuel in and then getting a small amount back per mile for company use. In his shoes then I'd be looking for something fuel efficient!
Does he have to spend the allowance on one from a list they provide? Thats what my friend had to do, she was told how much her allowance was but the company provided the car she chose from within that range.
It is 55p a mile which is a lot right? An no there is no fuel card which is ironic being as it is an oil company..............
I think it is a perk actually because they offered him a higher salary too.... which was unexpected. And apparently no list to choose from just an allowance. They don't do company cars as a rule apparently but they are trying to seduce him with goodies. The tax bill will be phenomenal!
I am assuming though if we lease something or other we don't have to spend it all do we? Actually I am happy with a tatty motor and I need a 4 x 4. That just seems like ever such a lot of dosh just for a car
If we get a car allowance it is expected to be under 5 years old and have 4/5 doors plus be 'respectable'.
As you are taxed on the allowance, that £600 will be £400 in his pocket - which would pay the lease and service (but not cover tyres etc) on a Mercedes A Class for example. I get 16p a mile for business miles (HMRC limit) which barely covers the diesel these days
Respectable.....hmmmmmmmmmmm No slutty cabriolets for him then@!@
Well it will be a 7 seater and very sensible actually - the notion of having lease and services and stuff is so nice to be honest... one less thing to do
16p a mile? Jesus!!!!
HMRC don't allow a lot for company cars on fuel. Again you need to find out what the (very generous) 55p means from a tax perspective. I'm guessing it will be a good thing
Well it all seems a lot to me either way but yes will check about the tax and mileage situation.... The tax bill for all this is going to be v. high so I will have to work it out. Looks good on the surface though.
Thank you everyone
I think it's an excellent perk; well done!
The car allowance will be paid along with the monthly salary; it will be included as income and will be subject to 40% tax (as you said your husband is a higher rate payer). So you will probably end up with around £400 net to use towards a car and related expenses, which is still a pretty good perk.
Getting a general car allowance usually means you have to pay your own car costs; tax, insurance, servicing etc and you also often receive a lower mileage rate than non-car allowance staff (as your company are already contributing towards 'wear and tear' on your car).
I've had company cars and also separately car allowances, and my preference has always been the car allowance.. more versatility, you can spend it on what you like (within reason) and you get to actually own the car.
One of the expectations from my firms mean that getting a car allowance also meant for that I would be expected to drive to various locations (within a limited distance) rather than get a train, cab or hire car - so if it's the only car for your family, you'd have to expect the working partner to use it when required.
I have known colleagues NOT to buy a car even if they receive car allowance, which is fine for example if you lived in central london and didn't need one.. they only thing those colleagues had to do was hire their own car or pay for their own train travel and and when was needed.
Hope your relocation negotations go well.
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