I work for a small family firm who have traditionally bought their vehicles as nearly new and ran them until they fall apart. Last year they bought me a one year old 3 series and paid all the bills to run it. Every time it comes to servicing (me doing 35k a year is often) I have the owners wife moaning about having to pay for it on a credit card etc… and one of the directors took out the personal finance on it and is paying £900 a month over two years to ensure at 3 years there’s equity in the car.

I’ve also been promoted and we are negotiating me a new package and I want a 5 series. I have to put a business case together for one and with the £20K allowance they are offering I won’t get one, BUT, they say they’ve always done it that way.

So, I need someone to tell me how I calculate if the company are better off paying £590 a month for a lease over 3 years for a fully maintained 520D M Sport which means they won’t own the car, or would they be better off doing as they are and buying and offsetting the spurious costs against tax.

They are the only company I know who buy them and it’s restricting my choice of car….

Your job, their business.

Make your choice.

i’ve made my choice, I need to justify that they are buying an asset the wrong way..

And what TF business case can there ever be for a bigger, more expensive car? Make them £80k more after tax profit and they may entertain paying for a £35k car I guess.

A car is never an asset.

And you could get a 520 MSport for much less than that, even at 35k a year.

And what TF business case can there ever be for a bigger, more expensive car? Make them £80k more after tax profit and they may entertain paying for a £35k car I guess.

I’ve brought in £1.7m in ten months, plenty of that is profit.

The car may be bigger and more expensive but the 5 series has a far higher residual value than the new series and my current outgoing 3 series. If they lease they don’t pay for that residual. If they purchase a new £38K car then pay the bills on it they may well get to realise the residual at the end but they stump up the layout at the front.

I’m trying to prove that a lease deletes the issue of outright purchase but you never own the vehicle.

And you could get a 520 MSport for much less than that, even at 35k a year.

Correct, but 28mpg Vs 40mpg on 100,000 miles doesn’t make sense, plus my BIK being emissions rated it would hit my pocket hard.

I meant the D – I think you could get it for less than you say above.

I don’t know what your issue is – if you can bring in £££££ profit then go somewhere that will give you a 5 series. Or set up your own business and get one.

As I said before, their business…

Leasing sometimes better for higher mileage users as risks of nasty expensive repairs etc increases with use. Leasing allows you to mitigate the level of potential losses if things do go wrong.

Also on the plus side leasing would be a fixed cost so easy to budget and account for.

Some people are wary of leasing as there are horror stories about excess mileage charges as these can bite you near the end of a contract….

You probably mean justification rather than business case. That is, unless you expect to magically up your £1.7m t/o by driving a 5. If it were that easy, I’d be asking you why you’re not doing it now….

This is a mixture of an investment decision, tax treatment and commercial preferences.
The interaction between these is complex and the tax effects for the firm (is it a company or a firm?) are different for different types of funding options as are the cashflow impacts.
If I was assessing this for a client I would model the options so the cashflow, profit and loss and tax consequences could be seen (there can be some big differences in tax depending on funding). Then I would try and match that to their commercial goals (eg are they risk avere or have a particular aversion to renting).
Fwiw contract hire has become popular for a reason.

Commercial preferences you say?

They prefer to buy.

FWIW, I prefer to lease but if the OP attitude to them comes across the same as it does on here, he’d be better off resisting biting at their legs for a bit and accepting their decisions or he’ll be without any precious BMW pretty soon.

If I was them, I’d offer you a car allowance and the usual business miles payment. That way all can be set against their tax, you’ve no BIK and they’ve got no risk of depreciation. Yes they don’t get the VAT back, but they also don’t pay it out.

And then you can buy/lease whatever car (and age) you want.

Johndoh agreed to a point.

The op has a point though (not about his desire for a car with no indicator stalk) that the business might and I emphasise might be doing itself a disservice financially.

he’d be better off resisting biting at their legs for a bit and accepting their decisions or he’ll be without any precious BMW pretty soon.

Like you know anything about the OP or his employer!

Just saying it as it is coming across on here. If I was a business owner with an employee nagging at me about needing this and my choice of that was wrong I would be questioning whether or not that person was right to be working for me.

