Company Car Tax help required…

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  • Company Car Tax help required…
  • mboy
    Member

    Looking for a bit of assistance here, suddenly in the situation where for the first time (since company cars have been taxed as a BIK at least) I will be taking a company vehicle as part of my new job… So…

    My situation… Job is going to require me to run a large estate car, or possibly a small/mid sized van. I’m aware of the BIK benefits of running a commercial vehicle, but also that they’re less comfortable and attract different speed limits. Also, having driven one, I’m leaning towards the VW Passat GTE Plug-in Hybrid, which is significantly more attractive on the BIK tax than a diesel or petrol version of the same car would be, almost as cost effective as the van.

    What I’m not clear about is the “private fuel” situation… If I have a van, given it’s probably going to do around 40mpg average and the annual tax bill for the personal use fuel @ 20% (I’m lucky I’m not getting taxed at 40% eh!!!) is £131… Far less than the fuel I would use in a year personally. However… If I went for the plug-in hybrid car, the tax on the fuel comes in at a staggering £771 for the first year apparently! How the hell do they work that out? I probably did less than 3000 miles last year in a car, for reasons other than work. I also have access to another car, and motorbikes, so whilst I may use the company vehicle occasionally for private use, it wouldn’t be much. Also there’s the fact if I get the Passat, it’s a plug in hybrid, and I would be charging it at home and driving on electric only as much as possible for my own use… So I’m thinking that I’d be best to opt out of the private fuel tax, as it seems extortionate for something I’d barely use in my own time!

    So… How do they administer if you opt out of the private fuel tax? I know some of you are going to say “it’s only £771 a year, just pay it!” but I guarantee I won’t use that much fuel in a year (or electric) for personal use, probably a 1/3 of that at most, so if I can save £500 odd a year by opting out then I’d really like to. But what do I need to do in order to do this effectively? Or is it really a massive PITA and not worth bothering with?

    Also, anyone with a Passat GTE? What do you think about it mid-long term? I had a test drive and was really impressed, but it was only 15mins in the car…

    Premier Icon nickdavies
    Subscriber

    You just opt out… if that’s an option under the scheme which it almost certainly will be.

    All you have to do extra is log your business/personal mileage as the company will then pay you a mileage rate based on your business miles.

    mboy
    Member

    OK thanks, but what happens then? Say I do 2000 business miles in a month, and 200 personal miles in the same month, what happens…? I am totally new to all this so forgive my noob questions!

    Premier Icon nickdavies
    Subscriber

    You document those business miles, and put a claim in for the mileage as agreed with the company. 1800 miles at however much. Just looked and official rates for a 1400cc petrol hybrid are 12p per mile, so you’d claim £216 in mileage if they use those figures.

    You may find the company want to charge for personal miles, it’s unlikely but does happen. Again all to be sorted out when you agree the terms of the co car.

    mboy
    Member

    You document those business miles, and put a claim in for the mileage as agreed with the company. 1800 miles at however much.

    So I pay on my own Credit Card for the fuel, then claim it back…? Despite the fact the company own the vehicle and its a perk?

    If that’s the case, then not a problem anyway, more cashback and tesco points for me!

    Do you need to account for everywhere you’ve been, or just record the mileage on Monday-Friday, then record it again Fri night-Mon morning…?

    Premier Icon AD
    Subscriber

    This might help: https://www.gov.uk/government/publications/advisory-fuel-rates/when-you-can-use-advisory-fuel-rates
    I just keep a record of any business miles in a spreadsheet and submit this with my mileage claim at end of month.

    Premier Icon nickdavies
    Subscriber

    Edited above post but too late,

    Just looked and official rates for a 1400cc petrol hybrid are 12p per mile, so you’d claim £216 in mileage if they use those figures.

    Again how much you record is up to you and the company, most are fine with just logging business mileage. I just kept a book, takes seconds to record a date, mileage start, reason for trip then mileage at the end. Record the whole lot I’d say then you can just put in what you need to. Tally up every week/month.

