Company car scheme - worth fighting?
Discussion
Hi all
We've been in a car scheme since day 1 (fully maintained) and burden the BIK impact (I personally pay £450/month).
The company are now introducing a cash allowance option (£7k gross) but are trying to prevent anyone in contract from accessing the cash allowance early. I have spoken to the lease company who'll take the current car back for £600 (which I would pay happily)
It would mean I have 24 months left with the BIK burden and would be around £300 a month worse off compared to taking the cash and buying a vehicle. We took the new contracts in good faith that the scheme wouldn't be changed or amended.
Worth fighting this? There's a £0 cost to the business as what they'll spend on my cash allowance they are saving through not leasing a car for me.
We've been in a car scheme since day 1 (fully maintained) and burden the BIK impact (I personally pay £450/month).
The company are now introducing a cash allowance option (£7k gross) but are trying to prevent anyone in contract from accessing the cash allowance early. I have spoken to the lease company who'll take the current car back for £600 (which I would pay happily)
It would mean I have 24 months left with the BIK burden and would be around £300 a month worse off compared to taking the cash and buying a vehicle. We took the new contracts in good faith that the scheme wouldn't be changed or amended.
Worth fighting this? There's a £0 cost to the business as what they'll spend on my cash allowance they are saving through not leasing a car for me.
RayDonovan said:
Hi all
We've been in a car scheme since day 1 (fully maintained) and burden the BIK impact (I personally pay £450/month).
The company are now introducing a cash allowance option (£7k gross) but are trying to prevent anyone in contract from accessing the cash allowance early. I have spoken to the lease company who'll take the current car back for £600 (which I would pay happily)
It would mean I have 24 months left with the BIK burden and would be around £300 a month worse off compared to taking the cash and buying a vehicle. We took the new contracts in good faith that the scheme wouldn't be changed or amended.
Worth fighting this? There's a £0 cost to the business as what they'll spend on my cash allowance they are saving through not leasing a car for me.
When you say "fighting", have you already spoken with your employer and they have said no?We've been in a car scheme since day 1 (fully maintained) and burden the BIK impact (I personally pay £450/month).
The company are now introducing a cash allowance option (£7k gross) but are trying to prevent anyone in contract from accessing the cash allowance early. I have spoken to the lease company who'll take the current car back for £600 (which I would pay happily)
It would mean I have 24 months left with the BIK burden and would be around £300 a month worse off compared to taking the cash and buying a vehicle. We took the new contracts in good faith that the scheme wouldn't be changed or amended.
Worth fighting this? There's a £0 cost to the business as what they'll spend on my cash allowance they are saving through not leasing a car for me.
Mandat said:
RayDonovan said:
Hi all
We've been in a car scheme since day 1 (fully maintained) and burden the BIK impact (I personally pay £450/month).
The company are now introducing a cash allowance option (£7k gross) but are trying to prevent anyone in contract from accessing the cash allowance early. I have spoken to the lease company who'll take the current car back for £600 (which I would pay happily)
It would mean I have 24 months left with the BIK burden and would be around £300 a month worse off compared to taking the cash and buying a vehicle. We took the new contracts in good faith that the scheme wouldn't be changed or amended.
Worth fighting this? There's a £0 cost to the business as what they'll spend on my cash allowance they are saving through not leasing a car for me.
When you say "fighting", have you already spoken with your employer and they have said no?We've been in a car scheme since day 1 (fully maintained) and burden the BIK impact (I personally pay £450/month).
The company are now introducing a cash allowance option (£7k gross) but are trying to prevent anyone in contract from accessing the cash allowance early. I have spoken to the lease company who'll take the current car back for £600 (which I would pay happily)
It would mean I have 24 months left with the BIK burden and would be around £300 a month worse off compared to taking the cash and buying a vehicle. We took the new contracts in good faith that the scheme wouldn't be changed or amended.
Worth fighting this? There's a £0 cost to the business as what they'll spend on my cash allowance they are saving through not leasing a car for me.
RayDonovan said:
Hi all
We've been in a car scheme since day 1 (fully maintained) and burden the BIK impact (I personally pay £450/month).
The company are now introducing a cash allowance option (£7k gross) but are trying to prevent anyone in contract from accessing the cash allowance early. I have spoken to the lease company who'll take the current car back for £600 (which I would pay happily)
It would mean I have 24 months left with the BIK burden and would be around £300 a month worse off compared to taking the cash and buying a vehicle. We took the new contracts in good faith that the scheme wouldn't be changed or amended.
Worth fighting this? There's a £0 cost to the business as what they'll spend on my cash allowance they are saving through not leasing a car for me.
you're in one scheme and when you finish the current term you can switch to the new one. What is there to fight.We've been in a car scheme since day 1 (fully maintained) and burden the BIK impact (I personally pay £450/month).
