Opting out employer company car

Has anybody done this? my car is up for renewal and I dont do the miles i used to so am considering knocking it on the head.

how does this work in leymans terms? from what i can gather its not straight forward i no longer get car now my tax reverts back to "normal", i will get an allowance? who decides that? is it based on an agreement with boss and me, or predetermined?

TELL ME!!!

In laymans terms I would guess that your company either does a company car or company car allowance. Depending on your grade the allowance is likely to be between 3k-10k per year or something so if your grade was somewhere in the middle I would guess that instead of a company car you would get an extra 5k or so on top of your existing salary. This would be a gross increase so obviously subject to tax / NI, etc. You'll probably end up with a couple of hundred quid extra a month in your pocket.

EDIT: I would also guess that the allowances are predetermined by the company based on your grade. You may be able to negotiate an increase in the allowance with your boss, for example I used to have a company car that was based on my grade but cos I had to do loads of miles my boss said I could get a car from a higher band. Obviously I paid extra tax on this but I was happy having the better car. Also, your personal allowance, assuming you have no other taxable benefits, will revert to standard.

[Bri w]

The monthly allowance from your employer is determined by them, and is usually based on your grade as well as what your employer thinks will get you a car comparable to that if you stayed on the Company Car scheme.

The allowance is taxable. There are then a number of options for claiming costs/fuel/company miles. The miles claim is based on what the Tax man says is acceptable, e.g. one version is 48p for the first 10,000 miles then down to 11p/mile whilst another is a flat 19p/mile.

The Company may also stipulate that the car must have 4 doors, must be changed before 4 yrs old and can't be red.

Some Companies do 'assisted purchase' schemes. They 'loan' the money to the employer, pay them a monthly allowance but claw back the loan from the allowance - guarantees them that the employee will be able to afford a decent car.

[G]

Your tax code also does not get adjusted until the new tax year, so you get shafted temporarily.

yip my previous employer offered a company car or a car allowance. my decision was did i want a basic 1.2 ford fiesta or £4,500.00 per year (minus deductions) to run the car.

i'd be asking your boss what this deal means in money terms. because remember when someone else always dealt with insurance, road tax, fuel costs, tyres, servicing etc.... now thats all your responsibilty. plus your insurance will maybe be a wee bit more expensive as it will no doubt need to be insured for business use.

i wouldnt take a company car, because of the tax costs and always feel i would be able to have a better car taking my allowance. but i like cars, some people at my old place didnt, so for them they would rather have someone else deal with all the car stuff for them!

check and see if your bike could be classed as your business vehicle! i know i was allowed to have my bike as my company vehicle! could easily give you a few months over the summer to claim some car allowance and then put towards a deposit on a car for autumn/winter!

[Viney]

Look into Private leasing if you get a car allowance. My old boss used to do this. There are always cars that have deals. He had a Merc CLS AMG pack (not AMG) for the same price as an Astra VXR. Serviced it once in 2 years (20k service intervals) Tyres lasted the 2 years as well. Doesnt answer the question but an option.

Originally Posted by G

Your tax code also does not get adjusted until the new tax year, so you get shafted temporarily.

not true... you phone your tax office once you have returned your company car and they will issue a new P6 notice to your HR department to change your tax code for the next pay.

we as a company inform then put they only update once a quarter however if the employee phones it is done straight away!

[Sir Trev]

Originally Posted by lily

not true... you phone your tax office once you have returned your company car and they will issue a new P6 notice to your HR department to change your tax code for the next pay.

we as a company inform then put they only update once a quarter however if the employee phones it is done straight away!

Correct. There is nothing stopping the employee telling HMRC themselves. Whether HMRC get your tax code right is however a different story...

Keith - do you do a lot of personal miles? If you're up in the 15-20k range then a company car is generally a good idea due to wear and tear and the fuel cost (assuming you get a fully expensed car/fuel package). If you do a lot of business miles this would also point you to a company car. If you do average personal miles, not many company miles, and don't mind an older car you can save a lot of money* by taking the allowance option if offered and getting a three year old mass market car. See if you can buy your current company car - the lease co may let you have it for a song.

*This was me a few years ago and I DID save a lot.

HOWEVER, if you're happy to have a very efficient smaller company car then the tax is not as bad as it used to be. The new shape Astra can be had with a 2.0l diseasal pushing out 160PS, and at just 126 CO2 thingies it's only 13% for BIK calculations.

[G]

[QUOTE=malks;2198812]
i wouldnt take a company car, because of the tax costs and always feel i would be able to have a better car taking my allowance. but i like cars, some people at my old place didnt, so for them they would rather have someone else deal with all the car stuff for them![qoute]

everyone says about the tax but it's not that bad really. Granted I only have a **** cheap car at the moment but it's still not bad.

I pay £26 a month for the benefit of a company car, so that's less than £400 a year, no insurance to pay, no tax, no maintenance, no repairs like windscreens etc.

I have just ordered a better car but because of the emissions it's still cheap each month in tax at £32 a month.

I guess if you talking £30k+ cars and you fall into the 40% tax bracket you will be paying a fair bit more a month but it will always be cheaper than running you own car for 25000+ miles a year.

If your employer offers a car allowance this would be paid though PAYE and tax & NI will be deducted, I got £4000 which equated to about £2900 in my pocket a year, this wasn't enough to finance and insure a car so I opted for the company car.

With a car allowance your tax code will revert to the "normal" 685L or whatever the tax free amount currently is, (£6850) hence tax code 685L providing your payments are up to date and you will be taxed using this code plus your allowance.

Company cars are still the way forward if you dont have the cash in the bank to buy a good car straight away and you dont want the risk or hassle of running your own car.