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Car Allowance

Discussion in 'off topic' started by garyi, Nov 10, 2017.

  1. hifinutt

    hifinutt hifinutt

    just bought a fully loaded car new pre reg , drives like a rolls , was cheaper than a dacia and amazing vfm . boring to look at but who cares . pretty nippy too and big practical car with onboard wifi, cruise control , speakers all over the place . no tax to pay to mr tax man as its mine

    slightly jealous of land rover employees who can get into an evoke for stupid money per month for 11months , then they give it back .
  2. Linds

    Linds pfm Member

    stevec67 is correct when he says that there is no one size fits all answer.

    And it is not as simple as these 3 rules! :(
    "If you are lazy / don't like second hand cars / your employer insists you get a new one"

    So... there is a bit of crystal ball (estimating) involved because if you do choose a second hand car you have to estimate maintenance/repair/damage/tyre costs and that isn't totally predictable. Some is.. but some isn't.

    So for company car vs. buying own, I say Pros of company car (scheme-dependent) are:
    1. You get to choose a latest model and also personal spec of car if desired
      (We've gone for the Dynaudio sound system in our VW... along with many other tasty things. 48 months of joy)
    2. For us, it's the only time in our lives on this planet we'll have this opportunity so why wait? :)
    3. Having a spec with big wheels and tyres is a small change to the P11D and ongoing tyres are nil cost differential vs. basic ones
    4. Any bumps, scrapes, blowing up engines, breakdowns, whatever are covered 100%. Zero volatility in the monthly outgoings
    Reasons to buy yer own instead:
    1. You could instead buy a 2nd hand car (probably half the price realistically) a couple of years old. You will be driving a £15k older car not a new £30k one, which is a difference, whether you think that's significant is personal
    2. You would be limited with what's in the second hand market so may not get all the spec you want or may need to travel to find the car you want
    3. Once you've done the estimated calc difference (allowing for tied up cash and lost value over the term with a 2nd hand purchase) you have to decide if the monthly difference is worth it. E.g. "for £200 more I can have the company car pros" vs. "I can compromise slightly and be £200 better off"
  3. Mike Reed

    Mike Reed pfm Member

    For what it's worth the HMRC allow 45p a mile for self-employed/ landlords etc. and it's been this amount for yonks. Handy !
  4. hifinutt

    hifinutt hifinutt

    or you can claim whatever percentage of time you spend doing landlord duties . so if you spend 70% of your time doing landlord duties you can claim 70% of your car expenses . at least thats my understanding
  5. Sonority

    Sonority pfm Member

    Most efficient for me is not a car, but a truck. Not for everyone, but something like a Nissan Navara Tekna is not too shoddy, just it's a bit big for a lot of folks.
  6. stevec67

    stevec67 pfm Member

    I don't think so, not for a private car. Maybe you can for a commercial vehicle - eg I have a company owned van, etc. However for privately owned cars I think that the limit is 45p a mile where a private vehicle is used in the pursuance of your business. I cannot buy a Ferrari that costs £10k a year to run and subsidise it through my business, let's say I do and I do 1000 miles for my business in it and 1000 miles for myself, so can I claim back £5k for my Ferrari from the business? Not f*ing likely sunshine, says HMRC. 45p a mile for the 1000 business miles, that's you.
    If you were running a motorsport business and the MaxPower modified Fiat were part of your promotions business, running track days, possily, but that's different.
  7. The Far North

    The Far North pfm Member

    You generally get the choice of claiming the fixed 45p/25p or claiming actual costs using all receipts, bills, etc, so that's where you have to work out the percentage work use/mileage compared to private to justify what you are claiming.
  8. ks.234

    ks.234 pfm Member

    I don't do numbers, but my wife does. She can rack up 100k miles in 3 years easy, and has reckoned she's better off with her own car. She buys a low miler and trades it in every few years. She has to pay for private mileage herself which I guess may not be the case with all companies
  9. stevec67

    stevec67 pfm Member

    Really? So I buy a Ferrari as above, it costs £10k a year, I do 1000 miles for my business and 1000 miles for myself, and I can claim back £5k for 1000 business miles? Try it, tell me what HMRC say!
    I know someone on here who runs a 911 as his personal car used for his own business (996 Carrera 4, to be exact) who reckons (iirc) it costs about 60p a mile in real, quantified costs. I know very well he doesn't claim back 60p from the Revenue (by which I mean charge it to his company), and he would if he could.

