Conference terri::cars_uk

    You did tell the nice man at the tax office that your contribution is
    made before tax, ie out of gross salary?
    
    It pays to tell them everything.
    
    Andrew

>    supplied as a benefit and the individual , out of choice , finances
>    the entire cost  above the standard figure of a better car , should the
>    taxable benefit value of the car should be deemed to be equivalent to
>    the standard vehicle and not the true cost price of the car ?
 
	If you financed the extra cost from after-tax money, I would agree, 
	but you will be funding the difference from before-tax money, so I
	would guess not, as this is still a perk.

	However, I would be interested to know what happens.


	Heather

	Opps      collision

    Hello ,
    		I didn't mention that this money was pre tax ,but I now of
    people outside DEC who provide their own vehicle for company use and claim
    tax back against costs , this also applies to a lot of other things
    such as telephone ,Laundering of overalls etc,etc. Surely this would
    not be any different ?
    Regards Arron.

>    		I didn't mention that this money was pre tax ,but I now of
>    people outside DEC who provide their own vehicle for company use and claim
>    tax back against costs , this also applies to a lot of other things
>    such as telephone ,Laundering of overalls etc,etc. Surely this would
>    not be any different ?
 
	It would be different.

	I take the money and get a car, I take the money AFTER tax.

	Therefore I can claim a percentage of the costs for the car against tax,
	(depreciation, insurance, tyres, services etc). The proportion is based
	on the amount of company miles to private miles.

	So, to do what you want, you should pay for the difference with AFTER
	tax money, and claim a percentage of that after tax money back.

	If you are on 25% tax, you would need to do more than 25% of your miles
	as business to benefit.

	If you are on 40% tax, you would need to do more than 40% of your miles
	as business to benefit.

	I would also asume, if the tax man decided to do this, he would do it 
	for all people who take a car in the scheme, not just for those who
	would benefit.

	Heather

    I've never input to the Notes file before but thought regulars would be 
    interested in an issue I've come across whilst choosing a new car on 
    the scheme (unless that is you already know all about it!).
    
    The rules for 94/95, as you'll be aware, replace the current system 
    with a standard charge of 35% of the list price.  This is, however, a 
    major change from the policy at present - even the �19250 break.  Why?  
    Because the new rules are strictly based on list price not on the 
    invoice price.
    
    This year if you were fortunate enough to be able to go for, say, a 
    �22,000 car and were able to get it discounted down to �19245 you'd be 
    under the tax break.  Next year will be different.
    
    I rang the Inland Revenue and they confirmed that the price they will 
    be working on in the published list price + VAT + delivery + car tax + 
    factory fitted extras.
    
    This appears particularly unfair where we are obtaining cars at a very 
    significant discount (as is supposedly the case in the new scheme).
    
    Surely we should only be taxed on the value of the benefit.  The value 
    being what it cost to buy, not the inflated list price (that hardly a 
    private buyer pays let along a fleet).
    
    The Inland Revenue would not consider individual applications for any 
    changes to this.
    
    Question to Doug if he's on this note:  Is there anything Digital can 
    do to get the IR to accept the cost of the various General Motors cars 
    at the actual price not the list price.   This would make a very 
    substantial tax difference in the case of cars like the Calibra Turbo 
    or the Carlton Diplomat.
    
    Regards,
    
    Phil
    

    Phil,
    
    	you've got to be kidding ! Think of all the extra work that would
    give the Inland Revenue. They are still going to have to deal with kit
    cars, imported cars with no equivalent in this country etc.
    
    Also, it is hardly fair, from a tax point of view, that you should be 
    charged less tax than me ( an employee of my own company ) for the same
    car just because your company can negotiate a better deal by dint of
    being bigger. If you and I have the same car as a company car, we
    should both pay the same tax, since we both have the same benefit.
    
    	Terry

    I hope .5 was in error when it said MLP +VAT + CAR TAX!!!!! This was
    abolished a while back!.
    
    Richard
    
    P.S. Don't forget that 'free metallic paint' will be taxable at �190 on
    a cavalier!!! as will all the other 'cheap' extra's!!!

Like Phil Collins I have never contributed to this notes file, but I do see his 
point.

What has happened is that the Company has negotiated a better deal with 
Vauxhall and then adjusted our allowances downwards so that Digital takes the 
benefit not the individual.

Under the old scheme I could buy a �14,000 list price Saab for less than a 
�19,000 list price Vauxhall. Not under the new scheme; I have to pay �200 per 
annum more.

