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Original poster

Talk to me about the benefits of a company car/benefits package

35 replies

ZednotZee · 10/08/2021 17:51

I'm currently changing roles.

The new role includes a salary cut of roughly 6K pre tax/NI/pension/student loan. So only about 200 pounds per month in real terms.

Will a company car be such a tangible benefit as to make up for this?

I will need to keep my seven seater taxed and insured due to having five dc in any case.

If you have a company car please tell me all the great things about it. I'll also have a fuel card, company sick pay, private medical insurance and professional fees reimbursed plus a lunch allowance as new role is field based.

Is this package worse a 6k cut from a position with only ssp and no other tangible benefits other than a good salary?

OP posts:
Chocolategirl19791 · 10/08/2021 18:07

I have a company car and have done for the last 18 years. Tax has gone up over the years (I have a diesel which doesn't help but this so being changed for a petrol one soon). I'm sure people will tell me it would be more financially wise to get rid of the car and take a car allowance. However I love having the company car.
Don't need to delay with things like insurance, servicing, etc or have a rainy day fund for unexpected repos and a shinny new car delivered every few years. I don't have another car though (my husband also has a company car) so you'd find in not as much as financial gain if you still have to costs of running another car.

Cathie102 · 10/08/2021 18:09

Depending on the company car you could end up paying quite a bit of extra tax for benefits in kind. Same for the fuel card if you’re allowed private use and for the health insurance. So you could end up with a lot less cash in your pocket.
What are the pensions like?
Personally it’s up to you how much you value these “perks” - particularly the sick pay. I took a 4K pay cut for sick pay and enhanced company maternity pay. And job security.

Original poster
ZednotZee · 10/08/2021 18:16

Oh no, really?

I hadn't even thought about the tax implications.

How much do you pay in extra tax if you don't mind me asking?

The pension is matched contributions. The role is also three hours less per week and compressed so only three days per week, albeit very long day and 2K miles driving per month which I have to say doesn't overly bother me.

OP posts:
Original poster
ZednotZee · 10/08/2021 18:17

Obviously with five DC I'm not invested in mat payGrin

OP posts:
Clymene · 10/08/2021 18:50

Are you sure you couldn't get a 7 seater as your company car? That would probably be the most cost effective way of doing it. You do need to work out the tax implications. Using a company car as a tax loophole was closed ages ago

flowery · 10/08/2021 19:47

If you still need to keep a private car anyway then surely a company car is a liability not a benefit? You’ll be taxed on it and will have two cars, one of which you don’t need. The only advantage might be a nicer car.

BikeRunSki · 10/08/2021 19:54

I have to agree with @Chocolategirl19791. I’ve had a company car for 13 years. I’ve always had nicer cars than I’d be able to afford privately. I probably don’t break even but it’s just so easy having a company car.Actually, I might break even, my time sometimes had me driving 1000 miles a week, and I’ve never done that kind of mileage/servicing in a private car.

Hekatestorch · 10/08/2021 19:55

Is the fuel card for personal milage aswell?

If so the tax for that can be fairly horrific on top of tax for the car

CarrotCakeMuffins · 10/08/2021 20:00

Is an electric company car an option? The BIK / taxable value is very very small. Definitely worth a look.

Ginger1982 · 10/08/2021 20:00

I don't know much about it personally, but DH is always moaning about how much company car tax he has to pay!

Original poster
ZednotZee · 10/08/2021 21:23

Thanks for all your replies.

OK,so our family car can be used for DH. He wfh and so hasn't needed a car for a while so we have got along with just the seven seater.
Now we could have a car each.

The fuel card doesn't include personal miles but I will pay mileage at a reduced rate.

I think the car will be Audi/BMW from what I have seen so no, likely not electric.

OP posts:
Original poster
ZednotZee · 10/08/2021 21:26

I suppose I should add that I am fortunate that DH can pick up the slack in my earnings.

That said, will we benefit from the extra car?

I suppose if we arent down in income its a nice extra to have. Just concerned now re the tax implications.

OP posts:
Alarae · 10/08/2021 21:38

Depending on the actual car, you are probably looking at a tax charge of a minimum of £1,500, so about £135 a month assuming you are a basic rate taxpayer.

You can look at this website where you can choose various models to see what the potential tax could be (not a definite, but probably right ballpark):

comcar.co.uk/companycar/tax/select/

Hecatestorch · 11/08/2021 00:40

@ZednotZee

Thanks for all your replies.

OK,so our family car can be used for DH. He wfh and so hasn't needed a car for a while so we have got along with just the seven seater.
Now we could have a car each.

The fuel card doesn't include personal miles but I will pay mileage at a reduced rate.

I think the car will be Audi/BMW from what I have seen so no, likely not electric.

You need to do some serious research. If you are getting fuel at a reduced rate, there could be tax to pay on that and the car.

Tax is also, as I understand it based on the list price. So a BMW or Audi could be quite heavy on tax, depending on model.

Are you getting a choice? I inherited mine from my predessor who had her notice in after having it 6 weeks. It's due to be changed this year and I get to pick. So going for an electric. I have been really getting stung on tax on this one.

