Car Allowance

[Wesdev]

My Ltd Co. bought a car 9 months ago. I currently drive 380 miles a week and have been in this contract 6 years. My client is relocating to a new location about 30 miles further away. Would it be more cost effective to stay in a B&B and claim fuel and subsistance or drive the company car since the new location would allow that to happen for 2 years?

The car is a 59 VW Golf gttdi 2.0

Any help is greatly appreciated...

[ratewhore]

Isn't that one for your accountant?

[northernladuk]

I always thought that cars were a poor option for tax and ownership reasons. It wasn't tax efficient to buy a car and claim the payments as it becomes an asset or something along those lines.

From what I can see this seems pretty universally agreed but some people still do. It would have to be a good tax break to beat 45p a mine but maybe with massive mileages it will become more efficient.

Anyway.. as it is a complex request and most of us won't do this then your account is most definately the way to go.... I also know a guy who was told to buy a high end car (i am talking 80k+) and put it through company which sounds highly suspect. If I had an account suggesting a car I would most definately be getting a second opinion IMHO..

HTH GTG ASAP TTFN!!!

[ASB]

I also know a guy who was told to buy a high end car (i am talking 80k+)

Assuming you actually wanted a high end car then this may well have been sound advice (don't know if would still be so). The reason is as follows:-

Private ownership. Paid for out of taxed income, reimbursed at set rate, thus effectively the individual is paying all the depreciation of of taxed income.

Company ownership. Paid for out of pretax income. Individual assessed to benefit in a formulaic manner, broadly this is intended to shift the burden of financing depreciation (or equivalent tax) back to the individual. This is at quite swinging rates, however in terms of large expensive cars it used to be the case that the value of the car was capped for purposes of BIK. The effect of this is that the tax charge on a card costing 500,000 was exactly the same as that on one costing 80,000 (barring different CO2 emissions of course).

[northernladuk]

Assuming you actually wanted a high end car then this may well have been sound advice (don't know if would still be so). The reason is as follows:-

Private ownership. Paid for out of taxed income, reimbursed at set rate, thus effectively the individual is paying all the depreciation of of taxed income.

Company ownership. Paid for out of pretax income. Individual assessed to benefit in a formulaic manner, broadly this is intended to shift the burden of financing depreciation (or equivalent tax) back to the individual. This is at quite swinging rates, however in terms of large expensive cars it used to be the case that the value of the car was capped for purposes of BIK. The effect of this is that the tax charge on a card costing 500,000 was exactly the same as that on one costing 80,000 (barring different CO2 emissions of course).

Totally agree, it could be but it is something that to date I never seen suggested on this forum and infact the opposite advice tends to be the norm. I am just raising a flag of caution here. Most things have been touched on in my time here to a greater or lesser degree except this and there is no smoke without fire.

I always thought company cars ceased to be a benefit many years ago and had turned become a boon rather a benefit but there could be some extreme cases i guess.

I also think if it is so beneficial to buy 80k cars on the company why arn't we all doing it?

Just thought it was worth mentioning.

[Maslins]

In the majority of circumstances, using your own car and reclaiming 40p/25p per mile is the best...it's also by far the simplest (no BIK issues, no VAT fuel scale charge/reimbursement of private fuel etc).

Situations where going the company car route can be beneficial:

You do hardly any business mileage, and/or
You want a car that's expensive to buy/run/insure, but has very low emissions (not many examples of this, Toyota Prius being the obvious one)

[northernladuk]

In the majority of circumstances, using your own car and reclaiming 40p/25p per mile is the best...it's also by far the simplest (no BIK issues, no VAT fuel scale charge/reimbursement of private fuel etc).

Situations where going the company car route can be beneficial:

You do hardly any business mileage, and/or
You want a car that's expensive to buy/run/insure, but has very low emissions (not many examples of this, Toyota Prius being the obvious one)

What if you want to buy one that will actually stop???

[BA to the Stars]

My Ltd Co. bought a car 9 months ago. I currently drive 380 miles a week and have been in this contract 6 years. My client is relocating to a new location about 30 miles further away. Would it be more cost effective to stay in a B&B and claim fuel and subsistance or drive the company car since the new location would allow that to happen for 2 years?

The car is a 59 VW Golf gttdi 2.0

Any help is greatly appreciated...

Careful if you have been at the same site all this time. Be aware of the 2 year expenses rule.

[northernladuk]

Careful if you have been at the same site all this time. Be aware of the 2 year expenses rule.

BOOOOOOOOOOOOOOM!!!! Very well spotted!!

Now I would be VERY interested to know the OP's situation and if his accountant is aware. If not this will be the second situation where accountant has suggested a car but messed up the basics so futher cementing my view that only cowboy accountants push the car option... Sorry you genuine guys on here that have done it... just 2 out of 2 starts to set a presedence.

[Robot]

My Ltd Co. bought a car 9 months ago. I currently drive 380 miles a week and have been in this contract 6 years. My client is relocating to a new location about 30 miles further away. Would it be more cost effective to stay in a B&B and claim fuel and subsistance or drive the company car since the new location would allow that to happen for 2 years?

The car is a 59 VW Golf gttdi 2.0

Any help is greatly appreciated...

After driving 380 miles, would adding another "about 30 miles" allow you to claim travel and subsistence? Is 30 miles enough distance away to restart the 24 month clock??

If not, you cannot claim for mileage or B&B expenses anyway, so you might be better to stick with the company car and benefit in kind.

But as someone said, speak to your accountant, that's what you pay them for.