I think the very least we should be doing is making clear the list price of the 
vehicles on the Standard Car List (including extras).

Alan

    It sounds as if this may be the last straw for some people and they
    will start to desert the company car scheme in droves.  I guess the
    Vauxhall deal must be based upon an agreed number of new cars per annum
    so eventually there will be a risk that Digital cannot comply with the
    contract 8-O (OK that may be in a year or so but it could happen)
    
    In these days of low interest rates and fixed rate loans (for car
    purchase); Options 1-2-3; the VW scheme etc... the case for opt out
    must be getting stronger.
    
    re 2132.7 - I am amazed that a self-employed person would allow himself
    to get caught by a tax liability.  Using your own car for business
    turns it into a tax benefit if you work at it.  (After all, your home
    to office mileage is zero etc. etc.)
    
    rgds Alasdair 

    I actually think the I.R. may be doing something right on the
    car benefit front (although I would naturally prefer not to pay
    for 'benefits' myself - who wouldn't?).
    
    If a car is to cost a private individual a certain amount, then
    that is the amount of benefit they are gaining whenever they are
    provided with that car by their employer.  So, that is what the
    tax should be based on - not whatever price a large company may
    negotiate that purchase down to.
    
    The fact that list price tends not to reflect normal purchase
    price is an issue to be sorted out by the manufacturers.  Perhaps
    they will do something about this with the new tax equations.
    Instead of there being a large 'discount' available to almost
    anyone who cares to ask for it, resulting in new cars rarely
    costing the list price...
    
    I'd like to be able to buy a new car at a correct price, whether
    it is bought privately or as a company car on which I'd pay benefit.
    
    J.R.

    re previous few
    
    The IR say the tax will be based on the list price. Ok, what happens if
    the manufacturer does not publish a list price??
    
	Ford apparently mooted the idea of not publishing the list price in
    an attempt to reduce Fleet users tax liabilities, and hence stimulate
    sales. This is a rumour but I wondered if the manufacturer could do
    this or whether the publishing of a list price is a legal
    requirement???
    
    An interesting thought though! What would the IR base their tax on??
    
    Malcolm 

    In that case, the IR would base their assessment on their own valuation
    of the vehicle.  Which could be a bit higher than the old list price.
    
    So if Ford (say) mess them around by not publishing a price list,
    they'll mess Ford around by grossly overvaluing their cars for tax
    purposes, thus driving fleet buyers away in droves...
    
    Or they could do a major tax audit of Ford every year, in order to have
    up-to-date info on which to base their assessment.
    
    Richard

    re .7   Terry, what's fair abouy any system imposed like this?   Like 
    it or not it's usually market forces that determine the price paid for 
    anything.
    
    I guess my point in .6 was that currently one wouldn't pay the same tax 
    if you'd managed to negotiate a deal on, say, a Cosworth to get it 
    below �19,250 than would someone who'd not beaten down the price.  So 
    the Inland Revenue are changing the rules to our disadvantage.
    
    I guess I'm also surprised that there's not more concern on this.  Tax 
    in the next Tax year will be 35% of the List price.  So say you got a 
    �16,000 Cavalier list but bought from Vauxhall for our scheme at 
    �13,000.  That's �3,000 x 35% = �1050 extra on which you'll be 
    taxed over and above the actual value of that car not it's paper value 
    (less of course the discounts for over 2,500 and 18,000 mileages).
    
    Ah well, guess I've just got to put up with it and pick something a 
    little less extravagant!
    
    
    
    
     

>     <<< Note 2132.14 by FILTON::COLLINS_P "Phil Collins @bso 842 3344" >>>
    
>    re .7   Terry, what's fair abouy any system imposed like this?  
    
	As I said in .7 and was said in .11, this new system is fair in that
    everyone will pay the same amount of tax for the same car and therefore
    the same benefit. We may all feel that the percentages are too large,
    but at least it is the same for everyone. 
    
>    I guess my point in .6 was that currently one wouldn't pay the same tax 
>    if you'd managed to negotiate a deal on, say, a Cosworth to get it 
>    below �19,250 than would someone who'd not beaten down the price.  
    
    	This is a good point, but it is only one small area of the existing
    tax laws. However, its corollary is that, under the existing tax scheme, 
    people pay the same tax for a 2l car cost �19,000 as for a 2l car
    costing �10,000. Do you consider this to be fair ? That is like saying 
    that someone who earns �19,000 p.a. should pay the same amount of tax as 
    someone who earns �10,000 p.a. They do however pay at the same
    percentage, which does seem to be fair.
    
