Company car or cash?

[RayDonovan]

Hi all,

Looks as though we're going to be given the opportunity to hand back our company cars and take an allowance pretty soon. Be helpful to get some advice from anyone that has gone through the process before..

Current position
Tiguan R Line 2.0tdi DSG - company car
40% tax rate, paying around £440/month in tax
10k business miles (HMRC minimum pence per mile reimbursement)
5k private

Rumour has it that we'll be offered £600/month which isn't a great amount, but added to the BIK savings gives me around £800 a month net (I think).

Obviously financially, I'd be in a better position taking the cash but the company car has benefits, no worry about servicing, tyres etc.

Thoughts would be welcome

[RayDonovan]

myvision said:

Are there any restrictions on what you can buy if you take the money?
We have the following to adhere to,
Can't be older than 6 years
Has to have less than 150k miles
Limit on emissions depending on which group you are in
Has to have four seats
No vans
No convertibles
No motorbikes

I'd ask about any other rules before deciding.

Just waiting on the final rules but expect them to follow a similar path as above. I probably wouldn't run anything too old anyway. Would really like a Tesla but not sure it would make much financial sense..

[RayDonovan]

EV would make sense as a company car - sadly not an option.

[RayDonovan]

JD said:

RayDonovan said:

Just waiting on the final rules but expect them to follow a similar path as above. I probably wouldn't run anything too old anyway. Would really like a Tesla but not sure it would make much financial sense..

Having recently come out of the company scheme a few points:

1. Why on earth have you got a diesel! Can you not swap for an EV or PHEV in the company scheme, that will save you £300 a month in tax.

2. £600 is not a lot of money at all, £350 after deductions, then insurance will be 20% of that, tyres & maintenance 15% of that

I reckon I just break even on £900 a month.

On the first point, no other reasonable options - certainly no EV or PHEV on the list. Point #2, agree. Feels like opting out could save some money, but not that much (unless I really downgrade)

[RayDonovan]

rlg43p said:

JD said:

Having recently come out of the company scheme a few points:

1. Why on earth have you got a diesel! Can you not swap for an EV or PHEV in the company scheme, that will save you £300 a month in tax.

2. £600 is not a lot of money at all, £350 after deductions, then insurance will be 20% of that, tyres & maintenance 15% of that

I reckon I just break even on £900 a month.

It's not as simple as that.

£350 after deductions maybe, but he's also saving £440 per month on the tax bill for the company car. Then there might also be a mileage rate for business miles from the company - if it's not 45p per mile then he can claim tax relief on the underpayment.

You need a complex spreadsheet to work out the full picture (I have one, but its probably out of date).

Tax relief is coming in at around £100 month (based on 10k business miles per year), so not insignificant. Total budget of around £850/£900 per month. Would guess insurance is going to be £75/month.

[RayDonovan]

JD said:

RayDonovan said:

On the first point, no other reasonable options - certainly no EV or PHEV on the list. Point #2, agree. Feels like opting out could save some money, but not that much (unless I really downgrade)

What on earth? no PHEV options? That is so seriously punitive to the employees it almost feels malicious in intent? especially since you are such a low mileage user!

What's your current company car budget?

Indeed, hence the change now.
I think it's about £550/month that includes full maintenance on 20k PA / 3 years. One of the issues is that the budget never kept pace with recent price rises so the choice has been getting worse and BIK getting more expensive.

[RayDonovan]

Thanks for all the comments.

[RayDonovan]

Other option would be to use the Wife's Corolla for business trips and PCP/lease/buy a MG4 EV or another EV.

Corolla is paid for, under warranty for another 7 years and is covered on a service plan.

[RayDonovan]

Does anyone know if you can still claim tax relief on mileage for EVs? Current HMRC guide is 10ppm but not sure if you can claim your prevailing tax rate on the difference between 10p and 45p (14p per mile in this case)

[RayDonovan]

CheesecakeRunner said:

RayDonovan said:

Does anyone know if you can still claim tax relief on mileage for EVs? Current HMRC guide is 10ppm but not sure if you can claim your prevailing tax rate on the difference between 10p and 45p (14p per mile in this case)

If it’s a privately owned or leased vehicle you’re using for business, the yes.