Go to your local BMW dealer and let them do the numbers for you.
Then take those to your accountant/tax advisor and ask them to do the tax calcs.
Then look at alternative suppliers for purchase/lease who may offer cheaper prices.

TBH though, the actual numbers are probably not that important – their attitude to risk and cash flow profile is.

i love this place, lynch the guy that vents his frustration (&and wants a BMW 😉 …
geordiemick, the lease v buy question is not a simple yes or no. It’s very business / usage & car specific, Deloitte make a very nice living off this question.

https://www.cartax.co.uk/desktop/products/Cartax/cartax.asp

however all you really need is a spread sheet with all the costs in one column against the lease costs in the other and a cash flow / interest formula at the end. If this isn’t with your “skill set” I find a packet of chocolate biscuits normally set someone in accounts to do pretty much anything!

p.s. if you haven’t already, go for a spin in the new 3 is a lovely!!

The 5 series will devalue at a greater rate than the 3 series imo.

enfht – Member
The 5 series will devalue at a greater rate than the 3 series imo.

This, unless it’s a well specced Auto Touring.

You need to do a cost analysis of both options over the llife of the vehicle. Need to make sensible assumptions about all costs to business inc repairs. Don’t forget tax benefits and costs to business as well (how it affects you is irrelevant)

If you are not sure a trainee accountant would be able to knock something up. TBH I imagine the costs arent mega different overall. And tread carefully, somebody in the firm may have already done the sums, and may not like someone turning up with some half arsed calculation trying to prove them wrong, you will know your own work environment

What can the 5 series do better than a 3 for the business? If the answer is nothing other than boost your ego then I can’t see why they should consider such a car. You may end up with another 3 series but leased if that’s all the arguement you have.

You can get a VW Up for about £130 on lease, they should look at one of those.

You can get a VW Up for about £130 on lease, they should look at one of those.

35k pa! You are having a laugh.

The 520d is a relatively cost effective car, with the exception of its purchase price and associated depreciation, and in companies I’ve worked, a middle/senior Manager car.

But I’d still look at getting pure cash from them, and then you can drive what you want.

Like you know anything about the OP or his employer!

Thanks Footflaps for seeing this post without the obvious envy that others can’t see through. For the benefit of Johndoh and others, I’ve come from a £30m company to a £3m company and in ten months brought in ten times the business than the previous person, I’ve instigated two new product launches and done a whole re-brand of a company who (for the last ten years) have been pootling along slowly in a market that is changing by the minute.

If I was a business owner with an employee nagging at me about needing this and my choice of that was wrong I would be questioning whether or not that person was right to be working for me.

Who’s been nagging?? My employers are well aware that they are paying me below market rate, I’m driving a car that’s not competitive to similar roles in the market place and as part of a review of my first 12 months they fell over themselves to offer me incentives to keep me on board. I’ve delivered 70% more than I was asked and now they are more than happy to give me what I feel is being offered by their competitors.

When I posted this up I knew the Audi haters would be out in force but I also thought there’d be some pearls of financial wisdom. I wasn’t expecting people to accuse me of being a shit employee begging for a premium executive car just because I want one. The company I work for are unusual in that they are entrenched in ‘the way they’ve always done things’ and are keen for my more universal knowledge to offer a different solution.

The 5 series will devalue at a greater rate than the 3 series imo.

Far from it, the 3 series has far more competitors than the 5, looking at lease rates a 318D M Sport costs £45 a month more than a 520D M Sport, despite the 5 costing more than £8k more. As suggested, an auto tourer is better still….

p.s. if you haven’t already, go for a spin in the new 3 is a lovely!!

I have done, I’ve had a go in a 318, 320 & 330D models and the problem I have with them is simples, they are too racy and not long enough for a sample I carry. The 520 touring is perfect. They also have fairly narrow seats and offset pedals/steering which is killing my back on long journeys. The 5 has a wider seat, even in M Sport trim and being a bit more lardy and an auto I feel less inclined to drive like a ****. I do use my indicators though……

What can the 5 series do better than a 3 for the business? If the answer is nothing other than boost your ego then I can’t see why they should consider such a car. You may end up with another 3 series but leased if that’s all the arguement you have.

