New car dilemma

[learningtofly]

Some of you may have seen my post in SC in which I sought a trade for my MX-5. I was looking for something in which I could fit all my photographic gear, but instead I accepted an offer to buy it and - as of tomorrow - I’ll be without a car for the first time since my late teens!

I did have a plan in terms of buying a replacement, but I’ve subsequently been offered a job (subject to getting through an “assessment centre” day in a week’s time) that comes with either a company car or a £6k car allowance. Now I’m at a loss to work out the best way forward having not been a salaried employee since 2005.

If I take the car allowance it’ll equate to £3300 net, or £275 per month. Using that amount as funding I could lease a car for myself - the £275 would probably get me something nice enough, and it would be brand new. Alternatively, my budget to buy a car outright is about £10-12k, for which I would end up with a nice 1.6-2.0l medium-sized hatchback from 2015/16 and with circa 15-20,000 miles (maybe a bit less)on the clock. Then of course there’s the company car option, although I haven’t yet seen the details and also don’t know whether I’d be looking at en existing vehicle in the fleet or something new and of my choice. I assume it’ll be the former, though.

So, what are people tending to do these days - is there some kind of conventional wisdom which should be guiding my decision?

[JasonM]

Faced the same ‘dilemma’ when I came out of a Company car company a few years ago, Company cars are expensive in tax but hassle free, literally nothing to think about, a allowance is good in that if you use it to finance a car you will eventually own it with the company having paid for it, I did as you have suggested and got a 4-5 year old car for 10k and the allowance plus mileage claim made it cost neutral over 5 years, I still have the car, all paid for but it’s starship mileage so not worth much now, you could lease with the allowance but you are tied to the lease if the job doesn’t work out, that’s what stopped me doing it.

[rico]

Lease gives you the choice of a brand new car. Company cars only really make sense now if they are hybrid (much lower BIK).

[Justin Case]

Take the allowance and lease something for yourself. As has already been mentioned, you will get stiffed on tax. Also, should you ever wish to leave that employer you have the added hassle of having no car.

That said, the company may have some favourable EV options and if you could suffer driving such a thing it might be the most financially sensible option.

[jukeboxs]

I can't advise from experience as I've never had a car allowance (I just lease privately). Of those two choices, my 2c would be how much you value a shiny new car to the cheaper cost-neutral used car purchase (car vs cost).

Congratulations on the "potential" new job!

[yumma]

I had a similar dilemma when I changed jobs and also sold my MX5 ND 2.0 Sport Nav on SC. I bought a 3 year old BMW 225 xe PHEV from a main dealer on PCP. It was brilliant and even with a 2000Gbp deposit it was costing me £225/month. I couldn’t fault it. It was roomy, comfortable, refined, plush and averaged 80mpg. Probably one of the best all round cars I’ve ever owned.

[Captain Morgan]

I understand that electric are the best option for company cars if they fit your planned use.

But might there be a issue with insurance etc if you still plan to use a car provided by an employer for the headshot business?

As for taking the allowance there will be stipulations attached, less than x years old, at least 4 doors etc.

As for what to go for I thin it very much depends on how many miles you expect to do for work, headshots and personal.

[rico]

For reference, I’m in a similar position (ish) and have a new job starting in few weeks and have a car allowance.

I decided to lease a new 128ti (metallic blue) on a 6+35 5k deal at £290 per month. It’s six and two threes regarding excess mileage charge and the next annual mileage bracket (8k). Hopefully should have delivery in early May.

The only stipulation from the new firm is that any vehicle must have four wheels!

[Captain Morgan]

Take the allowance and lease something for yourself. As has already been mentioned, you will get stiffed on tax. Also, should you ever wish to leave that employer you have the added hassle of having no car.

That said, the company may have some favourable EV options and if you could suffer driving such a thing it might be the most financially sensible option.

