lizzydripin wrote:Hi vrdiver
Thank you for that info, can you tell me if company cars were a better deal?
It's been a while since I had a company car, having always elected for the car allowance whenever offered (I'm not a petrolhead, nor do I care what people think of the car I drive). The taxation for company cars has however just changed and, as I understand it, HMRC will now tax you on THE GREATER OF the car allowance or the Benefit In Kind that the car is deemed to be worth. (So if his BIK is less than £4,500pa, he will still pay tax on £4,500. There was a separate thread on this - see viewtopic.php?f=49&t=5698
For 2017/2018, the lowest benefit-in-kind (BIK) levy will be 9% - reserved for cars producing between 0-50g/km of CO2 – while the highest will be 37% for those producing 190g/km or more. (see the full article for details that apply to any cars your OH is considering: http://www.parkers.co.uk/company-cars/2 ... 17-budget/
For ultra low emission cars that's a pretty good deal (except where the employee has a car allowance alternative, see above), whereas for anything else I think it's expensive, but others may not. The real difference, in my mind, is in where the risk lies; with a company car, if you drive it into a ditch, or an idiot drives into the back of you, you just pick up the phone and fleet management deal with it and send you a replacement, pronto. If it's your own car however, you're on your own with whatever insurance package you've taken out. In exchange for taking the risk on, you get to keep more of the money (it's usually cheaper, barring real bad luck; you also end up owning the asset, whereas a company car driver has less hassle, but doesn't own the car and is less well off).
If buying a car, note that the road tax rules will be different depending on date of first registration (pre or post April 2017) You can check here: https://www.gov.uk/vehicle-tax-rate-tables
One other point about company cars: if they are leased on e.g. 3 year / 30,000 mile deals then some companies will swap cars between high and low mileage users so as to avoid penalties from the leasing company. Might be worth checking, as that took the shine off of having a company car for some!
In summary, over time, a company car is a hassle free way of driving a newer car, but comes with a higher price tag than taking the cash and choosing to drive an older car. The car allowance route is generally cheaper if you accept the car will be older (on average) and comes with more hassle (tax, insurance, servicing etc). Risks are also different: company cars can be taken away at short notice, leaving you in the lurch, whereas private cars can incur costs that you have to pay for.
For me, the trick was to be really strict about setting aside the car allowance and mileage claims, keeping that money specifically for running the car and saving for the next one.