    You have to pay out of your own pocket yes but you get the points as you say. You may find you don’t get your expenses back till a month after but once your rolling it doesn’t matter m.

    Premier Icon davosaurusrex
    Subscriber

    As per Nick says I’m just claiming business miles. Been kicked in the nuts in the last month as the company has decided to adopt the HMRC advisory rates which pays me 12p a mile, was 18.8p previously so a hefty chunk out of take home every month. Nice for the company though….

    Anyway, that’s by the by. I have a Passat GTE estate and as you say it’s great in terms of BIK at close to half as much as an equivalent 2l diesel Passat. Done nearly 40k in it now and really like it. Anything specific you want to know fire away.

    leeroysilk
    Member

    As per above, although you might also want to find out how your company reimburses business miles. My company recently changed the way we pay for our private miles.

    Previously, we’d pay for fuel on our personal credit cards, end of each month we’d claim back business miles at HMRC advisory rates. This was good for those running hyper efficient diesels as they could earn a little extra, bad for those with heavy right foot as they lost out and were effectively paying out of their own pocket to fund business miles.

    Today, we all have fuel cards, end of the month we have deducted from our expenses number of personal miles X HMRC advisory rate. My rate is 11 pence per mile, if I’ve driven 200 personal miles I have £22 deducted from my expense claim. This way seems much fairer although those who used to earn a little extra now moan about them losing out.

    Premier Icon Dickyboy
    Subscriber

    Mine is done slightly differently, have to record daily mileage for business & private and then provide proof (receipts) that I’ve bought enough fuel myself to cover the private mileage each month.

    Premier Icon Sir HC
    Subscriber

    I had a company issued fuel card, note the monthly business miles on an online tool, record total miles for the month. Total fuel spend was then split. Very easy and very simply, which is a good thing, as the department which managed it wern’t the most capable.

    Had a Golf GTE, very good car, almost GTI speed, with almost GTD economy.

    Used it in electric mode on the commute and all round town, reasonable saving in fuel (think it worked out at 7p a mile, vs 13p for petrol).

    Premier Icon FB-ATB
    Subscriber

    Also bear in mind lead times, especially for hybrids. When I was changing my company car, it was a struggle trying to get the combination of low BIK (for me), within lease price range for the company and available in a reasonable time.
    Some I looked at couldn’t actually give a date when the cars would arrive in the uk.
    Eventually an immediately available cheap lease Outlander hybrid came up as it was registered and the reg was due to change.
    The lease is £100pcm cheaper than the same car one of our directors has and he is on a 15,000 mile pa lease and I’m on 25,000 miles pa.

    mboy
    Member

    Mine is done slightly differently, have to record daily mileage for business & private and then provide proof (receipts) that I’ve bought enough fuel myself to cover the private mileage each month.

    This is where I’m coming a bit unstuck… With a plug-in hybrid, almost all of my personal miles would be done in electric only mode. It’s rare (but not inconcievable) at the weekend I would need to do more miles than the electric only range would manage. Obviously I will be charging it from my own electricity wherever possible, does this mean I have to submit my home electricity bill every month as proof? Obviously I will stick petrol in whenever I need it for myself, but it’s not like it will be very often is my concern.

    Also bear in mind lead times, especially for hybrids. When I was changing my company car, it was a struggle trying to get the combination of low BIK (for me), within lease price range for the company and available in a reasonable time.

    I’ve found 3 ready to go, one locally, one about 60 miles away, one about 150 miles away. All at dealers in the Advance spec, one Black, one grey, one silver. All with about £5k off list! Lease price isn’t really a concern either, company are buying the car. My only real concern financially here is minimising my tax liability.

    Anyway, that’s by the by. I have a Passat GTE estate and as you say it’s great in terms of BIK at close to half as much as an equivalent 2l diesel Passat. Done nearly 40k in it now and really like it. Anything specific you want to know fire away.