The flip of that is you have no real protection in the first 2 years with a new employer, should your services no longer be needed the you are on the hook for the lease payment for the remainder of the lease term

[zelig]

IMHO you cannot beat a company car for peace of mind, but the BIK increases have made it more expensive in recent years.
My Jag XF was costing me £280/month just in BIK a couple of years ago.

It also means that your choice is limited to eco friendly models to keep the BIK down.

However, the new rules mean that plug in hybrids are still pretty cheap in BIK.

A colleague or mine has just ordered the new Golf GTE - which has BIK payments of approx £70/month (for high rate taxpayers)

See Comcar for BIK calcs

A premium hatch that's nippy & nice to drive for £70/month - it'll be difficult beat that IMHO.

z

[rico]

IMHO you cannot beat a company car for peace of mind, but the BIK increases have made it more expensive in recent years.
My Jag XF was costing me £280/month just in BIK a couple of years ago.

It also means that your choice is limited to eco friendly models to keep the BIK down.

However, the new rules mean that plug in hybrids are still pretty cheap in BIK.

A colleague or mine has just ordered the new Golf GTE - which has BIK payments of approx £70/month.

See Comcar for BIK calcs

A premium hatch that's nippy & nice to drive for £70/month - it'll be difficult beat that IMHO.

z

Will depend on what tax rate you are in of course but that’s a great ‘deal’

Edit: new mk8 Golf is entirely buttonless inside which was the main reason I didn’t go for a GTI when I was looking at lease deals.

[Daveya.]

I'm not fully up to date with latest BIK but you can't beat a co car for peace of mind

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[boundary546]

I took the car allowance 3 years ago and purchased an Audi SQ5, I hate finance and it frightened me borrowing all that money, but it worked and I've just purchased another new SQ5. I have been with my employer for 23 years though so the feeling of security is there.
I've always had company cars prior to the SQ5, and the SQ5 was going to be my company car until I seen it was going to cost me £400+ per month in income tax due to the purchase cost and emissions, then the plan to own it myself was hatched.
There are a few things to think about though, insurance - if you are using it for business use this can be expensive. Mileage allowance - I worked out I need to do around 11,000 business miles per year to make it pay. The business mile allowance hasn't changed for years, yet the cost of fuel has rocketed, you are allowed 45p per mile up to 10,000 per year and then 25p for each mile after that.
If you were going to buy a car yourself for around £10,000 will the new employer accept this model / age of vehicle ? If so I think I would be going down that route, once you've been there for a couple of years you can always change it for something better / newer or sell it and go down the lease / PCP route

[learningtofly]

Thanks for the input so far, everyone.

It seems that no single solution is a clear favourite and my thinking at the moment is equally fluid. However, a non-hybrid company car of the type I’d want to drive is likely to cost me precisely the same in tax as I’d receive as a net car allowance, and at the end of the day I wouldn’t own anything. Conversely, taking the car allowance would mean that in three years a car of the type I was intending to buy would be fully funded - and would be mine.

It seems to me, therefore, that the decision needs to be based on what cars are available to me if I go with the company car option. A nice, tax efficient PHEV might swing it based on the tax advantages; otherwise, though, I’m still inclined to buy.

[Mj2k]

Hi Tony,

Congratulations on the job, am sure you will do great in the assessment centre. Will feel weird returning to a salaried role, I know it did for me Nov 2019.

When I was in my early 20s I took the company car as could get & insure things I otherwise wouldn't have been touched with; Focus RS, 330i etc.

The last decade or so, have been opting out & buying a car vs leasing; pays off in 3yrs or so & is the deposit against the next one, rinse, repeat & trade up. Has served me well over the years. I have also never complied with minimum seats etc, but always told them I have access to 4 seats if required. In my career I have never taken customers in my car, and I don't do sales from a van, so don't quote see their requirement there!

I never treated the opt out as 'taxable' income. As the allowance comes out of your personal allowance & you therefore pay more tax on the income, I used to treat the gross value as my amount I can spend on a car. May be man maths in action, but it has worked for me over the years & let me get some really nice things to drive 'free' as a result.