Original poster
ZednotZee · 11/08/2021 06:49

Thanks for your replies.

The tax calculator was very helpful but gosh some of those amounts are a bit steep!
I assume that I will get my car from new as the benefits package stated 'new company car, however I haven't discussed specifics yet and you are right, an electric car would save me lots of money in the long run.

The role entails roughly 2k miles per month and I wonder at the number of charging ports and their locality. I'm unsure whether an electric car would be realistic under such circumstances.

Anyway, lots to think about and thanks once again for pointing me in the right direction.

OP posts:
HasaDigaEebowai · 11/08/2021 06:55

You should get an electric vehicle. The tax on it is extremely low (1%) and so its giving you extra cash in your pocket too. Plus the added benefit of helping to save the planet. I’m
Not sure why anyone would have a company car and not have an electric vehicle atm unless they are doing extreme mileage

Miliao · 11/08/2021 07:03

For me the fuel card wasn’t worth it, I was paying too much tax on it and not getting the benefit. It’s nice not having to worry about what happens to the car, and all your insurance etc is taken care of, but there are tax implications, mine reduces my tax free allowance by over £8k!!

Sunflowergirl1 · 11/08/2021 07:05

@HasaDigaEebowai "You should get an electric vehicle"

So the OP is averaging 500 miles a week over 3 days. You would need a really decent electric car to manage avoiding recharge stops as well. Many just don't have the range claimed as it is in ideal circumstances (bit like claimed mpg for cars)

I met a friend at some services to go on to a client meeting. He had bought an electric car. Got out of the car in gloves and a thick coat.....couldn't have the heating on as it reduced the mileage he could do too much.

So for me electric cars need to develop further distance yet.

OP.....the tax is significant. For someone who runs their own car and changes it every three years it might be worth while...just. But most people don't so it will be a significant cost to you know tax

OneEpisode · 11/08/2021 07:09

I test drove a lovely electric BMW. I wish I could afford one!
Audi make them too. The e-tron might do 200 miles between charges.

BobVance · 11/08/2021 07:10

Does the private medical insurance cover you and your family? This plus the car would easily be worth the pay cut in my opinion. I have company car and private medical insurance as benefits and I value the insurance more highly to be honest. Tax on the car doesn’t have to be huge if you choose electric or hybrid.

BritInUS1 · 11/08/2021 07:17

The car benefit it taxed as income and is included in any tax credit calculations - unless you will see a huge benefit from a company car, I would take the allowance and spend it on your own car

The fuel benefit is also taxed unless it is business miles only - you mentioned mileage, that is the best way to deal with it

Mileage would be higher if you took your own car, which helps with servicing costs, etc

HasaDigaEebowai · 11/08/2021 07:17

Loads of evs will do enough miles between charges to get in 160ish miles a day. Plus stopping to do a top up charge is perfectly possible even if running low.

Netaporter · 11/08/2021 07:32

Hi OP having worked in the motor trade for many years, I can tell you that even national sales companies don’t have much take up on company cars unless there is a tax efficient ownership scheme , as the BIK can be punitive. So check the ownership proposal before committing either way. I’ve just popped on here to say that I am a massive advocate of electric vehicles but you need to consider the cost of running one. It’s not ‘free’ electricity unless you have renewable energy sources at home. And electricity bills are set to rise significantly this year. And your company won’t be paying your home electricity bill. And the car you choose needs to come with a standard 3pin plug adapter as well as the rapid charger adapter. The Waitlist for home rapid charger points is off the scale long…Then there is the locations of charger points for journeys. We’ve just swapped one of our cars for an electric car and my DH (who is still in the industry) has adjusted his fuel card to accept charger stations (you’ll need to do this if you choose the car and card) And here’s the rub in the past two weeks he’s attempted to rapid charge at various locations across the country. Out of 17 locations, 10 points were not working. Of the remaining 7 he’s had to navigate various suppliers/apps to actually pay for the charging. He’s actually writing to Grant Schapps to ask him to review the situation urgently. There currently is a woeful lack of infrastructure to support the ambition of the nation to enable ditching diesel/petrol.

Regarding fuel cards, when I last looked HMRC’s viewpoint was you either have one or don’t. You are taxed as if you have access to one all of the time (like the car) and it doesn’t distinguish between business or private mileage. The difference will be to the company employing you who foots the fuel bill. I’d see if you can be reimbursed for business mileage if you can afford to fund the fuel rather than take the card if they expect you to pay for private mileage.

LadyGAgain · 11/08/2021 07:48

Can you ask for car allowance. You will see a huge decrease in your take home pay by having a company car - average £400 per month. Add on your £6k decrease and it's a lot! Most companies are encouraging employees to take allowance these days.

TempNameChangexx · 11/08/2021 11:48

As others have said, can you ask for a car allowance instead?
I changed from having a car to a car allowance years ago and it was like getting a massive pay rise.
Then, if you decide that you really need a second car, you could lease a car yourself and probably still be better off Smile