Conference terri::cars_uk

        That should of course be MANUFACTURER'S list price.
        
        Fuel increased by 10% (approx 12p on unleaded).

    Has diesel gone up too?
    
    Laurie.

 >    Has diesel gone up too?
    
      There was no specific mention of diesel, but he did say 'fuel'
      charges would be incresed by 10%.  Whether the chancellor knows
      that diesel is a fuel is an interesting question - he doesn't
      seem to know we use litres and not gallons!
    
      ~sam

    
    I think he uses Diesel to keep his eyebrows in order!
    
    Tim (who uses diesel)

>      that diesel is a fuel is an interesting question - he doesn't
>      seem to know we use litres and not gallons!
    
Just as well....12p on a litre would be horrible !!!

    >    For 1994/1995, a new scheme is to be introduced. Tax liability
    >    will be 35% OF THE MANUFACTURED LIST PRICE.
    >      	 ==================================
    
    Surely that means that there will be no point in buying/leasing
    /whatever a second hand car. Assuming you have that choice of course.

    I forgot something in my last reply. How will they go about working out
    the tax liability on a car that is no longer available such as the one
    I drive?

    Will the amount we pay, be based on the cost of the basic car DEC
    supply or will it be on the cost of the car we actually order.
    If its the later does that mean that we will be taxed twice, once 
    when we get paid and again when we chose to spend our hard earned
    cash on a car that is a little different from the Digital standard car?
    
    

    
    Kieth,
    
    You don't pay tax on the money you put into your car as I understand it!
    
    Richard

>>>    You don't pay tax on the money you put into your car as I understand it!
    
    You do at the moment, if your care is over 19,250 you pay extra tax,
    even though it's your contributions that make take the car over that
    price.
    
    I suspect we'll be taxed on the price of the car we drive and not the
    "free" one.

    Phew, just read today's newspaper,
    
    There will be a 33% reduction (of the 35%) for > 2500 business miles
                    66%                             18000
    
    not too bad unless you drive an expensive car.
    
    Huw.

	As an example these are the calculations for a Ford Mondeo GLX 1.8i 
	5 door...

	MRP (excluding delivery and road fund license)	13880


	35% of MRP (and less than 2,500 business miles)	4858
	2,500 to 18,000 miles				3207
	over 18,000 miles				1604


Andy.
	

	The paper says diesel ans unleaded up by 12p gallon.

	Some examples.....on tax to pay size vs price

			   under 2500	  over 2500         over 18,000
	       MLP	size	price	  size 	price	    size  price

rover metro    6670      866     584       578   389         289   195
ford esc 1.4   11025     866     965       578   643         289   322
V.all cav 2.0i 15325    1794    2146      1196  1430         598   715
bmw 318i       18450    1794    2596      1196  1730         598   865
river sterlng  26995    3726    3779      2484  2520        1242  1260 

	metro/escort assumed 25% tax, rest at 40% tax	

	Heather

        Re .13>
        
>    Phew, just read today's newspaper,
>    
>    There will be a 33% reduction (of the 35%) for > 2500 business miles
>                    66%                             18000
        
        
        ... on the ball then Huw!  I said that in the base note.
        
        Ian.

>>                                                     - he doesn't
>>      seem to know we use litres and not gallons!
    
    
    	What's with this "WE" ?  As far as I'm concerned petrol pumps use
    litres, "I" use gallons.   You use litres if you want to.
    
    
    I didn't listen to the actual speech but CEEFAX said "Hydrocarbon
    fuels".
    
    
    	.Steve.

    	He actually said "raise all fuel duties by 10%" and then gave
    examples for leaded & unleaded petrol.

    by my calculations if you get hammered for 2600 of taxable benfit at
    present then you need to order a car with a MLP of #11,150 or less in
    order to break even .
    
    I'm calculating this by the equation
    
    35/100 = 3,900/x where x is the MLP and 3,900 is your current taxable
    benfit (2,600) + the third that is chopped if you do more than 2,500
    miles.
    
    Or am I wrong ;-) ?

    I'm not sure where you got 2600 from. The 1991-2 ( 1400-2000cc?) figure
    was 2650. The 1992-3 figure went up to 2770, and this year is subject to
    an 8% rise as of next tax year (1993 -94) which gives 2992 (calculated,
    depends if they round out). 
    
    the reciprocal of 35% is 2.857 so if you roll up the 2992 * 2.857 then
    say this is 2/3 of the car value then the end result will be 12,822.
    This figure is across the board of diffent company car milages.  
    
    I pasted all these figures in .12 of this note string.
    
    Richard

    yeah you're right. i was of course not using the correct figure which
    is 2992 as opposed to my curent code. well spotted the chap !