[IAmATeaf]

If you’re going to be doing moon miles then either a company car or a leased car would make sense simply for peace of mind.

I used to do a lot of business miles but over the last 15 years that has dropped to only around 5k so opted out, took the money and run my own car.

As already stated some employers do have stipulations, such as the age, mine has but it’s to date hasn’t been enforced so I tend to get a car I want and then run it for quite a few years.

[Devonian]

I know very little about cars yet alone company cars, tax etc but it strikes me if you can get a new company car that’s tax efficient and ticks all the boxes that you require, then it’s cheap hassle free motoring in a new car. No worries of deprivation, servicing and maintenance. Plus if you decide the new job isn’t for you, you can always buy your own car then. Anything for an easier life in my book.

[Kingstepper]

I also no nothing about company cars and their tax but is it okay to use a company car for your own business?

[JasonM]

I also no nothing about company cars and their tax but is it okay to use a company car for your own business?

Not in my experience, when you sign the CC policy there is usually a clause about that, mind you, at one company I worked at, when I inherited the patch car, on handover, we found loads of business cards the previous rep had made up for minicabbing in it.

[Omegamanic]

Congratulations Tony.

Id be tempted to work out what I was happy paying monthly, and then seeing what the options in each, lease, company car, buying privately were. Something like the 128ti mentioned above might even fit all your camera gear in the boot, and be covered by an allowance - but a nice used Golf or similar as a private buy would be owned outright in a few years or so with the same outgoing expenses.

If I felt the role was fairly secure I’d possibly discard the company car, and concentrate on either the best possible lease deal, or look at what I’d like to own.

However, if there was any chance of the role being affected by the current global situation then I might consider a company car. That way the car would just go back to the company fleet.

A nice decision to make though, and I’m sure there are positives and negatives with each choice.

[learningtofly]

Hi Tony,

Congratulations on the job, am sure you will do great in the assessment centre.

Congratulations Tony.

Thanks both - fingers crossed for Monday week as it’s going to be quite an intense day (hoping to finish my presentation tomorrow but there are lots of other things to nail on the day, including monitored role play!).

I’d never considered that driving to take someone’s photograph every now and again could be in breach of company car rules (and I’d be inclined not to concern myself much with it). Is that really a thing?

[sundial]

Thanks both - fingers crossed for Monday week as it’s going to be quite an intense day (hoping to finish my presentation tomorrow but there are lots of other things to nail on the day, including monitored role play!).

I’d never considered that driving to take someone’s photograph every now and again could be in breach of company car rules (and I’d be inclined not to concern myself much with it). Is that really a thing?

Car is insured for business use whilst engaged in company's specific business ... thus not insured for your photography business which includes driving to/from the studio or to/from client's home ... unless you declare that use to your insurer ... which would then require additional /separate insurance and insurance premium. Different businesses are risk rated differently. 'Now and again' still constitutes 'business use'. You can take a chance by not declaring the separate additional business use ... but if someone involves you in a car accident / accident injury, whilst using the car in the course of your photography business, you'd be uninsured ... and risk prosecution. And if the car is carrying photo equipment, an attending police officer will likely ask where you were travelling to and for what purpose. Not worth the risk of a potential driving ban ... or worse.

A friend was advised by his insurance co. he was not allowed to drive his wife to dolls' fairs / jewellery fairs carrying her hand made dolls and jewellery because that constitutes 'business use' ... his car was only insured for 'social domestic & pleasure'. They now travel by taxi to attend dolls' fairs and jewellery fairs.

Insurance contracts rely on the legal doctrine of 'utmost good faith', uberrimae fidei ... which states that the insurer and the insured must disclose all material facts before the policy inception. Non-disclosure of material facts will make an insurance policy null and void.

I'm a former insurance professional.


dunk

[Dave+63]

If you choose to buy/ lease rather than go down the company car route, including business use on your policy costs very little more than SD&P only.

