Recommend me a new company car...

Soldato
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So I've currently got a Skoda Octavia (my 2nd) and I absolutely love it but the time has come to get rid and my company are now leaning towards a car allowance rather than buying for us so I'm looking into various lease deals!

I don't do a huge amount of mileage, probably 8-10k in a normal "non-Covid" year but would like something that has a decent amount of boot space for the odd long journey and family holidays. (wife and 2 kids and her car is a Fiesta so replying on mine for these!)

To this end I've been looking at the likes of the Volvo XC90, Mitsubishi Outlander and possibly even the Skoda Kodiaq (I don't need 7 seats but I guess it could be handy from time to time!

I've not been given a budget yet so a lot of this, particularly the likes of the XC90, might well be pie in the sky in terms of affordability but it can't hurt to look!

Any suggestions and/or experience of these motors in particular?
 
Soldato
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For that mileage I'd just base it on best BIK to space ratio you can manage. If outlander PHEVs are still good BIK go with that. No point having a lavish car and paying a fortune unless you really want it.
 
Caporegime
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BIK isnt relevant to a car allowance. Need to know how much it is/how much you wish to spend after its taxed.

But add in the company car tax you used to pay. I know a lot of people who say their company car allowance isnt enough etc at £500-£600 per month once tax is taken off but they are always forgetting they used to pay £200+ on their old company car in tax.

Dont forget business insurance cost though. That can catch a lot of people out.
 
Soldato
OP
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BIK isnt relevant to a car allowance. Need to know how much it is/how much you wish to spend after its taxed.

BIK? (benefit in kind?)

Work aren't busting a gut to get this sorted so the actual monthly amount after tax (which I really need to educate myself about!) is a bit of a guess at circa £500 p/m.

They have got a company who will provide a lease car with various benefits included but they seem to be mostly electric cars, which I'm not entirely comfortable with just yet!
 
Caporegime
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BIK? (benefit in kind?)

Work aren't busting a gut to get this sorted so the actual monthly amount after tax (which I really need to educate myself about!) is a bit of a guess at circa £500 p/m.

They have got a company who will provide a lease car with various benefits included but they seem to be mostly electric cars, which I'm not entirely comfortable with just yet!

ANd how much tax did you used to pay each month on the Octavia? You need to add that to your after tax amount of £500 per month and subtract the monthly insurance cost to see what your budget is.
 
Soldato
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I know not every company will work the same but ours typically offer you a car allowance that is pre-tax equivalent to what they would spend leasing your company car. If yours operates similarly and you have an Octavia company car, i'm not sure you'd likely be getting an allowance that's £500 after tax - of course they may not operate like this and the allowance amount may be entirely arbitrary in comparison, my previous company seemed to make things up on the spot for example. You really need that allowance figure firmly from the company before you get too carried away on what you're buying/leasing - there's a big big difference in what's available if that ended up even £100 lower than your current £500 assumption.

Edit - looking at your previous 'spec me a car' thread, it looks like your company bought second hand cars on a 3 to 4 year turnover and your budget was £16k. If they assumed zero value at the end, this suggests they were budgeting something like £330 to £450 out of their pocket. If they instead opt to just give you this money as a car allowance pre-tax, you maybe want to be thinking more like £250-£350 after tax.
 
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Soldato
OP
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Edit - looking at your previous 'spec me a car' thread, it looks like your company bought second hand cars on a 3 to 4 year turnover and your budget was £16k. If they assumed zero value at the end, this suggests they were budgeting something like £330 to £450 out of their pocket. If they instead opt to just give you this money as a car allowance pre-tax, you maybe want to be thinking more like £250-£350 after tax.

Yep, this is what they typically did but we've been bought out and the new "parent company" don't provide company cars so this is the route we are being forced down.

Quite worrying if the allowance does end up being more in the £250-£300 range because notwithstanding it will obviously be a new car as opposed to one 12-18 months old, I'm obviously going to be worse off! :mad:
 
Caporegime
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Yep, this is what they typically did but we've been bought out and the new "parent company" don't provide company cars so this is the route we are being forced down.