Cheers. Can pick up a long range MG4 EV for £370/month with minimal deposit. 24p a mile to run sounds ok considering we can charge for free at the office..

[RayDonovan]

Done some quick sums this morning

Combining the BIK savings per month (£447) + the net monthly allowance gives me around £810/month (excluding any claim back on mileage allowance)

Can PCP a MG4 EV long range for £426/month on 15k. Total running costs including insurance and maintenance comes to £522/month so quite a net saving.

[RayDonovan]

Muzzer79 said:

RayDonovan said:

Done some quick sums this morning

Combining the BIK savings per month (£447) + the net monthly allowance gives me around £810/month (excluding any claim back on mileage allowance)

Can PCP a MG4 EV long range for £426/month on 15k. Total running costs including insurance and maintenance comes to £522/month so quite a net saving.

Financially, you're better off in this scenario but don't lose sight of the fact that this is only because of the spectacularly poor company car scheme you have been in, which is steering you now into spending 160 quid of your hard-earned every month to drive an MG4.....

If you have any influence in this company, point out how much worse off you are even with your reduced tax bill - a car allowance is supposed to cover the cost of purchasing and running a car for work - how much car do you get for £360 a month (after tax) all in nowadays??

Cars have got a lot more expensive in the last 2 years - car allowances haven't kept up so now companies are seeing a great way to save money and just give you an allowance which would have bought a decent car.........5 years ago.

Completely agree on all points. Sadly, not much influence. We're a multi €billion business but every car scheme is run locally. We got told 4 years ago that we were all moving into hybrids - turned out it meant we could order a Mild Hybrid which made no difference to tax bills...

It's been a very continuous point as you can imagine..

[RayDonovan]

Muzzer79 said:

RayDonovan said:

Muzzer79 said:

RayDonovan said:

Done some quick sums this morning

Combining the BIK savings per month (£447) + the net monthly allowance gives me around £810/month (excluding any claim back on mileage allowance)

Can PCP a MG4 EV long range for £426/month on 15k. Total running costs including insurance and maintenance comes to £522/month so quite a net saving.

Financially, you're better off in this scenario but don't lose sight of the fact that this is only because of the spectacularly poor company car scheme you have been in, which is steering you now into spending 160 quid of your hard-earned every month to drive an MG4.....

If you have any influence in this company, point out how much worse off you are even with your reduced tax bill - a car allowance is supposed to cover the cost of purchasing and running a car for work - how much car do you get for £360 a month (after tax) all in nowadays??

Cars have got a lot more expensive in the last 2 years - car allowances haven't kept up so now companies are seeing a great way to save money and just give you an allowance which would have bought a decent car.........5 years ago.

Completely agree on all points. Sadly, not much influence. We're a multi €billion business but every car scheme is run locally. We got told 4 years ago that we were all moving into hybrids - turned out it meant we could order a Mild Hybrid which made no difference to tax bills...

It's been a very continuous point as you can imagine..

Tough break.

Personally, I'd sink an extra £160 a month into a Tesla Model Y (available for £588 a month with 1 month deposit)

You're still saving cash and I think it's a nicer car (whilst by no means perfect)

Or, for just a tenner or so more, get into a Kia EV6

Where have you seen those deals? (Would prefer a Tesla)

[RayDonovan]

CheesecakeRunner said:

RayDonovan said:

Where have you seen those deals? (Would prefer a Tesla)

Get an insurance quote first. It’ll be a lot more than an MG4.

I've run a few quotes and it's more than an MG4 but not horrific.

[RayDonovan]

Hopefully getting a little closer to being able to switch from a company car to a car allowance

Still favouring a 2021 Tesla Model 3 LR, sums as below

£10k savings
£15k loan

£352/month for the loan (£15k over 48 months)
£65/month for the insurance (checked and have been quoted)
£50/month into savings for tyres and servicing

Total running costs of £437/month

BIK savings of £450/month & £7k PA (£350 net per month) give a total monthly budget of £800.
£363 monthly saving v company car (£800-£437).