    Bummer if you driver a Supra :-(

    Hows the tax man going to work out the MLP of a car when factory
    fitted options are available that you may add later.
    
    I was think mainly of BMW's.
    
    A possible loop hole for small companies to buy bottom of the range
    then 'upgrade' later ?
    
    Ian.

    If you add options later (at your own expense) then these extra items
    are not taxable.
    
    Roy

Obviously if you add options at your own expense, then your aren't liable for
extra tax as these are not a perk or benefit. If the company were to pay,
then I would have thought you would have to declare it.


	Ian

    RE .16,
    
    Ian, you know what it's like, You get so upset by the news that you
    can't read the rest of the message!
    
    Huw. :-)

    So, will the list price be the original price of the vehicle, or will
    it increase as the manufacturers increase their prices over the 3
    years?
    
    Huw.

>>                    <<< Note 2043.31 by EBYGUM::WILLIAMSH >>>
>>                             -< We need to know! >-
>>
>>    So, will the list price be the original price of the vehicle, or will
>>    it increase as the manufacturers increase their prices over the 3
>>    years?
    
    Sense dictates the former, but I seem to remeber him uttering a phrase
    along the lines of "there will be no need to keep changing the tax as
    the rising cost of the car will provide the additional taxation" seems
    to suggest otherwise. (definitely not the original words!)
    
    Richard

    Could someone explain the following bits from .33.
    
>    *the full cost of the car - 35% of the list price of the car from April 
>    6 1994;
    
    Is this the Full Cost minus 35% of MLP, or is it saying the Full Cost
    is 35% MLP?
     
>    The Chancellor proposes to base the new tax charge on the full cost pf 
>    a car for a year.  Full cost includes not only running costs but also 
>    large fixed costs (such as depreciation and financing costs).  The 
>    measure of full costs for the income tax charge will be 35% of the 
>    price of the car.
    
    What gets added and what gets subtractd to get the Full Cost. or does
    everything get added? and what's the financing costs?
    
    Angus

    
    Surely we can only be taxed on the base car ie.1.6L Cavalier as
    anything beyond that is financed entirely out of our own pocket and is
    therefore not a company provided benefit. Or perhaps the money we chip
    in should be deductable from the benifit.
    I fail to see how they can tax us for someting we pay for out of our
    own pocket!
    If they only tax us on the base company provided car DEC could help us
    out by changing to a different base vehicle but with a low capital cost
    but the same lease cost due to high depreciation/running costs, this
    would mean that the taxable benefit would be lower but the lease
    contribution would be the same.
    
    Richard (young)

    
    But when we "chip in" that money is not taxed

    I realise in advance that this will be an unpopular reply, but being
    taxed for the full amount of the car is correct.
    
    Imagine you have a salary of approx #20,000. To get the car you want
    you must pay #1,000 per year to subsidise the lease costs.  How, from a
    tax point of view would that differ from someone who salary is #19,000
    and doesn't have to contribute to get the same car ?
    
    Now if you were already paying tax on the #1,000, that would be
    different.
    
    Shaun.

    
    I know we're not taxed on the money we chip in but thats not the point
    the company aren't paying for it so it's not a benefit is it?
    
    Whether that money we chip in should be taxable is a totally separate
    question surely?
    
    Richard (young)

    Right now the MLP of a car in the UK allows for large discounting. The
    new tax scheme for 93-94 will encourage manfacturers to make their MLP's
    closer to the price you pay. So if you get a car now and keep it for 3
    years you will carry a tax penalty for 2 years due to the inflated MLP.
    
    Re .-1
    Richard, it sounds to me like you should be asking John Birt's
    accountant to manage your tax affairs otherwise you will have to pay
    just like the rest of us on PAYE. !! 
     
    

Doug,

will Digital UK be taking the tax changes into consideration, and possibly
changing the way that the car scheme works?

I would hope that the fact that "better cars" are paid for out of our
own pockets (admittedly sans-tax), would help us negotiate a deal with
the Inland Revenue whereby we are only charged on the benefit of a
"standard" car.

If not then the plain fact is that one of the "benefits" of working for
this company will be substantially reduced. Whether you are a qualified
car user or not, it always hurts when someone takes something away.

mb

p.s. I haven't forgotten about the crate of beer!!!!!

    This information is courtesy of Vauxhall.
    
    "Transitional Rules from "Old" (pre April 94) to "New" (April 94 on) 
    System.
    
    No transitional rules have been proposed.  The current intention is 
    that the new system for Company Car taxation should be introduced for 
    ALL CARS PROVIDED TO EMPLOYEES BEFORE AND AFTER 6 APRIL 1994.  The 
    existing system would therefore cease to operate, even in respect of 
    Company Cars made available to employees before 6 April 1994.
    