    	Aside from the overall fairness of this scheme, all the other
    taxable benefits I can think of are all taxed by their value ( i.e.
    actual cost ), so this new tax scheme will just bring it into line with
    all other taxable benefits. Additionally, the implementation of a scheme 
    where every individual car had a different price would be too horrific to 
    contemplate. The IR make enough blunders as it is.
    
    	Terry
                  
    
    

    RE: .14
>   �16,000 Cavalier list but bought from Vauxhall for our scheme at 
>   �13,000.  That's �3,000 x 35% = �1050 extra on which you'll be 
 
    Is this really true or are you exaggerating to make a point ? The
    Digital cars still come from PHH who still buy them from dealers, who
    at most are going to give 10% discount.  10% of 16000 is 1600 which is
    half as much.
    
    tp

    RE: .14
>>   �16,000 Cavalier list but bought from Vauxhall for our scheme at 
>>   �13,000.  That's �3,000 x 35% = �1050 extra on which you'll be 
 
>    Is this really true or are you exaggerating to make a point ? The
>    Digital cars still come from PHH who still buy them from dealers, 
>    who
>    at most are going to give 10% discount.  10% of 16000 is 1600 which 
>    is
>    half as much.
   
Trevor, where have you been :-)

As far as Vauxhall's are concerned, they are now only supplied by 4 
selected dealers; managed only through HERTZ; and digital gets a massive 
25% discount. 

So it should be
�16,000 Cavalier list but bought from Vauxhall for our scheme at
�12,000.  That's �4,000 x 35% = �1400 extra on which you'll be taxed!

Richard 

>>>    Is this really true or are you exaggerating to make a point ? The
>>>    Digital cars still come from PHH who still buy them from dealers, who
>>>    at most are going to give 10% discount.  10% of 16000 is 1600 which is
>>>    half as much.		 ^^^^^^^^^^^^
    
>>>    tp

	Typical discounts for PHH and Hertz from Car Dealers range up to 22% in
my own experience.  One car I had came from Toyota Maidenhead instead of the 
Renault dealer because the Renault dealer would "only" give a 20% discount to PHH.

				Malcolm. 

    Sorry, I was only stating what I know to be true :-)
    I know someone who works at a large Citr�en dealer and he was telling
    me how PHH had threatened to buy elsewhere as the dealer wouldn't give
    more than 10% discount.  I know things used to be different as I
    accidentally got a copy of the costs of my previous car which seemed to
    be at around 25% discount off the retail price.
    
    tp

    
    When my last car came up for renewal, I toyed with the idea of opting
    out. I phoned up the Toyota garage in Reading (that used to be on the
    DECpark roundabout) to enquire about prices. 
    
    The guy at the garage asked whether it would be a private or a company 
    purchase. I said I hadn't made up my mind yet and it would depend on
    the differing costs. He then asked which leasing companies did I have
    in mind. When I replied PHH or Hertz, he said oh you work for Digital
    then. He then went onto say that if I purchased privately then they
    would be willing to offer the same discounts as offered to the leasing
    companies. They were in the order of 17% for a family type car and 9%
    for the sportier cars (I was interested in the MR2)
    
    POL. 
        

    Not sure if there's a more appropriate note....
    
    Got this info from a Vauxhall Fleet dealer:
    
    
    TAX PAYABLE PER MONTH FOR EVERY  1,000 POUNDS OF COMPANY CAR PRICE
    
    				Age of Company Car at end of tax year
    1994/95 and beyond		Less than 4 years	4 years or more
    				-----------------	---------------
    				25%	40%		25%	40%
    				 taxpayer		 taxpayer
    Business Mileage
    
    Less than 2,500		7.29	11.67		4.86	7.78
    
    2,500 to 17,999		4.86	7.78		3.24	5.19
    
    18,000 or more		2.43	3.89		1.62	2.59
    
    "The above information must only be used as a guide to enable users to
    quickly calculate the amount of tax payable on their Company Car."
    (copyright Touche Ross & Co)

	I think I'm being ripped off! From my (newly corrected) P11D my 	
	leasemobile is taxed as follows:

| 1. Cars made available to the director/employee
|    Appropriate benefit charge for car shown at (i) above........ 4551.75

	This appears correct, 35% of list price of �13005 means I'm taxed
	on �4551.75.  BUT, the lease cost of the car is only �3400 
	i.e. I pay tax on �1151 of benefit I don't get.  