    As I say above, if you *have* to run a Ferrari because your business is motorsport or similar and it's part of your brand, then you could argue it with HMRC. Actresses and models will charge designer clothes, jewellery hire etc through their business because they need to have a different £10,000 dress for every film premiere event. But for the rest of us using this as a means of subsidising an exotic spots car, I doubt it very much. Otherwise, let's be honest, we'd all be at it. I did 2000 miles in my Ferrari last year, 1800 of them for my business. Honest I did. Just like I needed a Rolex for business meetings.
  10. The Far North

    The Far North pfm Member

    That's not really what I was saying Steve. The actual costs claimable are listed at the link, as well as the private miles you can't claim for. If you use traditional accounting rather than fixed mileage rates, you can buy the car as a capital allowance item, so I guess that would be where you might need to justify your Ferrari? Hard to simplify without getting deeper into it all, but keeping all the receipts for 6 years might be worth it for you, but fixed rates are an awful lot easier. https://www.gov.uk/expenses-if-youre-self-employed/travel
  11. Mike Reed

    Mike Reed pfm Member

    New one on me. Seems a bit nebulous based upon time. I'm not aware that I can charge my time to landlord duties (and am pretty sure I can't). If you could, surely you are then working for reward; that reward being a tax break. Doesn't seem to hold water but I'd like to be wrong ! Mileage to and from and on behalf of your properties is a finite distance which can be challenged
  12. Dozey

    Dozey Air guitar member

    Nothing wrong with a Mondeo. Better drive than a BMW IME.
  13. garyi

    garyi leave blank

    Well we all have opinions, but I really don't want to be in a mondeo or an astra.
  14. stevec67

    stevec67 pfm Member

    What is it?
  15. James

    James Lord of the Erg\o/s

    I don't think you've experienced enough.
  16. The Far North

    The Far North pfm Member

  17. garyi

    garyi leave blank

    I am afraid I don't get those surveys, people that own skodas are likely to fill out a survey, so its kind of self full-filling in terms of the outcome.
  18. stevec67

    stevec67 pfm Member

    Really? I hardly think so. Most people I know that own Skodas are company car drivers who aren't into cars and don't give a toss what they drive as long as someone else pays, or bargain hunters who don't want to pay for a badge. I don't think either set would waste time on a survey.
  19. stevec67

    stevec67 pfm Member

    I think that we are talking about 2 different things. One is the costs to a business of running a particular car as a company car, and the other is the rate of acceptable reimbursement if I as an employee choose to use my personal car for business miles.

    Here's a real-world example from a former colleague. He's a director of a food company, very much a high-up. The company bought him a Merc S500e with all the toys, reckoned to be list £100k or so. He will spend a lot of time in it, they can afford it, he can afford the BIK tax, happy days. So this car is likely to be worth half list in 3 years time, by which time it's worth £50k. So the fag packet says that it costs £17k a year depreciation, plus whatever in fuel and insurance for his (say) 20k miles. Let's say that it's £25k a year, all up, cost to the company. Can the company claim back the full amount of all this against profit? Of course. It's an essential part of running their business, same as paying him his salary. He gets the car to take home, pays the BIK on his tax bill, uses it in his own life, where he covers (say) 5k miles a year. Great. So in this instance as you say the car costs WAY more than 45p a mile, it's a pound a mile (fag packet).

    Our man tires of his tax bill so he decides to buy the same car and bill mileage. He shells out the £100k, owns the car, takes on all the fuel, insurance, servicing costs, and bills his employer £1 a mile. That's what it costs him after all, £25k, 25k miles, of which 5k personal, he picks up £5k of that, his employer £20k. He now has a £100k car on his drive for £5k a year, fully fuelled, all up. This is a LOT less than the BIK bill would be for such a car at 40% tax (maybe 45%!). Are you really suggesting that HMRC will tolerate this? I don't think so. If they did then I for one would have a 911 in the garage and the business would be heavily subsidising it, out of my untaxed company income. This is not the case because my accountany and HMRC would roll their eyes and say "You're havin' a giraffe! Now stop taking the mick, 45p a mile, if you choose to drive a Porsche then that's good for you but you'll pay for it!"
  20. dweezil

    dweezil pfm Member

    Figures worked for me with a reasonably expensive car and buying it from my employer after said company had taken a big depreciation hit.

    Car had got a bit tatty by then and AC was out so I got a sensible valuation from my OPC.

    I'm not sure that the company in your second para will usually get 100% first year write off but that's a minor detail.

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