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Company car income tax question - used car?

My company have been "downsizing" quite dramatically over the past twelve months.

As a result, there are a number of company cars now surplus to requirements. So, as someone's company car comes up for renewal, rather than be offered a choice of brand new vehicles depending on your entitlement scale, we're being told we get a choice of A, B or C from the said surplus.

Naturally, some of the cars are dented and have been used by smokers etc etc............it doesn't particularly bother me either way, a car is getting from A to B.

But what's the position with company car tax liability? It's based on the vehicle list price? But the value of the vehicle I'm going to be allocated to drive (3 years old) is likely to be half that value.

(I can already guess the answer to this but here goes........) Do I get taxed on the brand new list price or the value when I start to enjoy the "benefit"?

Reply to
leaenna_mills
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Sadly, your guess is right.... List price when car was new.

Reply to
Martin

I had a vague memory it reduced after 4 years, but I could be completely wrong.

I think it is much better most of the time for Cos to pay cash car allowance.

Reply to
whitely525

Yes not the price actually paid, the price that *nobody* pays.

A friend works for a company where the company buys in ex hire cars for their service engineers. They don't pay anything like the new list price for their cars ( Even the hire company didn't and that was 6 months and 10,000 miles ago) but their employees are taxed as if they were bought new for them at list price.

DG

Reply to
Derek Geldard

That was up to about 5 years ago.

Don't know about that.

If the firm is happy to pay the rate you can make a profit out of the revenue's non profit mileage rates by running a miser-rate poverty spec car.

Or by running old raspers and fettling them yourself.

DG

Reply to
Derek Geldard

That is on reason why highly discounted cars (i.e. cars where ASP is much lower than the list) are such a rip-off for Co car drivers. In addition, lease costs can be uncompetitive because of high depreciation.

Maybe this explains why BMW sells more 3 series cars in the UK than Ford sells Mondeos, even though it costs 10grand more.

Reply to
whitely525

So you can have a 10 year old car, taxed at the original list price...?

That really sucks...

Aren't UK firms obliged to offer a cash alternative now..? Actually I think it makes more sense for the Co too, as they don't have to be tied into a long leases (useful for when they fire everyone). And they don't have to stump up

3 months (or whatever) in advance. And they don't have to worry about the risk (I believe some Cos are essentially self-insured).

For the employee it almost always makes sense to own the asset themselves and drive it into the ground to extract max value from it. Buying your ex Co car can make the most sense as you know its whole history (or not buying for the same reason..!)

OTOH if you think the Co ARE going to fire you, maybe you should keep hold onto a very expensive Co car as collateral...:-)

Reply to
whitely525

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