The company are now introducing a cash allowance option (£7k gross) but are trying to prevent anyone in contract from accessing the cash allowance early. I have spoken to the lease company who'll take the current car back for £600 (which I would pay happily)
It would mean I have 24 months left with the BIK burden and would be around £300 a month worse off compared to taking the cash and buying a vehicle. We took the new contracts in good faith that the scheme wouldn't be changed or amended.
Worth fighting this? There's a £0 cost to the business as what they'll spend on my cash allowance they are saving through not leasing a car for me.
Blown2CV said:
RayDonovan said:
Hi all
We've been in a car scheme since day 1 (fully maintained) and burden the BIK impact (I personally pay £450/month).
The company are now introducing a cash allowance option (£7k gross) but are trying to prevent anyone in contract from accessing the cash allowance early. I have spoken to the lease company who'll take the current car back for £600 (which I would pay happily)
It would mean I have 24 months left with the BIK burden and would be around £300 a month worse off compared to taking the cash and buying a vehicle. We took the new contracts in good faith that the scheme wouldn't be changed or amended.
Worth fighting this? There's a £0 cost to the business as what they'll spend on my cash allowance they are saving through not leasing a car for me.
you're in one scheme and when you finish the current term you can switch to the new one. What is there to fight.We've been in a car scheme since day 1 (fully maintained) and burden the BIK impact (I personally pay £450/month).
The company are now introducing a cash allowance option (£7k gross) but are trying to prevent anyone in contract from accessing the cash allowance early. I have spoken to the lease company who'll take the current car back for £600 (which I would pay happily)
It would mean I have 24 months left with the BIK burden and would be around £300 a month worse off compared to taking the cash and buying a vehicle. We took the new contracts in good faith that the scheme wouldn't be changed or amended.
Worth fighting this? There's a £0 cost to the business as what they'll spend on my cash allowance they are saving through not leasing a car for me.
could you not have had the option of choosing a car with far lower BIK? In other words, they didn't force you into taking a car which is expensive.
It's possible the provider might charge you a fee but they might also charge your employer a fee too, which they would rightly not want to pay.
It's possible the provider might charge you a fee but they might also charge your employer a fee too, which they would rightly not want to pay.
Blown2CV said:
could you not have had the option of choosing a car with far lower BIK? In other words, they didn't force you into taking a car which is expensive.
It's possible the provider might charge you a fee but they might also charge your employer a fee too, which they would rightly not want to pay.
You're right, but when we had to renew the car, a cash option wasn't on the horizon. I could've stayed in my old car and swapped into a cash option if we knew a cash option was in the future.It's possible the provider might charge you a fee but they might also charge your employer a fee too, which they would rightly not want to pay.
The fee (£600) is all in, nothing else to pay (confirmed by the lease company)
RayDonovan said:
Blown2CV said:
seems peculiar that they did not have a car allowance alternative all along, as this is very common.
100%The only logical explanation is that we used to have a high average mileage (average was circa 25k pa pre COVID)
tload of miles on it. Was a decent car to be fair. They tried to lean on people to have more respectable and modern cars but it wasn't enforceable. Had a TVR as a second car. For me paying the tax on the BIK for the hassle free factor of a company car trumps taking the cash.
Someone else is keeping me mobile at all times, with no VED, insurance, service and maintenance to pay. No shopping around for insurance.
£7k pa after 42% tax and NI is only £338 per month nett assuming 40% taxpayer, and you have to lease/buy and maintain a car out of that.
Someone else is keeping me mobile at all times, with no VED, insurance, service and maintenance to pay. No shopping around for insurance.
£7k pa after 42% tax and NI is only £338 per month nett assuming 40% taxpayer, and you have to lease/buy and maintain a car out of that.
RayDonovan said:
Initial pushback from fairly junior HR, no reason given...
How big is the company? Sounds like the kind of thing where someone at the right level would just say "this is bonkers" and agree.Unless there's some accounting issue, maybe.
It's 20yrs ago that we introduced a cash allowance and people weren't that keen at first, as 30K/yr is pretty hard on a car and the maths at the time was pretty evenly balanced. We weren't allowed to end leases early but people were pushed into cash at the end - if they still wanted a company car they were given whatever random car was kicking around from people who'd left.
Somebody said:
For me paying the tax on the BIK for the hassle free factor of a company car trumps taking the cash.
Someone else is keeping me mobile at all times, with no VED, insurance, service and maintenance to pay. No shopping around for insurance.
£7k pa after 42% tax and NI is only £338 per month nett assuming 40% taxpayer, and you have to lease/buy and maintain a car out of that.
Net allowance & BIK savings is pretty decent as an overall pot.Someone else is keeping me mobile at all times, with no VED, insurance, service and maintenance to pay. No shopping around for insurance.