Work will pay me 15p per mile, but I can claim the tax relief for the first 10k which comes out at 12p per mile. That will give me 27p per mile for business use and should cost me around 3p per mile to run, based on EON EV tariff at 9.5p per kWh. Even using Tesla Superchargers on a longer journey I would still be in the positive.

[RayDonovan]

Thanks but we're strictly forbidden for trying to declare company cars as "Business use only" (and it wouldn't work for us anyway).

Lots of different options in how to move forward with replacing the company car, I would prefer something nice and comfortable as I need to do a 450 mile round trip once per month at least (and I like having a nice car!)
EVs appeal to my nerdy side, I have no issues with charging at home and the office and i'm able to plan charging around trips / longer journeys with few issues.

[RayDonovan]

JD said:

RayDonovan said:

Hopefully getting a little closer to being able to switch from a company car to a car allowance

Still favouring a 2021 Tesla Model 3 LR, sums as below

£10k savings
£15k loan

£352/month for the loan (£15k over 48 months)
£65/month for the insurance (checked and have been quoted)
£50/month into savings for tyres and servicing

Total running costs of £437/month

BIK savings of £450/month & £7k PA (£350 net per month) give a total monthly budget of £800.
£363 monthly saving v company car (£800-£437).

Work will pay me 15p per mile, but I can claim the tax relief for the first 10k which comes out at 12p per mile. That will give me 27p per mile for business use and should cost me around 3p per mile to run, based on EON EV tariff at 9.5p per kWh. Even using Tesla Superchargers on a longer journey I would still be in the positive.

You are however totally ignoring the fact you are putting in £10k of your own money…

Still no hybrids or EV on the company car list?

Nope, no EVs or Hybrids due to lease costs
I am putting in £10k but the car will retain some value after 4 years and I'm 'saving' £363 compared to my current situation.
The other option is to keep in the scheme and keep spending £450/month in BIK with nothing to show.

[RayDonovan]

DickP said:

If taking the car allowance does it have to be electric? Why not a nicely specced diesel or petrol car?

No, can be pretty much anything.

[RayDonovan]

JD said:

RayDonovan said:

Nope, no EVs or Hybrids due to lease costs

I just don’t think you are looking in the right places.

What is your company allowance and required deal?

Leaseloco have a phev Leon estate for £360 a month on 10k miles, or a Cupra Formentor for £380

Crossed wires. We can't have EVs or Hybrids within the company car scheme due to the costs (20k PA / Fully maintained). If we opt for the car allowance, we can have what we want..

[RayDonovan]

TwigtheWonderkid said:

RayDonovan said:

JD said:

RayDonovan said:

Hopefully getting a little closer to being able to switch from a company car to a car allowance

Still favouring a 2021 Tesla Model 3 LR, sums as below

£10k savings
£15k loan

£352/month for the loan (£15k over 48 months)
£65/month for the insurance (checked and have been quoted)
£50/month into savings for tyres and servicing

Total running costs of £437/month

BIK savings of £450/month & £7k PA (£350 net per month) give a total monthly budget of £800.
£363 monthly saving v company car (£800-£437).

Work will pay me 15p per mile, but I can claim the tax relief for the first 10k which comes out at 12p per mile. That will give me 27p per mile for business use and should cost me around 3p per mile to run, based on EON EV tariff at 9.5p per kWh. Even using Tesla Superchargers on a longer journey I would still be in the positive.

You are however totally ignoring the fact you are putting in £10k of your own money…

Still no hybrids or EV on the company car list?

Nope, no EVs or Hybrids due to lease costs
I am putting in £10k but the car will retain some value after 4 years and I'm 'saving' £363 compared to my current situation.
The other option is to keep in the scheme and keep spending £450/month in BIK with nothing to show.

But in the interim, you're losing the interest on £10K, so about £500 a year, or £2K currently over 4 years. And insurance costs, £65/month now, what if you have a claim during the year, or get a conviction. What if you have 2 claims. Insurance costs can go quite easily from £800 to £2500 in a year if things don't go well.

All points to consider but I am 'saving' nearly £4k per year compared to my current situation. There's no perfect solution really as each option bares a risk