Company Cars - Are they worth it?

Gatster

Must say I'm confused (more than normal), can't work out if having a company car is worth it. My (UK) employer have offered me a car (Lex Leasing) but from what I can gather I'll come out with less in my my actual payslip for this 'perk', which seems a little odd to me - Is the the correct calculation?

I'd like a car, but not at the detriment to the money in my pocket - I paid insurance etc. for the full year and don't have any outgoings on my car bar petrol and the loan, and God knows now matter how much I seem to have in my pocket it's never enough..!

colm_mcm

company cars rule! not worrying bout tyres, shocks, servicing, depreciation. pros definately outweigh the cons

HashSlinging

I prefer to go the mileage route myself, I earn an extra 2.5k a month sometimes .

milltown

IMO, no.

If you are doing big miles and the co. are paying your fuel then maybe, but only if a mileage/expense option isn't available. My previous employer offered a choice of company car (mondeo/avensis/vectra/a3/golf etc.) taxed, insured and maintained but you pay your own petrol or an allowance of ~€550 a month before tax. The camp was split and the company car men spoke as if they had a free car and the allowance guys tried to explain that they had an extra €600 or so in their pockets at the end of every month to buy and run a car of their choosing, that they would still own if the job went for whatever reason, and never the twain did meet.

A couple of years ago the company car tax was worked so that if you paid for your own petrol you paid less BIK but that was done away with about three years back for some reason. To my mind, unless you are in a high profile job that demands a flash car that you can't afford, or are flat broke and can't afford any car to do your job, or have always driven company cars and crashed them on someone else's insurance, it makes no sense to be shafted by the taxman for the privelege of driving someone else's car.

to Colm:
Most company cars are leased for a max of 4 years. If you are going through a significant amount of tyres and shocks within four years I'm staying the hell out of your way!
Granted, depreciation is a big deal on a new car but not a 1 or 2 year old. You would still be paying the same BIK when it's 3 and 4 years old though.
Servicing is almost completely dependent on mileage, therefore if you would be spending a lot on servicing it follows that you would be raking it in if you were claiming mileage on your own car.

Gary ITR

I think it depends on your mileage. If you do over 30000 miles per annum you pay minimal bik. If I was in my own car for work I'd never be able to sell it due to the high mileage. The car I'm currently in has 50000 miles on it and it's just under a year old. So after 3 years try selling a car with 150000 miles on the clock. Also my company increased our pay to make up whatever bik we pay. Maybe talk to your employer about doing something like that if you need the car for work

Gatster

At this stage I have now idea of the mileage, I'm getting the 'available cars' list this morning. Quite fancy a Focus ST but doubt that'll be on it! If they bump my wages up to compensate for the BIK payments I'd be a happy camper as I wouldn't lose out at all - depending on what is on the list I'll probably go this route if they'll 'do a deal'. Is there a calculator for BIK on the web anywhere?

zing

Not aware of a handy calculator. The revenue's own guide is here:
http://www.revenue.ie/leaflets/bikguide.pdf
which should be a good place to start.

Gatster

They're giving me a 'car allowance' (quite healthy). Page 18 of 47 of the above guide link says that this is liable to PAYE and PRSI (fair enough). Does it mean though that I don't have to pay all the 'Calculation of Cash Equivalent' (page 13/point 5.5) crap. It appears to contradict itself, but I'm probably misreading it...

murphaph

To get the allowance most companies will expect you to drive a minimum spec car <5 years old, saloon, no flash sh!t, stuff like that is common enough for places to expect.

Ivan E

My wife has a company car. Ford Focus. I worked it out that its costing her €229 a month. She has to pay her own petrol and where initially it was thought she would do a lot of mileage, she doesn't really.

So her wages at the end of the month is amount - 229.

There is a choice of an allowance too. I think it works out at 550 a month of which around 250 I think goes into the hand after tax.

As her lease comes to an end her choice is lose 229 or the likes from her wages or take that allowance which will give her 229 + 250 a month to sort her own car out.

It made sense at the time as she had a crap car. Now she might change but we'll see where we are with loans etc.

But each car is worked out on its worth. Being offered a nice 5 series is all well and good but if its costing you 500 or the likes a month you need to consider it carefully.

Personally I think you're best to work out what it will cost you. If you have a car that you like and feel no need to change, then allowance is your best option. You also have the problem of getting rid of it too.

Gatster

There is a choice of an allowance too. I think it works out at 550 a month of which around 250 I think goes into the hand after tax.

That seems wildly excessive, it's a tax rate of over 50%. I'm ringing the tax office tomorrow to have it out with them so will try to post a result tomorrow as I really want to know the difference between 'Cash Equivalent' and 'Car allowance'.

The car I get has to be under 8 years old, less than 150k on the clock, no convertibles, no 2 seaters, but that still leaves quite a bit of scope. When I do travel around I'll probably be lugging gear about so it'll probably be a 4x4 or an estate (I'm mentally waving bye bye to the desired M3). Cheers for the advice so far.