£7k pa after 42% tax and NI is only £338 per month nett assuming 40% taxpayer, and you have to lease/buy and maintain a car out of that.
Agree about the convenience of a company car, certainly has its benefits at times..
Sheepshanks said:
RayDonovan said:
Initial pushback from fairly junior HR, no reason given...
How big is the company? Sounds like the kind of thing where someone at the right level would just say "this is bonkers" and agree.Unless there's some accounting issue, maybe.
It's 20yrs ago that we introduced a cash allowance and people weren't that keen at first, as 30K/yr is pretty hard on a car and the maths at the time was pretty evenly balanced. We weren't allowed to end leases early but people were pushed into cash at the end - if they still wanted a company car they were given whatever random car was kicking around from people who'd left.
We're hoping some common sense will prevail as essentially, new starters will have an increased salary through basic pay & allowance v existing staff with a company car.
CheesecakeRunner said:
Allowance may not be the increase you think it is.
You’re getting a fully paid and maintained car for BIK of 450 at the moment
7000 allowance is about 300 a month for a 40% tax payer, or 400ish for a 20% payer (I’ve had wine, sums may be off a little). Can you run an equivalent car for that all in?
And don’t forget, if you make use of a company salary sacrifice scheme, the car is still regarded as a company car, and you’re still paying BIK (or income tax, whichever is higher) as well as the lease cost from your allowance. So unless it’s an EV, it’s still chunky BIK.
Allowance added to current BIK implications give a decent net position (but I'm not here to discuss that to be fair) You’re getting a fully paid and maintained car for BIK of 450 at the moment
7000 allowance is about 300 a month for a 40% tax payer, or 400ish for a 20% payer (I’ve had wine, sums may be off a little). Can you run an equivalent car for that all in?
And don’t forget, if you make use of a company salary sacrifice scheme, the car is still regarded as a company car, and you’re still paying BIK (or income tax, whichever is higher) as well as the lease cost from your allowance. So unless it’s an EV, it’s still chunky BIK.
CheesecakeRunner said:
Allowance may not be the increase you think it is.
You’re getting a fully paid and maintained car for BIK of 450 at the moment
7000 allowance is about 300 a month for a 40% tax payer, or 400ish for a 20% payer (I’ve had wine, sums may be off a little). Can you run an equivalent car for that all in?
You add the two together though - he's getting £400 ish / mth plus saving £450.You’re getting a fully paid and maintained car for BIK of 450 at the moment
7000 allowance is about 300 a month for a 40% tax payer, or 400ish for a 20% payer (I’ve had wine, sums may be off a little). Can you run an equivalent car for that all in?
And mileage payment, plus tax refund.
I've no care to do the calc now - but when we introduced opt out in 2005, some guys randomly bought (well PCP'd) the same cars they could have had as company cars and then found there was little in it cost wise. The 30K/yr mileage was killing it.
The people that did well were head office staff doing little mileage where their company cars had been things like A6 / 5 Series and they replaced them with used Astras / 308s!
I've done the calcs and I'd be between £350 to £400/month better off (net), excluding any fuel savings from running an EV as a personal car.
I would make a decent amount per mile on business trips (low rate EV tariff and would get circa 23p/ mile (AFR and tax reclaim) I can also charge for free in the office (where I wouldn't claim the business mileage for).
The numbers have been done. I'm lucky enough to be able to finance 50% of a EV purchase in cash and the remainder on a low interest bank loan. This wouldn't really work if I was looking to PCP something decent on 15k PA.
I would make a decent amount per mile on business trips (low rate EV tariff and would get circa 23p/ mile (AFR and tax reclaim) I can also charge for free in the office (where I wouldn't claim the business mileage for).
The numbers have been done. I'm lucky enough to be able to finance 50% of a EV purchase in cash and the remainder on a low interest bank loan. This wouldn't really work if I was looking to PCP something decent on 15k PA.
Sheepshanks said:
You add the two together though - he's getting £400 ish / mth plus saving £450.
And mileage payment, plus tax refund.
I've no care to do the calc now - but when we introduced opt out in 2005, some guys randomly bought (well PCP'd) the same cars they could have had as company cars and then found there was little in it cost wise. The 30K/yr mileage was killing it.
The people that did well were head office staff doing little mileage where their company cars had been things like A6 / 5 Series and they replaced them with used Astras / 308s!
And, let me guess, the people who made this decision where head office staff...? And mileage payment, plus tax refund.
I've no care to do the calc now - but when we introduced opt out in 2005, some guys randomly bought (well PCP'd) the same cars they could have had as company cars and then found there was little in it cost wise. The 30K/yr mileage was killing it.
The people that did well were head office staff doing little mileage where their company cars had been things like A6 / 5 Series and they replaced them with used Astras / 308s!
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