New company car user - understanding costs
Discussion
Hi all
I've got a new role which gets me a company car but I don't fully understand the cost implications. I don't get a fuel card.
Is it literally the BIK cost that comes off my net or gross wage?
Looking at a Merc c300e and using comcar.co.uk it suggests I'll be paying about £140 a month it gives a cost at basic and at 40% rate. Does it amortise the 40% rate?
When I tick private fuel it adds 50 quid. What does this mean?
Any other costs?
Thanks
I've got a new role which gets me a company car but I don't fully understand the cost implications. I don't get a fuel card.
Is it literally the BIK cost that comes off my net or gross wage?
Looking at a Merc c300e and using comcar.co.uk it suggests I'll be paying about £140 a month it gives a cost at basic and at 40% rate. Does it amortise the 40% rate?
When I tick private fuel it adds 50 quid. What does this mean?
Any other costs?
Thanks
You pay tax on the BIK (20% or 40% depending on which tax band you are in).
In effect the BIK is the financial value that HMRC put on you having tje car so tax you on that amount. The BIK amount is itself calculated on the list price of tje car and tje emissions level, comcar is a good site for working this out.
Private fuel will apply if your get private fuel paid for, it sounds from your post that you won’t get this.
Be aware that electric cars have very low BIK so are very cost effective as a company car.
If you have a conventionally powered car then there are HMRC limits on how much you can claim back for the fuel for business miles, my experience is that this rate barely covers the actual cost. There used to be some cars that were better for this than others as I recall cars over 2.0 are allowed a higher rate, so a 2.1 diesel (Mercedes) was preferable to a 2.0 diesel (BMW).
In effect the BIK is the financial value that HMRC put on you having tje car so tax you on that amount. The BIK amount is itself calculated on the list price of tje car and tje emissions level, comcar is a good site for working this out.
Private fuel will apply if your get private fuel paid for, it sounds from your post that you won’t get this.
Be aware that electric cars have very low BIK so are very cost effective as a company car.
If you have a conventionally powered car then there are HMRC limits on how much you can claim back for the fuel for business miles, my experience is that this rate barely covers the actual cost. There used to be some cars that were better for this than others as I recall cars over 2.0 are allowed a higher rate, so a 2.1 diesel (Mercedes) was preferable to a 2.0 diesel (BMW).
Scrump said:
You pay tax on the BIK (20% or 40% depending on which tax band you are in).
In effect the BIK is the financial value that HMRC put on you having tje car so tax you on that amount. The BIK amount is itself calculated on the list price of tje car and tje emissions level, comcar is a good site for working this out.
Private fuel will apply if your get private fuel paid for, it sounds from your post that you won’t get this.
Be aware that electric cars have very low BIK so are very cost effective as a company car.
If you have a conventionally powered car then there are HMRC limits on how much you can claim back for the fuel for business miles, my experience is that this rate barely covers the actual cost. There used to be some cars that were better for this than others as I recall cars over 2.0 are allowed a higher rate, so a 2.1 diesel (Mercedes) was preferable to a 2.0 diesel (BMW).
Thanks, I will definitely be getting a PHEV, likely a C300e as it gives c. 60 miles electric range. In effect the BIK is the financial value that HMRC put on you having tje car so tax you on that amount. The BIK amount is itself calculated on the list price of tje car and tje emissions level, comcar is a good site for working this out.
Private fuel will apply if your get private fuel paid for, it sounds from your post that you won’t get this.
Be aware that electric cars have very low BIK so are very cost effective as a company car.
If you have a conventionally powered car then there are HMRC limits on how much you can claim back for the fuel for business miles, my experience is that this rate barely covers the actual cost. There used to be some cars that were better for this than others as I recall cars over 2.0 are allowed a higher rate, so a 2.1 diesel (Mercedes) was preferable to a 2.0 diesel (BMW).
I can relax that it'll be BIK I'll pay and nothing else.
Is it off my gross or net wage do you know?
The BIK is the value hrmc attribute to the car.
So let’s say you get paid £30k and the car has a BIK value of £4K
Hmrc then say you effectively earn £34k ( salary plus BIK) and then tax you on the whole lot.
How much you pay depends on your marginal tax rate, but effectively your take home pay goes down by about £1700 a year on a c300e if your a 40% tax payer.
4K x 40% = £1699
So let’s say you get paid £30k and the car has a BIK value of £4K
Hmrc then say you effectively earn £34k ( salary plus BIK) and then tax you on the whole lot.
How much you pay depends on your marginal tax rate, but effectively your take home pay goes down by about £1700 a year on a c300e if your a 40% tax payer.
4K x 40% = £1699
Uncle boshy said:
The BIK is the value hrmc attribute to the car.
So let’s say you get paid £30k and the car has a BIK value of £4K
Hmrc then say you effectively earn £34k ( salary plus BIK) and then tax you on the whole lot.
How much you pay depends on your marginal tax rate, but effectively your take home pay goes down by about £1700 a year on a c300e if your a 40% tax payer.
4K x 40% = £1699
Thanks very much for this. So let’s say you get paid £30k and the car has a BIK value of £4K
Hmrc then say you effectively earn £34k ( salary plus BIK) and then tax you on the whole lot.
How much you pay depends on your marginal tax rate, but effectively your take home pay goes down by about £1700 a year on a c300e if your a 40% tax payer.
