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I wonder if anyone can help with a company car tax question

Resolved Question:

Hi, I wonder if anyone can help with a company car tax question (based on a 40% tax payer). My company offers a scheme where by they reduce my monthly salary by a lump sum for the car/insurance/servicing inclusive of BIK before tax; therefore, basically reducing my taxable salary amount. Excuse the ignorance but am just not sure whether that would be a good deal for me financially or not (as the cars turn out quite expensive)!? Naturally specific numbers can be provided.
Any guidance most appreciated. many thanks in advance.
Dan
Submitted: 11 months ago.
Category: Tax
Expert:  bigduckontax replied 11 months ago.
Hello Dan, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. The scheme is a benefit in kind and any private use including commuting is subject to Income Tax (IT). The benefit will be declared annually to HMRC by your employer. You can have mileage allowance up to 45p per mile for the use of your own vehicle without incurring any tax liability. This rate is designed to compensate for both running and capital expenses. If your employer pays you at a lower rate you can claim the difference up to the 45p level as an expense in employment on your annual self assessment IT return. All in all the latter method is probably easier. I do hope that my reply has been of assistance.
Customer: replied 11 months ago.
Thanks Keith, so, to confirm, your saying I'm better off buying/funding my own car and claiming any business mileage as an expense in employment? To give you an example, the funded car I'm looking at through the scheme would cost £850 a month, that amount is taken out of my monthly pay before tax, am just trying to ascertain whether the saving in tax by a reduction in monthly pay makes any financial sense (based on base salary of £90kpa); car seems very expensive to me. Perhaps better off being paid the full amount, forget the car scheme and fund a car personally via a PCP or similar?
Expert:  bigduckontax replied 11 months ago.
I think you will be better off claiming motor mileage. There is less record keeping needed and it is outside the scope of tax altogether save if you have to claim the balance annually; far less palaver that way. Please be so kind as to rate me before you leave the Just Answer site.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3369
Experience: FCCA FCMA CGMA ACIS
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Customer: replied 11 months ago.
Understood, thanks.
Expert:  bigduckontax replied 11 months ago.
Thank you for your support.

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