    Great stuff! What’s it like to live with? I had a 15min test drive in one and was thoroughly impressed, but couldn’t take it any longer sadly. What kind of “real world” mpg are you getting? I’ve been told to expect high 40’s maybe 50mpg if on a motorway run, mid-high 50’s in mixed urban and rural driving where it’s using the electric more, and round town I can get away with electric only so superb economy there! Is this realistic?

    Previously, we’d pay for fuel on our personal credit cards, end of each month we’d claim back business miles at HMRC advisory rates. This was good for those running hyper efficient diesels as they could earn a little extra, bad for those with heavy right foot as they lost out and were effectively paying out of their own pocket to fund business miles.

    That works for me to be fair, definitely not of the leaden foot brigade (at least not whilst I’d be working!), 12p per mile probably covers it ok if I’m using a mix of electric (gonna cost me something like £1-1.20 for a full charge and 30ish mile range!) and petrol.

    Premier Icon Dickyboy
    Subscriber

    Sorry hadn’t considered the hybrid side of things, that certainly adds in another layer of buggeration…

    Premier Icon boomerlives
    Subscriber

    an immediately available cheap lease Outlander hybrid

    I know why it would be available…They are horrid

    At my place of work there are two methods of opting out. The reimburse private miles (as above) and the buy your own fuel version

    This is reimbursed on a percentage basis; if 90% of your miles are business you will get 90% of the cost of fuel back; whether electrons or hydrocarbons.. It’s fair, but needs someone at the other end to administer the faffage

    Premier Icon FB-ATB
    Subscriber

    an immediately available cheap lease Outlander hybrid

    I know why it would be available…They are horrid

    The BIK tax I pay is less than I was paying in fuel to get to work so I’ll take any car that saves me money.

    Premier Icon boomerlives
    Subscriber

    I would rather walk. As should you, by your argument, as it would save you even more money.

    I don’t miss mine one bit. One fine day I had to fill it up 4 times because the range is so bad.

    They were responsible for hybrids being banned from the company as they promised so much, and cost twice as much to run as a good diesel.

    Premier Icon davosaurusrex
    Subscriber

    @mboy – sorry for the delay replying. It is a very easy car to live with, comfy, dispatches long journeys easily with the adaptive cruise and DSG (although true of a diesel Passat as well). Shift between battery and engine is seamless.

    Real world economy depends very much on journey distance, obviously. I am doing around 22k a year, a lot of journeys are 20 to 50 miles though and I recharge at home every night. One journey I was doing was 50 miles each way, if I left early and put the cruise on 50 to 60 I could get an indicated 80mpg on the way there using all the battery and low 50s on the way back. That was middle of summer though. I am getting low 50s overall without trying too hard. This also doesn’t take into account charging costs, my company and HMRC don’t allow for reimbursement so I put all company miles through as petrol. This may not be possible if you don’t know someone else with a petrol car who doesn’t need the receipts. Ahem.
    I don’t think it would work out if you’re doing long journeys and staying away without charging facilities. That said I took it to Italy on holiday last year and loaded with 3 kids and luggage it did 44mpg with no battery so not bad (stuck to 120km/h on the cruise). Think the face-lift model has a bigger battery pack, 50 odd mile theoretical range up from 31? That would make it a fair bit more practical although you’d never get 50 because I sure as hell don’t get 31! Spinning around locally at the weekend on electric is nice though.

    Lack of a spare wheel a bit annoying as sealant kit crap so potential to leave you stranded but that’s the compromise you have to make

    It’s no sports car but has plenty of grunt for overtaking when you have charge left (and not bad without, lacks diesel torque as only a 1.4 petrol and a heavy car but still has around 150bhp so it’s not bad).

    One of the best things is having it plugged in on the app timer so it is preheated and defrosted when you get in on a winters morning, proper luxury! When the lease runs out I hope I can have another unless something better (full EV equipment with 300 mile range would be nice). The big LED running lights on the front do look a bit stupid though!

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