4K x 40% = £1699
Were also moving into a new, bigger house so just don't want any nasty financial surprises - I can relax a bit now.
http://cccfcalculator.hmrc.gov.uk/CCF0.aspx
You will pay tax on 8% of the value based on the MB site so approx 4k is taken of your SP tax free allowance. How much you actually pay depends on how far over the 40% rate cut off you are.
You will pay tax on 8% of the value based on the MB site so approx 4k is taken of your SP tax free allowance. How much you actually pay depends on how far over the 40% rate cut off you are.
Comcar is pretty good for detailing the exact costs based on your salary, the chosen car, personal use, etc., etc.
https://comcar.co.uk/
https://comcar.co.uk/
PorkInsider said:
Comcar is pretty good for detailing the exact costs based on your salary, the chosen car, personal use, etc., etc.
https://comcar.co.uk/
Cheers. Very useful.https://comcar.co.uk/
heisthegaffer said:
PorkInsider said:
Comcar is pretty good for detailing the exact costs based on your salary, the chosen car, personal use, etc., etc.
https://comcar.co.uk/
Cheers. Very useful.https://comcar.co.uk/
PorkInsider said:
heisthegaffer said:
PorkInsider said:
Comcar is pretty good for detailing the exact costs based on your salary, the chosen car, personal use, etc., etc.
https://comcar.co.uk/
Cheers. Very useful.https://comcar.co.uk/
I may have missed it but you may also have to pay a contribution depending on the car and it usually has to be on the 'list' you can't just pick anything.
Assuming you could have anything the standard 'allowance' might get you a poverty spec BMW 1 series. You just pay the BIK. If you wanted an M3 instead then you will have to pay the additional contribution + the BIK on top (of a more expensive car).
Assuming you could have anything the standard 'allowance' might get you a poverty spec BMW 1 series. You just pay the BIK. If you wanted an M3 instead then you will have to pay the additional contribution + the BIK on top (of a more expensive car).
Bullett said:
I may have missed it but you may also have to pay a contribution depending on the car and it usually has to be on the 'list' you can't just pick anything.
Assuming you could have anything the standard 'allowance' might get you a poverty spec BMW 1 series. You just pay the BIK. If you wanted an M3 instead then you will have to pay the additional contribution + the BIK on top (of a more expensive car).
Thanks. Hopefully I'll be in line for something like a 330e, C300e or V60 recharge. I really don't want to be paying more than the BIK. Assuming you could have anything the standard 'allowance' might get you a poverty spec BMW 1 series. You just pay the BIK. If you wanted an M3 instead then you will have to pay the additional contribution + the BIK on top (of a more expensive car).
Ask to see the list. It will have the selection and and contribution you will need to make (if any). The free cars are nearly always worse than you are expecting!
Also ask if they have reallocations, usually available at a discounted contribution. The wife just picked up an i-pace for £0 + £25 a month BIK as it was a reallocation. A new one was £150+BIK (still cheap)
Also ask if they have reallocations, usually available at a discounted contribution. The wife just picked up an i-pace for £0 + £25 a month BIK as it was a reallocation. A new one was £150+BIK (still cheap)
I don't know what job you do, but a lot of companies grade their company car drivers, so Grade A for example may only see a certain list of vehicles.
There are usually zero-cost vehicles - so the vehicle rental is the same as your grade allowance, and you just pay the BIK. If you go for a more expensive car this is known as a 'trade up' so you have to pay your allowance (so zero for you) plus whatever the difference on top is. Similarly, if your company does this, sometimes they may credit you some allowance back for going for a car cheaper than your allowance (a 'trade down').
If you add cost options to the car depending on your company policy, you may have to either pay for them separately, or the rental will increase and you pay the difference as per a trade up. This will also affect the BIK as you're increasing the P11D value of the car.
If you only want to pay the BIK and nothing else, then you need to pick the zero cost vehicles and don't spec them up like a christmas tree, stick to zero cost options.
A lot will depend on your company policy.
There are usually zero-cost vehicles - so the vehicle rental is the same as your grade allowance, and you just pay the BIK. If you go for a more expensive car this is known as a 'trade up' so you have to pay your allowance (so zero for you) plus whatever the difference on top is. Similarly, if your company does this, sometimes they may credit you some allowance back for going for a car cheaper than your allowance (a 'trade down').
If you add cost options to the car depending on your company policy, you may have to either pay for them separately, or the rental will increase and you pay the difference as per a trade up. This will also affect the BIK as you're increasing the P11D value of the car.
If you only want to pay the BIK and nothing else, then you need to pick the zero cost vehicles and don't spec them up like a christmas tree, stick to zero cost options.
A lot will depend on your company policy.
ds!one thing really worth considering is a downgrade.
At my employer the list is graded with payments for downgrades, its become quite popular to downgrade to a small EV with a very small BIK value.
swapping a BMW 330E etc with a fuel card for a Cupra Born with 260miles of range may not sound exciting but for a 40% taxpayer it has a huge financial benefit which pays to run a fun weekend car.
At my employer the list is graded with payments for downgrades, its become quite popular to downgrade to a small EV with a very small BIK value.
swapping a BMW 330E etc with a fuel card for a Cupra Born with 260miles of range may not sound exciting but for a 40% taxpayer it has a huge financial benefit which pays to run a fun weekend car.
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