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company car help

Discussion in 'Motors' started by jimblowscash, 8 Sep 2010.

  1. jimblowscash

    Wise Guy

    Joined: 18 Apr 2006

    Posts: 1,174

    Location: london

    Hi There

    I am just about to switch jobs and as part of the paccage for the new role I get a company car. I have had company cars before and never had a problem, I also have a car of my own that i intend to keep.

    My question is thus... as part of the deal I have to lease a car in my name but bill my firm for, they in turn pay all of the running costs including servicing, insurance etc and then apparently i have to claim something back....???

    before i have just recived the car and a fuel card, then paid an ammount monthly in tax for it.. i dont like the idea of leasing a car in my name for the simple reason that if anything should go south with the job in say 12 months time im stuck with a lease car for two years...

    can anyone help shed some light on this? im told it is becoming incresingly popular way to run company cars...

    cheers.
     
  2. Will Gill

    Don

    Joined: 18 Oct 2002

    Posts: 56,211

    Location: Cornwall & Sail.Number: GBR 3936

    sounds dodgy, my experiences have been the same as your previous examples

    definitely not a kosha agreement, as you say what happens if the company goes **** up, you are left with a car you would no more wish to own than fly to the moon!

    with who? the FD/CFO of the company you are potentially joining :p
     
  3. UncleBensSauce

    Gangster

    Joined: 13 Aug 2008

    Posts: 410

    This sounds like a company best avoided - ask them what happens if they go bust?!
     
  4. DM

    PermaBanned

    Joined: 11 Jul 2009

    Posts: 11,386

    Location: West Kingsdown, Kent.

    I cant see that being right, what happens if for example you didnt have any sort of credit rating, not necessarily a bad rating, you might not be able to lease a car.
     
  5. [TW]Fox

    Man of Honour

    Joined: 17 Oct 2002

    Posts: 157,259

    Sounds like.... they give him a car allowance. Just like loads of other firms.
     
  6. Rilot

    Don

    Joined: 18 Oct 2002

    Posts: 20,663

    Location: Wargrave, UK

    What Fox said.
    Is there any stipulation that you must have a new, leased car?
    Many companies that give a car allowance have certain rules (4 seats, no older than 5 etc) but I've not heard of one demanding that you lease a car yourself.
     
  7. Rotty

    Don

    Joined: 18 Oct 2002

    Posts: 41,096

    Location: Notts

    we had the same system, the company covered any outstanding costs if you left

    in our system the company gave you an allowance similar to the lease costs less the equivalent CO2 company car liability, we also had to allow the companto claim the AMAP relief accrued
     
  8. Will Gill

    Don

    Joined: 18 Oct 2002

    Posts: 56,211

    Location: Cornwall & Sail.Number: GBR 3936

    I would agree apart from stipulating it has to be a lease car, sure firms give you a cash equivalent for your allowance but that doesnt cover maintenance etc like this company seems to be offering, maybe the directors/company have a toilet credit rating and can't even get a car lease?
     
  9. Axeboy

    Mobster

    Joined: 13 Nov 2002

    Posts: 4,767

    Location: Scotland

    Sounds like my old employers system with autolease

    My name on the documents, and i was given an 'allowance' which paid for the lease. No tax.

    Underwritten by the business though. Was a great scheme overall, but no doubt will get stopped at some point.

    edit: the lease docs had both my name and the business name within, covering business risk and what happens when you leave etc etc
     
    Last edited: 8 Sep 2010
  10. Vonhelmet

    Caporegime

    Joined: 28 Jun 2005

    Posts: 48,107

    Location: On the hoods

    Exactly. Doesn't sound weird at all. It's very popular because it's very tax efficient.
     
  11. Will Gill

    Don

    Joined: 18 Oct 2002

    Posts: 56,211

    Location: Cornwall & Sail.Number: GBR 3936

    thats a cash equivalent and not weird at all

    seems weird to me
     
  12. johnny6

    Wise Guy

    Joined: 14 Apr 2006

    Posts: 2,170

    Sounds like an ECO (Employee car ownership) scheme to me. You technically own the vehicle but your company pays the bills.