Quite worrying if the allowance does end up being more in the £250-£300 range because notwithstanding it will obviously be a new car as opposed to one 12-18 months old, I'm obviously going to be worse off! :mad:

Again you are falling into the trap a lot of company car users do which is forgetting you WONT be paying any company car tax anymore and you have to ADD that monthly value to your net car allowance after tax to give you your actual budget

I hear this all the time from car drivers who have swapped over.

Take our work. We have a lot of people on £5000 per annum car allowance before tax. A lot of them say its no good as after tax they only get around £285 per month for their car. But prior to that they were paying around £2,500 per annum in car tax so thats another £204.66 per month they have to play with so their total monthly budget is is almost £500 per month.

Unless the person goes mad, that should be enough to cover a reasonable car.

So how much per month were you paying in car tax before?
 
Soldato
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Go electric. 1% BIK. When you take the allowance you take responsibility for insurance, servicing, all the running costs.

Depending on what you have now potentially you could literally be looking at adding hundreds of pounds onto your take home every month. And the additional inconvenience if you lots of trips with away from home charging isn’t really that bad. Try a couple of electric cars. I don’t think you’ll be disappointed.
 
Caporegime
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Go electric. 1% BIK. When you take the allowance you take responsibility for insurance, servicing, all the running costs.

Depending on what you have now potentially you could literally be looking at adding hundreds of pounds onto your take home every month. And the additional inconvenience if you lots of trips with away from home charging isn’t really that bad. Try a couple of electric cars. I don’t think you’ll be disappointed.

He wont have BIK. He is going from a company car to a car allowance.
 
Soldato
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From reading the OP (s)he has access to a lease list but all the cars are BEVs (which they’re a bit unsure about) so (s)he’s thinking about the allowance option. But if I’m wrong, then I stand corrected.
 
Soldato
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Sorry guys, been a bit hectic today - to clarify I don't know how much company car tax I'm currently paying (bad I know!) but will find out - also, the lease scheme that the company have arranged for us to have access to is not entirely clear just yet - my understanding is that the monthly payment includes servicing, insurance, tax as well as the car itself and is sorted out before tax & NI - sorry if this sounds completely wrong!

I should probably push for the budget, take into account any tax benefits and then start looking - in hindsight I've probably suffered for a spot of premature threadulation! :D
 
Caporegime
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salary sacrifice scheme then it sounds like. Could be really great value for you if you can convince yourself to have an EV.

And yes, it will be on your P11d or annual tax code notice from HMRC as to hoe much you are paying per month for your current car. Until you have that info, you have no idea what your budget is or which is going to be the best choice for you.
 
Soldato
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Unless the company mandates a certain age of car I’d avoid leasing a new car buy something used and bank the difference.

That’s probably the least-cost way to do it. I don’t like surprises though. I like to budget for all my car expenses and while it may not be the cheapest way it does seem to be the one that gets to my appointments on time, every time, and doesn’t leave me feeling raped when I have to get my car repaired because something has gone wrong with it.

And currently, with BIK on BEVs at 1% this year then 2% until 2025, it’s a no-brainer to take the company car.
 
Associate
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Some of it depends if you’re a high rate tax payer as well. Quick example:

Source yourself Option:
Car Allowance: £600 a month
After tax and NI: £348 a month

Costs to consider if sourcing yourself:
Deposit (amortise over finance term): £50
Finance cost: £600
Warranty cost if used:
Insurance: £50
Road Tax: £10
Servicing: £40
Residual sales price (saving amortised over term): -£100
Total cost: £650

Total cost: £302

Company Car Option
Lost car allowance: £348
BIK (Tesla M3): £28

Total cost: £376

Don’t forget the relative “ease” of a company car. If you need new tyres or one pops before Xmas, it won’t impact you as much as your own car option would.

I’ve probably forgotten something, but you get the idea.
 
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