    The calculation of the benefit under the new system is a straight 35% 
    of the list price of a car.  There is a discount of one third if the 
    employee drives more than 2,500 business miles in a year, or two thirds 
    for 18,000 or more business miles.  The net taxable benefit after the 
    adjustments above are taken into account, is further reduced by one 
    third for cars of four or more years old at the end of the tax year in 
    question.
    
    The 'new' system will use the list price at the time the car is first 
    registered plus the price of "extras" provided with the car.  Special 
    rules will be announced on how to arrive at a price for a car if no 
    list price is published.  
    
    The 'new' system will not refer to the engine size of a Company Car, in 
    determining the amount of tax payable on that car."
    
    Employers Reporting
    
    "Under the 'new' system, the provider of a Company Car will, on a 
    quarterly basis, have to notify the Inland Revenue of any new Company 
    Cars provided to employees.  This should then enable the notice of 
    coding for each employee to be updated by the Inland Revenue within 
    each tax year.  Employees will therefore pay tax on the Company Car 
    through the monthly payroll."
    
    That's about it from Vauxhall, and it doesn't add much to what we 
    already knew.
    
    There was some speculation in the Sunday papers, about people taking 
    very basic cars and adding extras at the first service.  It seems that 
    the Revenue will keep a close eye on this potential loophole and plug 
    it, if they see fit.
    
    Doug

why don't we just stop all the shennanigans, and use the same car and expense
"plans" as our employees, the MP's have?

Or the one that Inland Revenue employees have? I've been told they get 36p/mile,
tax free, but I dunno if it's true or not.

Peter.

    	Tax should be payable against the MLP, for a bog standard model
    	extras come gratis?.
    	Lets not forget that the Leasing companys have humungus buying
    	power, and get cars at WELL below MLP??????.
    
    	Colin.

.49>    Lets not forget that the Leasing companys have humungus buying
.49>    power, and get cars at WELL below MLP??????.
    
    Colin,
    
    	what the leasing companys pay for the vehicle is totally irrelevant
    to the taxable benefit. Why should Digital's employees pay less tax on
    a car when I ( an employee of my company ) would have to pay more tax on 
    the same car, just because my company doesn't have the same bargaining
    power with the leasing companies as Digital does.
    
    	The relative bargaining powers of my company and Digital is
    business. The benefit of having a company car is a personal tax issue and 
    the two have no effect on each other.
    
    	Terry
        

re .51;

the car value is reduced when the car is four years old.

I guess they are basing all this on MLP to try and circumvent the games
that can be played in this area. 

Mind you, I'm still not sure where the Maynard List Price comes into this...

Peter.

    Perhaps I'm being dumb here, but is MLP quoted before or after VAT is
    added ?
    
    Pete

    Re -1
    
    So after driving from London to Derby, then to Nottingham, then to
    Reading for meetings with customers I go back into my London office,
    leave the car behind and get the train home?
    
    Get a life, I've done over 11k miles so far this year on business for
    this company, as a London based sales person, assuming I'm willing to
    pay, just why shouldn't my car be available to me after hours?
    
    Paul

    re the MLP
    
    I think the MLP price is the Basic List price of the car I.E *NOT*
    including the VTX or car tax.
    
    Grant

I agree with .54 - The perk factor of the company car
is the ability to use it as your own private
transport. Whether you do 0 or 30,000 miles 
per year on company business should be irrelevant
when calculating the "perk" value.

If you don't want to pay tax on your company 
provided car then leave it at the office 
each night. If you want to use it for
personal travel then pay the tax.

Just my view,
Phil. 

    Ref MLP
    
    I have just read some data from Avis Fleet Services which consistently
    refers to "retail price" and the car prices they quote in their
    examples are almost to the penny the list price published in What Car
    which include VAT but not delivery or on the road charges.  As it is
    government policy to tax us on taxes we've already paid (eg.Petrol??)
    why should we think that they would act differently on Company cars ?
    
    Doug

        Why is it every time I see MLP in these notes I think,
        
        "What has the Maynard List Price got to do with cars?"
        
        Simon (been here too long)

If the calculation is based on the list price of a car "when it was first
registered", then it seems to me there is potential for small companies
running very old/vintage cars as company cars at very little cost to the
employees.

Must be a catch...

Carol.

    There's some special rule about cars older than 15 years, specifically
    to allow for Vintage cars.
    
    D.

    Several notes in this string have referenced the fact that employees
    (of Digital) who contribute to their car cost should not expect that
    this should reduce the level of taxable benefit. They have
    (incorrectly) assumed that were one to receive the amount of one's
    contribution as salary one would be taxed on it at 25%. It seems to
    have escaped a lot of people that there are three levels of taxation in
    this country - 20%, 25% and 40%. It also seems to have escaped their
    attention that a large proportion of the Digital drivers who do
    contribute to their vehicle cost pay tax at the highest level and not
    at 25%.
    