    Edit

    Or if you prefer ECOP (Employee Car Ownership Plan)
     
    Last edited: 8 Sep 2010
  13. Will Gill

    Don

    Joined: 18 Oct 2002

    Posts: 56,211

    Location: Cornwall & Sail.Number: GBR 3936

    please forgive me, im well aware about this scheme, but how does a leasing agreement provide the employee with any "ownership"

    :p
     
  14. Axeboy

    Mobster

    Joined: 13 Nov 2002

    Posts: 4,767

    Location: Scotland

    Pretty sure this covers it:

    "Structure of employee car ownership schemes
    In order to avoid car benefit, one or more of the car benefit conditions at EIM23020 must not apply. It is only possible to escape two of those conditions while still providing benefits akin to a company car, “by reason of the employment” and “without any transfer of the property in it”.

    The employer’s involvement makes it impossible to escape the first of those, so these schemes rely on avoiding the second. To do so, ownership of the car in an ECOS is transferred to the employee at the outset (see EIM23205).

    So, in reviewing a scheme, the first point to establish is whether the employee has become the owner of the car at the outset. Only then can the ECOS succeed in avoiding car benefit."

    http://www.hmrc.gov.uk/manuals/eimanual/EIM31501.htm
     
  15. johnny6

    Wise Guy

    Joined: 14 Apr 2006

    Posts: 2,170

    The employees name will appear on the V5C not the lease companies. The employee will owe the lease company a set amount of finance on the vehicle, which is pay off in monthly installments by the employer. The employee will normally sell the vehicle at the end of the contract period instead of handing it back to the lease company.
     
  16. Axeboy

    Mobster

    Joined: 13 Nov 2002

    Posts: 4,767

    Location: Scotland

    In our scheme it was the same as a lease really, handed the car back.

    Basically it was a fully maintained lease but the car would be in the employees name to dodge tax. The "contribution" would still cost the employee something but it wasnt bad. For example, on my last company car (Insignia) i paid about £80 a month for it.

    Edit:

    It was this scheme: http://www.lexautolease.co.uk/content/funding/ecos/default.aspx
     
    Last edited: 8 Sep 2010
  17. Will Gill

    Don

    Joined: 18 Oct 2002

    Posts: 56,211

    Location: Cornwall & Sail.Number: GBR 3936

    this guy will never own the car, accept all of the risks of his employer going bust and be stuffed with a lease car of shame should that happen

    sounds full of lose lose lose to me
     
  18. Axeboy

    Mobster

    Joined: 13 Nov 2002

    Posts: 4,767

    Location: Scotland

    Better in my opinion.

    Need to see the documentation, it should be well covered. I mean surely if it costs less than tax and has no risk of being landed on you then its better than a normal company car?

    I suppose it really comes down to the paperwork. The lex one i linked above is well done.
     
  19. Will Gill

    Don

    Joined: 18 Oct 2002

    Posts: 56,211

    Location: Cornwall & Sail.Number: GBR 3936

    well done?

    its precisely as i summised it, he is lumbered with a car if he gets the sack or his employer goes bust

    employer = translated It is suitable if you have lots of money in the bank, with a decent accounts department and you employ lots of loyal peoplye.

    employee = run if you arent sure about working here long term or they appear shakey

    its still full of lose, my policy gives me £800 a month and I fend for myself, no obligation to buy anything, do anything, just have a car of my own or choose one from the maintained fleet to the same value, simples
     
  20. Axeboy

    Mobster

    Joined: 13 Nov 2002

    Posts: 4,767

    Location: Scotland

    We dont know if hes lumbered with the car, thats my point.

    I personally have similar to you, with £800/900 a month and its great, but in a decent sized business the ECOS scheme works out very well.


    Im just saying that if it is an ECOS scheme then it should be fine.

    If its as ***** as just paying a lease company then claiming something like 'expenses' then yes, its ropey


    It sounds to me like an ECOS scheme to someone who doesnt know them. If the OP confirms one way or another then ideal. It may be he has the most basic details in the offer of employment and will get the full detail when he starts.
     
    Last edited: 8 Sep 2010