The 5 isn;t a downright necessity, I won’t cry if I don’t get one! But with lease costs being less than a 3 series then why wouldn’t they? They have said in principal it’s fine and are looking for funding options, hence the post. We are taking on another person down south so the plan is to give them my car and i’ll get the new one. With the extra business I’ve brought in enabling them to do so I get the reward.

But I’d still look at getting pure cash from them, and then you can drive what you want.

Been there and done that and doing the mileage I do it isn’t worth it. Firstly the accountant has a fit when a £1500 expense claim comes in every month on top of £550 extra car allowance and secondly I have two kids and pay maintenance to an ex, when the CSA sees the extra dosh come in they don’t recognise it as car allowance, so I’d lose 20% of my car allowance to the ex. I’m more than happy to pay 20% to my kids of my salary and commission but I’m not losing 20% of an allowance meant to fund a car, bearing in mind the £550 car allowance would be taxed too.

without the obvious envy that others can’t see through.

I drive an Audi A6 2.0tdi SLine Special Edition (owned from new) so no, not envy – just putting my point across as an employer myself.

If the answer is nothing other than boost your ego then I can’t see why they should consider such a car.

He’s a rep – sounds like good motivation to me.

Ah, CSA. Absolutely understand, I’ve been there 😳

I drive an Audi A6 2.0tdi SLine Special Edition (owned from new) so no, not envy – just putting my point across as an employer myself.

Well I find that alarming. I hope you don’t show your own staff the same level of contempt as you have me. Inwas only asking for funding options in the favour of my employers and not having to bare my soul in justifying why I feel I’m worth the perks im asking for.

johndoh – Member

I drive an Audi A6 2.0tdi SLine Special Edition (owned from new) so no, not envy

So much ammunition…
…must resist…

I drive an Audi A6 2.0tdi SLine Special Edition (owned from new)

You missed out what colour..

Well I find that alarming. I hope you don’t show your own staff the same level of contempt as you have me. Inwas only asking for funding options in the favour of my employers and not having to bare my soul in justifying why I feel I’m worth the perks im asking for.

You do bite easily don’t you?

I’m sure if you re-read the whole thread you’ll see who has been rather abrupt and disrespectful.

And if you reread your posts, you might realise why your employer is stalling at the idea of buying you the 5 Series M Sport you want.

And if you reread your posts, you might realise why your employer is stalling at the idea of buying you the 5 Series M Sport you want.

If the OP has delivered what he says he has and the Directors are convinced that he can carry on doing so they will be happy to fund his car, or whatever else he wants within the budget that they feel he is worth. For some employees its cars, others want big offices etc.

I was never interested in cars – when I could’ve had a 530d, I took a Vectra instead, as with the BIK/allowance saving I had almost £100pw extra in net cash. But I took the full pension offered, and paid upto my limit which they matched. Each to our own.

If the OP has delivered what he says he has and the Directors are convinced that he can carry on doing so they will be happy to fund his car, or whatever else he wants within the budget that they feel he is worth.

Agreed, but the references to ‘personal loans’ for cars and accounts dept balking at repair/service bills suggests that, despite the £1.7m turnover the OP has generated, the company isn’t particularly cash rich or confident in getting tied in to a long term lease on a car.

Just my opinion mind you but, as an employer myself, that is how I am reading it.

And if you reread your posts, you might realise why your employer is stalling at the idea of buying you the 5 Series M Sport you want.

Have you been reading a different thread to everyone else? At no point have they stalled or brought my performance into question. I’ve brought in £1.7m in ten months and have a very realistic chance to bag another £2m in the next six months. The company haven’t offered any resistance at all, they recognised that they have been poorly geared up in past and the guy before me wasn’t covering the territory.

All they have requested is I show them funding options they haven’t considered in the past and that as well as there being a benefit for me there is a benefit to them.

why don’t they get their accountant to work it out ?

why don’t they get their accountant to work it

Sadly, he’s of similar ilk to the owners, quite lazy, blasé and suffer from major CBA. Whilst they aren’t standing in my way or denying me the car, they want me to do all the running about, maths and once agreed practically put the contract in front for them to sign.

I also have to get shot of a Citroen C5 Tourer too, my BMW will get car pooled and the Citroen needs to be disposed off before I can order my new vehicle.