    I should like to see some more cogent arguments as to WHY any positive
    contribution (before or after tax) to the cost of the vehicle is not
    deducted from the taxable benefit. I can see why under the present
    rules it may be difficult to calculate the precise value of that
    contribution (does one allow for the additional deduction of Nat
    insurance - if applicable, and other post tax deductions in the
    calculation or not?), but I suspect that the equation should be
    somewhat simpler with the arrival in '94-95 of the % of MLP. At least
    it would be simpler to prove to the tax man that a contribution is
    being made if it appeared on any kind of documentation the tax man
    receives! Currently of course because it is deducted from our base
    salary before ANY deductions (not just tax) there is nothing one can do
    in terms of "proof" of payment of any such contribution.
    
    I agree with the person who made the comment about Digital having full
    discussions with the TAX authorities on this matter as the present
    scheme pre-dates even the charging of the company car scale charges and
    is going to be a potential negative aspect of the Digital car scheme in
    future.
    
    One point that people should be cognisant of however is that it is
    Digital and NOT the employee who holds the lease contract with the
    lease company. Were Digital therefore to allow us to receive our full
    salary (with no pre-tax deduction) we would still have to re-imburse
    Digtal for the FULL value of the contribution and this has not been
    taken into account either in any of the discussions so far! I should
    also like to better understand the full implications of coming out of
    the car scheme altogether and maybe Digital helping to arrange
    preferential rate loans (usually non-taxable) as an alternative. As an
    example of the penultimate point:-
    
    Say a car costs an EXTRA contribution of 1000 and tax is paid on this
    at 40% i.e you receive an extra 600 nett salary but you still have to
    pay the full 1000 contribution you will be 400 worse off (dollars,
    pounds, drachmas, whatever!). I seem to remember that NI has a ceiling
    beyond which no more deductions are made, but I'm prepared to be
    corrected on this. Anyone from Payroll a member of this conference?
    
    The moral of course is ..... let's look at the whole picture, not just
    part of it, before we all complain to the tax man too much!
    
    Best regards, Bob Lewis (who's just having to repay the taxman for over
    allowance on biz miles! Ouch!)

>   I should
>    also like to better understand the full implications of coming out of
>    the car scheme altogether and maybe Digital helping to arrange
>    preferential rate loans (usually non-taxable) as an alternative. As an
>    example of the penultimate point:-
 
	Digital already offers you the option to come out of the car scheme.

	You get 3,000 quid, taxed at whatever your rate is.
	You don't pay tax for a company car.

	No preferential loans - and if they did, they would be taxed too!
   
>   I seem to remember that NI has a ceiling
>    beyond which no more deductions are made, but I'm prepared to be
>    corrected on this. Anyone from Payroll a member of this conference?
 
	It's about 21,000........................max ni is 1333 a year

	Heather

> It also seems to have escaped their
>    attention that a large proportion of the Digital drivers who do
>    contribute to their vehicle cost pay tax at the highest level and not
>    at 25%.

	How can you say this ?  Salaries are supposed to be secret, have you
        been doing a private survey, or peeking in cupboards you aren't 
	supposed to :-)

	If this were widely known, there would be a serious drop in moral
	in the support specialists of the Basingstoke Telephone Support Centre.
	What's your source ?

	tp

        Trevor,
        
        I may be wrong, but I think you meant "morale".
        
        Ian.

I think you may be right. Morals are pretty low as it is.

tp

    Re: .66
    
>    It also seems to have escaped their
>    attention that a large proportion of the Digital drivers who do
>    contribute to their vehicle cost pay tax at the highest level and not
>    at 25%.

	How can you say this ?  Salaries are supposed to be secret, have you
        been doing a private survey, or peeking in cupboards you aren't 
	supposed to :-)

    
    No one's specific salary has been mentioned
    I have not been looking in cupboards
    I have not been doing a secret survey
    I do not have access to secret or private information
    All the relevant information on which to base such a statement is
    readily available including much information regarding taxable benefit
    scale charges which have an impact on the level of TAX one pays and
    generic salary scale levels and bands. You mean you don't have ANY idea
    what your immediate colleagues are earning (ball-park)? If you don't, then
    logic dictates that your implication is automatically invalid!
    
>>      If this were widely known, there would be a serious drop in moral
	in the support specialists of the Basingstoke Telephone Support Centre.
    
    If what were widely known? The fact that many people in Digital pay at
    higher tax levels? Get a life! And I hope you're not suggesting that
    people in the TSC are immoral! :-(
    
>>	What's your source ?
    
    Common sense, logic and a little bit of information. Oh! and an ability
    to do simple maths! :-)
    
    Regards