Company cars and personal use

and other disasters

My boss is toying with the idea of getting a couple of company cars (we all currently use own cars and the company pays for Class II insurance and mileage at an agreed rate). For now hes giving us the option of taking a company car or an allowance. Ive done the sums but hes not too clear on what level of personal use hes going to allow.

So, for anyone who has a company car, whats your companys rules re. using it for non-work purposes? Still debating if its gonna be worth my while or not. Ive a reliable MKV diesel golf Im keen to hang onto.

commited

When a previous company I worked for made the same move, I stipulated that I'd only go into a company car if I could use it for personal use with no questions asked as I didn't want the cost of running a private car in addition to paying company car tax. A car allowance will be taxed but mileage isn't - you'll probably find that the best scenario for both your company and yourself is to remain as you are.

R.O.R

I don't know of any company that has any stipulation on the amount of personal use of a company car (and I deal with a lot of company cars).

Unless you are expected to drop the vehicle back to the office every evening, then you will be subject to BIK, and there is an expectation that you will have private usage, and that's what the benefit of a company car is. No benefit if you can't use it for private use.

Whether the company pays all fuel usage or only business fuel usage, varies company to company.

goz83

As above. You'll pay BIK. Oddly enough, the more the car is used, the less BIK is paid. But I suspect your boss will be expecting fuel consumption to be monitored and will want personal use contributions too.

I had a company car with Eircom a few years back. Personal use was absolutely expected. Was a simple corolla 5 seater hatch. We weren't asked to contribute to fuel costs (had fuel card) unless we were going to be going on long trips down the country for personal reasons. But I doubt your employer will be that flexible and rightly so.

The_Honeybadger

Had company cars in two jobs in the past. You pay BIK which can be a killer if your business mileage is small. One employer wanted me to log all personal miles and I was levied a small amount from my other expenses against those. In fairness it was all very loose and could be easily fiddled but the contribution was so small that it was almost negligible.

The other employer (a very large multinational) didn't seem to care and never tracked personal mileage or expected any contribution for them. Depends entirely on the company so make sure you are happy with the deal on the table. It can be an amazing perk, especially if you do a lot of business miles and pay minimal BIK.

blackwhite

goz83 wrote: »

As above. You'll pay BIK. Oddly enough, the more the car is used, the less BIK is paid. But I suspect your boss will be expecting fuel consumption to be monitored and will want personal use contributions too.

I had a company car with Eircom a few years back. Personal use was absolutely expected. Was a simple corolla 5 seater hatch. We weren't asked to contribute to fuel costs (had fuel card) unless we were going to be going on long trips down the country for personal reasons. But I doubt your employer will be that flexible and rightly so.

An important distinction, but it's only business mileage that counts for usage deductions.

Revenue do conduct audits of people who claim the reduced BIK rates, and will expect to see evidence to support the claim. An odometer won't suffice, there must be evidence that the mileage was for business, and not personal, purposes.

Also, any time that your employers asks you to contribute to ANY of the costs of a company car, you should request that the company pays and you then re-imburse them.
If this is done, the amount that you pay back to the company can be claimed as a credit against the BIK charge.
If you pay directly out of your own pocket (i.e. pay for diesel at the pump) then you cannot claim any tax relief.


I have a company car since January 2012. I currently have approx. 110,000 km on it, of which I'd say a max 20,000 was business mileage. I work in Dublin, but play GAA in Connacht and usually travel west and back twice a week.

If they are offering a car allowance, then it could well work out more beneficial to you to take that instead. It's worth your while doing the calculations.

For example, my car cost €27,768 when bought.
My BIK "notional pay" is calcuated as follows:
€27,768*30%= €8,330.40

I currently pay income tax at 41%, USC at 7% and PRSI at 4%, giving a total marginal tax rate of 52%.
€8,330.40*52%= €4,331.76

The car allowance offered by work is €10,000 per year.

That works out at €4,800 after tax.

So, for me, the cost of taking the company car is €9,131.76 per year.

For last year diesel, motor tax and servicing/repairs came to just over €7,500.
Insurance is part of a fleet policy, but based on my current details the cheapest I could get would be approx. €700.

That would leave me with less than €1,000 per year with which to pay for any new/second hand car that I would buy - and also to cover any out of the ordinary repairs that might be needed.

For me, with high personal mileage, the company car was the better option.
For anyone who doesn't have high personal mileage, I'd imagine a car allowance would work out better.