	If I took the car supplement as salary and paid the lease cost
	out of my NET pay, I'd save 25% of �1551 (=�387) in tax.

	Or have I missed something?

	Ian.

    I think you've missed something.
    
    Car Fleet (or whoever) get 3400 to run the car.
    If you got that paid you'd get 3400 -25% tax
    If you then had to pay car fleet the 3400 they need, you'd be paying
    3400 (-25%) tax  plus the extra to compensate for the missing amount.
    
    :-)
    tmp

I never look at the figures the way you seem to be,
I need to know what the car costs *me*. Lease cost and tax 
value are not really related.

Let S be salary
Let A be allowance given by digital for a car (if any)
Let L be lease price of your chosen car
Let T be taxable benefit of car

Case 1: take the cash, no car.

       Taxable income     = (S + A) 
       You are left with    (S + A) - [Tax due on (S + A)]

Case 2: take a car for a lease price, L.

       Taxable income     = (S + A - L + T)
       You are left with    (S + A - L) - [Tax due on (S + A - L + T)] 
 
For your case

S = S
A = A
L = 3400
T = 4551

So, case 1:  Left with		S + A - [Tax due on (S + A)] 
    case 2:  Left with		S + A - 3400 - [Tax due on (S + A - 3400 + 4551)]

If we drop in a salary of 20000 and a car allowance of 3200
we get 

	case 1: 23200 - tax on (23200) but  no car
	case 2: 19800 - tax on (24351) with a car

Work it all out with the correct tax levels and rates and
you'll see what the lease car costs.

Phil.  

        RE .24
� I never look at the figures the way you seem to be,
        
        Well I thought I might be making it too simplistic, but 
        I still can't see the flaw. In fact your example has
        strengthened my arguement. 
        
        By plugging my actual figures into your model I'm �3787 pa
        better off without a lease car. That would be enough for me to
        lease it privately and have �387 tax free spending dosh!
        
        Ian.

It does not surprise me that your lease car costs �3787.

I've looked at my figures again and I'm still not sure you are correct.

case 1: left = S + A - Tax on A - Tax on S
case 2: left = S + A - L - Tax on S - Tax on A + Tax on L - Tax on T
                                               ^
					       ****** this is now plus
						      due to algebra

therefore if the (high end) tax rate stays the same, the difference 
between the two cases is

case 1 - case 2 
    = S + A - Tax on A - Tax on S - (S + A - L - Tax on S - Tax on A + Tax on L - Tax on T)

simplifying 
    = L - Tax on L + Tax on T

and since the difference between case 1 and case 2 is the 
real/true/actual lease cost to you I get 

      True cost = 3400 - 25% of 3400 + 25% of 4451
                = 3400 - 850 + 1137
	        = 3687

What I am a bit surprised at is that you can get a private lease deal
for 3687 per annum (=307 per month).
Would this equal the DEC scheme in its terms and conditions ?

pick all of

Free full insurance (anyone to drive)
Free tyres
Free Servicing
Free Green Card
Free Breakdown Cover
and any others I've forgotton.

Phil.

    
    You could easily get a contract hire deal as good as the current 
    non-vauxhall deals including all the extras mentioned in the last note.
    Unfortunately, as a private individual you'd have to pay the VAT @17.5%
    on top of any advertised figures.
    
    DEC doesn't (or at least didn't used to) charge us the VAT since it 
    claimed it back from the VATman. However.....
    
    On August 1, the VAT rules change on company cars. The new rules are :
    
    1. New cars purchased for business use *ONLY* can recover VAT on purchase
       price. Where VAT has been recovered on the purchase price, VAT must
       be charged on the eventual sale price when the car is disposed of.   
    
    2. Businesses who lease cars will only be able to recover 50% of the
       VAT on the lease payments if the car is available for private use
       by employees. (note: this is VAT on the lease payments for the
       capital value of the cars, they will still be able to claim full
       VAT refund on maintenance etc.) 
    
    
    Rule 1, I believe, will apply to companies like PHH and HERTZ who buy
    the cars and then lease them on to companies like DEC. They will be
    able to claim the VAT back (they can't today) because their use will
    be soley business use ie. leasing. Because they will be able to claim
    the VAT back this should reduce the cost of the lease.
    
