Benefit in Kind for a company car

[DownButNotOut]

Apologies in advance someone must have requested this previously.........

At what point does BIK % of the list price of a new car make it cheaper to use HP through the business rather than PCP privately.

e.g. Assume the list price of a car is £20,000. If the BIK is 30% then if purchased through the business then, assuming higher rate tax this would be 40% of 30% of £20,000. or £2400.

Therefore if I were paying £300 per month for HP (business) then the cost would be £300*12 + £2400 or £6000

If however if I owned the car privately (assuming the same monthly cost for PCP) it would be £300*12 (as above) + £3600*.4 (40% personal tax) or £3600+£1440 or £5040

I appreciate I have simplified the costs (PCP vs HP) and tax (personal tax on P11D) but is the following statement correct?

If the BIK < 16% (almost half of the example above) then all things considered a company car is cheaper than private ownership.

[northernladuk]

Have you factored in the different between claiming the 45p/25p per mile rather than the <whatever> you claim for a company car?

The 30% comes from a car with 175 CO2?

Would you buy exactly the same car like for like? Why not get a 2 year (or older model) and avoid a majority of the depreciation?

You sure about your figures....

Have a look at this article and see if your figures match..

You've also forgotten to factor in what happens after the 3 years. Explained here...

On the whole company cars are not efficient through the company unless it is very low or zero emissions but best to run the exact figures of the car you want through your accountant.

[BolshieBastard]

Apologies in advance someone must have requested this previously.........

At what point does BIK % of the list price of a new car make it cheaper to use HP through the business rather than PCP privately.

e.g. Assume the list price of a car is £20,000. If the BIK is 30% then if purchased through the business then, assuming higher rate tax this would be 40% of 30% of £20,000. or £2400.

Therefore if I were paying £300 per month for HP (business) then the cost would be £300*12 + £2400 or £6000

If however if I owned the car privately (assuming the same monthly cost for PCP) it would be £300*12 (as above) + £3600*.4 (40% personal tax) or £3600+£1440 or £5040

I appreciate I have simplified the costs (PCP vs HP) and tax (personal tax on P11D) but is the following statement correct?

If the BIK < 16% (almost half of the example above) then all things considered a company car is cheaper than private ownership.

Wrong!

From the beginning, because your co is paying tax on the vehicle and the employee is paying a BIK, it is not efficient to provide yourself with a company car.

Even EV's which are currently set as 0% BIK will attract one of 5% from April and 7% from 2016.

Buy the car yourself.