As mentioned previously though, don’t have it and you could be in a world of trouble.

[learningtofly]

If you choose to buy/ lease rather than go down the company car route, including business use on your policy costs very little more than SD&P only.

As mentioned previously though, don’t have it and you could be in a world of trouble.

Yes, I've had my car insured for business use for years, and I couldn't believe at first that the difference in premium was about a fiver. For info, if you claim business mileage on a private car and don't insure it for business use then potentially you could have a problem in a manner of respects.

Anyway, point noted regarding company car insurance. I'm not sure how anyone could maintain I was working just because I had some photographic gear in the boot (or that it would even be considered worthy of discussion), but the point has been taken on board in terms of determining my most favourable option.

As an aside, I've found a showroom condition 2016 Ford Focus 1.6 Titanium, close to me and with less than 6,000 miles on the clock. It ticks all the boxes so I now have to decide whether I commit to it straight away or not.

[Captain Morgan]

I’ve suggested these elsewhere but there are still some pre registered Dacia Dusters around £12k this gets something brand new with 3years warranty, not got the badge but reports from folk running them are good. If it’s a tool for business then it might be worth considering.

[learningtofly]

I’ve suggested these elsewhere but there are still some pre registered Dacia Dusters around £12k this gets something brand new with 3years warranty, not got the badge but reports from folk running them are good. If it’s a tool for business then it might be worth considering.

Any links, Captain?

[Omegamanic]

I’ve had a fun in a friend's Duster - a lot better than expected.

The Focus is a nice/better drive though, and Ford hit a nice patch of Fiesta and Focus cars in recent years for ride and handling.

[Captain Morgan]

https://www.autotrader.co.uk/car-sea...wCarHasDeal=on

[Captain Morgan]

Apologies first link omitted pre reg options

https://www.autotrader.co.uk/car-sea...year-from=2021

[learningtofly]

Apologies first link omitted pre reg options

https://www.autotrader.co.uk/car-sea...year-from=2021

Ah, thanks - I don't want a diesel so that won't work for me. I think I'd prefer a Focus too.

Thanks, though.

[Captain Morgan]

Ah, thanks - I don't want a diesel so that won't work for me. I think I'd prefer a Focus too.

Thanks, though.

That good, as none of those were diesel...

[learningtofly]

That good, as none of those were diesel...

Every car in that search was a diesel. Not to worry, though, as I'm not keen on them.

[Captain Morgan]

Every car in that search was a diesel. Not to worry, though, as I'm not keen on them.

Interesting both links for me show petrol or dual fuel on the first page at least.

[learningtofly]

Interesting both links for me show petrol or dual fuel on the first page at least.

Oh, perhaps I sorted it in a different way, then. Anyway, I wouldn't consider an engine below 1.6l so the position remains unchanged

[mjc1216]

As an aside, I've found a showroom condition 2016 Ford Focus 1.6 Titanium, close to me and with less than 6,000 miles on the clock. It ticks all the boxes so I now have to decide whether I commit to it straight away or not.

The plus with buying outright as previoulsy pointed out is that if the job dosen't work out you are not tied in to a 2/3 year lease.

Also easier to insure the car for business/private use.

As an aside how many miles will you be doing for business.

[Captain Morgan]

Oh, perhaps I sorted it in a different way, then. Anyway, I wouldn't consider an engine below 1.6l so the position remains unchanged

Sounds like the older Focus is best then

Emission regulations are forcing engine sizes down access the board, 1 ltr is the largest non diesel in the current focus. Golfs bar the gti are 1.5, smaller petrol turbos are the norm these days until the ubiquitous take up of the electric car

[learningtofly]

The plus with buying outright as previously pointed out is that if the job doesn't work out you are not tied in to a 2/3 year lease.

Also easier to insure the car for business/private use.

As an aside how many miles will you be doing for business.