    Rule 2 is going to be bad new for companies like DEC. As just about
    all of the cars leased are available for private use, DEC will be
    effectively surcharged to the tune of just under half of 17.5% of the
    VAT they currently pay. I said 'just under half' because it is expected
    that the leasing companies will issue two leases for all new cars. One
    that just covers the capital value on which only 50% VAT will be 
    recoverable and a second that covers all the other costs on which VAT is
    fully recoverable.
    
    I wonder what this will mean for us?
    
    Richard.
    

>> What I am a bit surprised at is that you can get a private lease deal
>> for 3687 per annum (=307 per month).
>> Would this equal the DEC scheme in its terms and conditions ?
        
        My intention is not to get a private lease deal, but to stay
        in the Digital one, which costs �3400. If I pay for it out my
        NET pay it is no longer a taxable benefit and the 450 odd tax
        points I get back puts me into profit (assuming I don't do
        over 2500 miles).
        
        Of course the whole thing relies on Car Fleet letting me do
        it!
        
        Ian.

    	For anyone considering coming out of the Cocar scheme and taking
    the money instead, last night I worked out all the costs of running my
    Xantia VSX TD.  This came to 15.89p/mile over 28k miles and 26 months. 
    I was amazed, expecting the figure to be about double that.  The figure
    EXCLUDES depreciation and loss of interest on the capital used, so I
    suppose that would bring the figure up to more like the 30p/mile I was
    expecting.  Bear in mind that I started with no No-claims bonus on the
    insurance, which was �593 for the first year, and 4 tyres so far at
    about �100.00 each, which is all included.
    
    				Malcolm.

    Simple question here from a novice to the Tax rules surrounding company
    cars.
    
    If appreciate that I incur a taxable benefit of 35% (?) of the value of
    the New Car. So, whats the deal if I buy a 4 year old one. 
    
    I had in mind a Lotus Esprit, but the even a two year old one would
    incur me 35% the cost of a new one which is horrendous. A 4 year old
    one, would look just as good and hopefully incur less tax. Any ideas how
    much ?
    
    
    Thanks
    Paul.
                                    

...you can only get new cars on the scheme, as far as I'm aware...

Chris.

	Hi,

	I agree that only new cars are available via the scheme, however
	if you still need the info...

	"The benefit is reduced by one third if the car is over four
	 years old."

	Courtesy of my free"Tax Card" from Computer Weekly *8-)

	HTH,
	
	Kevin.

    thanks for the info, forgot to mention the question was a generic one, ie
    I'm doing this through my company not digital. Contractor scumm bag and
    all that.
    
    paul                                                                 

    Car Benefit 1995-97
    
    Business Use PA	Up to 2,500       	2,500 -		18,000 and
    			Miles and 2nd Cars      17,999          over
    
    %list price		35%			23.33%		11.67%
    Max chargeable	�28,000			�18,666.67	�9,333.33
    
    - List price includes cost of optional extras
    
    - Cars aged at least 4 years on 5th April: 1/3 off scale rate
    
    - 2nd cars with 18,000 business miles or more: 1/3 off scale rate
    
    - Cars aged 15 years or more on 5th April and with value of �15,000 or
      more: taxed at current market value
    
    - Private use of van: under 4 years �500, 4 years and over �350
    
    Car Fuel
    
    		1400cc or less	1401 - 2000cc	Over 2000cc
    1996-97
    	Petrol	�710		�890		�1320
    	Diesel	�640		�640		� 820
    1995-96
    	Petrol	�670		�850		�1260
    	Diesel	�605		�605		� 780
    
    Clive

    Has anyone any current experience of persuading the nice taxperson to
    agree allowances for the costs of business mileage in a non-Company car
    - a la Heather's experience (*.5 etc) two or three years ago?
    
    My calculations show the economics of opting out of the leasemobile
    scheme to be marginal, unless it is possible to get something towards
    the losses incurred in driving for the company at 8.3p per mile.  If
    they still operate as Heather described that would make a big
    difference in my case where 50+% of mileage is for Digital.
    
    Please share any current thoughts or experiences.
    
    Richard
    

    By getting a form from the tax office (P85?) you can apportion your
    costs for running the car for business use against tax. The 8.3p per
    mile comes off the running cost you claim. Your running costs include 
    petrol, servicing, repairs, road tax and insurance. You can also claim a 
    capital allowance for the proportion of the depreciation, where the 
    depreciation is 25% per year.
    
    Brian