http://www.hmrc.gov.uk/cars/index.htm

All you need to know: From the people who do know.

Don't forget that if you are using your car for business use then you will need to adjust your insurance cover. The standard social domestic and pleasure only covers travel too and from your place of work not between different venues. Additionally with the increased costs I think that 25 pence per mile is not enough.

Hi Daisy,

The Link John posted will enable you to do the sums. I'll provide a lay persons synopsis and an opinion on when it's worth taking the car.

Essentially a company car is a benefit in kind and the amount of benefit in kind is worked out using the list price of the vehicle and it's CO2 emissions, the more expensive / more polluting, the larger the BIK value. You don't state, but if you get a fuel card with your car (that allows you to use it for person use) the fuel car is also a BIK.

The total value of the BIK for company car + fuel card is provided as a financial figure (it will bein the thousands), this is then deducted from your personal tax-free allowance.

As an example, I have a VW golf and a fuel card and this BIK is roughly £7000, my tax free allowance is therefore in the region of 1250. Therefore depending if you pay 20% or 40% income tax, the actual cost to you for the privilege is 20 or 40% of your BIK value.

Now is it worth it? Consider the costs you would incur yourself if you don't take the car:
- Purchase cost
- Tax
- Insurance
- Repairs / maintenance
- Fuel (if you're given a fuel card for personal use)

I've done the sums for me, and my employer gives you the option of a company car (with fuel card) or no car and no fuel card but £5000 extra salary (and would cover business mileage). Even with this, I'm better off with the car. You’d have to have an extremely generous car cash allowance and do very small annual mileage to make the sums work for the allowance in my opinion.

For people that use their own car for work purposes the Inland Revenue will allow a mileage rate of 45p per mile for the first 10.000 miles and 25p per mile thereafter.

If your employer pays less you can claim the difference though your tax return (but it does mean you will have to make a tax return each year)

I am not sure what difference it makes if your employer also offers a "lump sum" payment in addition to mileage rate.

Hope this helps

thanks all forn your replies. they are not offering a cash payment for the car if I dont take it but the salary is good would i be better of ft then asking for lower salary and cash payment towards the car?

Hi Daisy

Take the car and then you can forget about repairs, insurance etc. if you are going to be travelling all over the country it is not worth the hassle and will end up costing you money.

Regards

PaulR

tahnks all for your helpful replies will look into it further as you all suggested. thank you again.

When using your own car, HMRC use the AA car running costs as a basis to calculate the mileage expenses.

http://www.theaa.com/mot...running_costs/index.html

They use the "Total of standing and running costs as pence per mile" for the first 10K miles and then just the "running costs as pence per mile" for anything over 10K miles.

This is where the current 45p and 25p per mile rates come from. If you receive more than this, its regarded as a Benefit in Kind and taxable. (My wife gets paid 46p per mile and gets a P11D every year for about £5).

"Don't forget that if you are using your car for business use then you will need to adjust your insurance cover. The standard social domestic and pleasure only covers travel too and from your place of work"

Only covers SDP and travel to a SINGLE place of work. If, as many do, you also have a part-time job, you then need to inform your insurer about that.

And while you are busy extolling the virtues of company car + company insurance, please do not forget your no-claims bonus and the problem you will have with insurance cost if you have no personal car + personal insurance.

If you are using your personal vehicle for work, and with a high mileage, you also NEED to consider servicing and repairs.
If you have a new car, and use it for commercial purposes, you may find that the free servicing clauses with the vehicle are no longer valid.

It will definitely have to be declared on any further insurance.
NCB do not "live" forever and if you drive a car without personal insurance you may well find you are unable to qualify for a NCB, or may only get a smaller one.

Hi Daisy,

This really does depend on your personal circumstances.

Three years ago our company account told the directors that we would all be better off with our own cars and claiming the relevant reliefs etc.

I explained at the time this was not always the case but it fell on deaf ears. At the end of the year and 42K miles later, I showed them how much more having to use my own car had cost me (servicing, tyres, insurance , road fund licence etc) They struggled to get their head round the fact that as I had other income as well, it meant I was almost £9000 per year worse off!

I now have a company car again.

The best advice I can give is get all the information together and go and see an accountant who is qualified to give the advice. It does not cost much but could save you loads.

Good luck in the new job.

Clive