I'm not sure, to be honest, but I'll be home based for the foreseeable, albeit with an office base in Guildford (about 1.25hrs from home). I'll have a UK-wide remit covering about 30 offices but travel should be relatively infrequent and I wouldn't use the car beyond a reasonable distance anyway.

Sounds like the older Focus is best then

Emission regulations are forcing engine sizes down access the board, 1 ltr is the largest non diesel in the current focus. Golfs bar the gti are 1.5, smaller petrol turbos are the norm these days until the ubiquitous take up of the electric car

Yes, I can see the way it's going. I've never been particularly leading edge with regard to cars, though.

[learningtofly]

Well, by way of an update I checked the fleet car policy of my hopefully soon-to-be employer and the cars that they now make available would have been far too tempting to turn down. In a purely defensive maneuver, therefore, I bought a car today to ensure that the possibility of any such temptation is removed.

Mazda 3 2.0 Sport Nav... a year or two older than I'd intended but 30,000 miles below the average for the year and too nice a spec/car to ignore. I was actually due to ride up to Dunstable today to look at a 2.0 SE Nav, but the difference in trim/spec makes this a no-brainer... additional kit & farkles when compared to the SE include full leather seats, dual-zone air-con, privacy glass, auto lights and wipers, cruise control, LED rear lights and front daytime running lights, 18-inch alloys, body styling kit, adaptive front lighting, front parking sensors, silver interior trim, a head-up display and a premium sound system!

Now I have a week's wait whilst it's serviced and MOT'd (damn it).

[Kingstepper]

Don't know anything about them but it's a nice looking car!

[Justin Case]

As close as you can get to an MX5 with 5 doors and seats!

Looks tidy.

[Devonian]

Tony that looks a really lovely car. A friend had one and was very happy with it. Good luck with the job :-)

[jukeboxs]

Ah, good old manual gear stick and handbrake - those were the days. But, good for your brain / memory. Looks in great nick - and well done avoiding the new lease car temptation (could put the savings towards a new watch surely).

[Omegamanic]

Should be a great reliable car!

[learningtofly]

Don't know anything about them but it's a nice looking car!

Isn't it? They're very well reviewed, actually.

As close as you can get to an MX5 with 5 doors and seats!

Looks tidy.

Yeah, I like Mazdas, and I have a superb dealership near me for servicing.

Tony that looks a really lovely car. A friend had one and was very happy with it. Good luck with the job :-)

Thank you very much, on both counts.

Ah, good old manual gear stick and handbrake - those were the days. But, good for your brain / memory. Looks in great nick - and well done avoiding the new lease car temptation (could put the savings towards a new watch surely).

Well, I crunched some numbers and I'll be substantially better off taking the car allowance, as opposed to being taxed for the BIK (over three years the difference is staggering). I fancied an auto if I'm honest, but it's hard to find the 3 in the Sport Nav spec and I really don't mind it being a manual.

Should be a great reliable car!

Thanks Scott!

[cgs]

Nice car Tony, good luck with your new job,
KR
Colin.

[Daveya.]

Cool kids drive Mazda's

I love the 3

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[jonasy]

Good choice! I think Mazda nailed this one.

[learningtofly]

Good choice! I think Mazda nailed this one.

i agree. Such a nice, but outwardly unassuming car.

Nice car Tony, good luck with your new job,
KR
Colin.

Thanks Colin!

Cool kids drive Mazda's

I love the 3

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Hah! Yes they do.

[pacifichrono]

Looks like you got a great deal, Tony! That 3 looks brand new. I've owned several Mazdas and never had a problem. Good luck with yours.

[nibby]

The Mazda 3 is based on the same chassis as the Focus;

"The Ford Global C-car Platform is Ford's global compact car automobile platform. It replaces Ford C170 platform and Mazda's BJ platform. ... The Ford Focus, Volvo S40 and V50, and Mazda3 (BK & BL) share about 60 percent of their parts and components."