Conference terri::cars_uk

	You have not added the cost of "usable" things such as tyres and
	exhaust.....clutch if you do loads of miles.

	The 400 insurance looks low for this type of car.
	If you then take account of the fact that people coming out of the 
	scheme may not be able to get full-noclaims.
	Many insurers won't take info from your employer, and even if they do,
	Digital can only give you the no-claims info for your current car, not 
	any previous ones.
	Also, you will have to add business travel useage to the insurance 
	cover, and, if you are ever likely to carry any Digital property 
	(laptop, portable phone, diskettes, manuals?) that is also extra cover.

	You have averaged the deposit over three years, this is a lump-sum
	up front, you may not be able to afford this, and have to take a
	loan over 3 years, the could skew the figures dramatically.

	However, if you can, you can use the next years to save the next one,
	which could have a bennificial effect on the figures.

	You have not added the benefit of tax relief that you can claim for 
	using your private car on company business.
	
	I have been working out this is about 2,000 rebate I will get over
	the last 6 years, and I only went over 2,500 business miles once 
	(2,800), and only did in the region of 500 or so for the first few 
	years.

	However, the Money Mail a few weeks ago went into these schemes, and,
	apart from HP type deals, they are one of the most expensive around.
	You could get better value by financing your car differently.

	At the end of the day, your circumstances will decide the best option,
	however, what this change might have done is get people to look at
	the real figures for themselves, and not assume the lease car must
	be the best deal.
	
	Heather

>	If someone could work out what the true cost of purchasing a new
>	car (Cavalier SRI 2.0I 5DR H/B) taking into account depreciation,
>	loss of interest on cash used to buy, or loan interest charges,
>	also road tax, insurance, services etc etc. and ending up with
>	selling the car at the end of 3 years (to compare like with like)
>	It would be interesting to see the figures.

	I've done that somewhere here....for a Pugeot 1.3 Gr to a MG Maestro 
	2.0EFI to a Montego 2.0gti........trading in the old for the new.
 	I'm just thinking about going to another one, as the Montego is
	now 3 years old.  Mazda 323 looks good at the moment....however, the
	500 quid off deal on the vauxhalls may be worth a look.

>	Re: your statement on claiming tax relief for the use of a private
>	car on company business, Is this only available to non supplement
>	holders or can anyone claim ? Do you have details ?

	Anyone can claim part of their private car costs if they do business 
	miles in it.

	You add up depreciation (25% of price per year), maitenance, insurance,
	parts, car wash......etc.

	Work out the percentage of business miles to private (you can work this
	out from P11D and service records)

	And claim the business percentage of all these.

	Phone up your tax office, and they'll send you a form.........If you 
	haven't claimed this in the past, you can go back 6 years. I am busy
	filling in 6 forms, and finding all the docs required.

	And thanks to the person who pointed this out to me.

	Heather

>Another item to factor in is the variable tax levels. Because you take the 
>supplement as cash it doesn't mean you automatically pay 25%/40% of it as tax. 
>Your tax free allowance goes UP because you are no longer elligable for company 
>car tax liability.

   The way .0 has done the figures, the tax has been factored in correctly.

	Heather

    re .4
    
    I'm sure it's been mentioned before, but is the Excel spreadsheet on
    the net?
    
    Cheers,
    
    Greg

	Excel is part of the MicroSoft desk top software.
	and you have to buy it.  However, there are many
	similar shareware packages....

	Dave

re .-1

What Greg meant was ' is the excel workbook/spreadsheet mentioned 
earlier on the net. He already has EXcel on his PC, he just needs the 
calculations.

Malc

Don't forget that NI Contributions (Briefly mentioned) is 10% of ALL your Income!
It doesn't matter if it is Basic salary, Job Supplement or anything else.
There is an upper limit over which you don't pay any further (well, there was)
but it is/was so high that it is academic.

No one seems to have taken this into consideration in the figures quoted - or did
I miss something?

				Malcolm. 8-(

>Don't forget that NI Contributions (Briefly mentioned) is 10% of ALL your Income!
>It doesn't matter if it is Basic salary, Job Supplement or anything else.
>There is an upper limit over which you don't pay any further (well, there was)
>but it is/was so high that it is academic.

	I looked at my last NI payment, if it's 10%, then the NI limit is 
	about 14,200, so for everyone level 6 and above it is acedemic, and 
	also for those below, but on more than 14,200.

	My NI is 118.40 a month - if you're paying that, you're paying the max.

	There is also a limit of 8,500, below which you are not taxed on a 


	Heather	
	PS, the 10% on everything is based on your info, however, somewhere
	in the back of my brain the number 21,000 rings a bell.	

From an article I read a few weeks ago the current rates of NI
are:-

7.2 % if part of contracted out pension scheme (which Digital's is)
9.0 % otherwise

plus some max per week which was not quoted

From April 1994 these rise to

8.2  % if part of contracted out pension scheme (which Digital's is)
10.0 % otherwise
420 pounds per week max. after which no more employee NI levied (=21840 per year)

Note, I'm 99.9% sure of the 420 figure from April next year.


Phil.

>420 pounds per week max. after which no more employee NI levied (=21840 per year)

	That sounds more reasonable, I thought 21,000 seemed a better number.

	That makes it acedemic for most level 8's and above (8 starts at around 
	20,400 I think), and for some 7 and under, depending on the position 
	in range.

	You'll have to do the sums individually depending on salary.


	Heather

Re .5,

Heather he HASN'T worked out the tax correctly:

>>Lease cost payable to Vauxhall =            4555       4555
>>Minus supplement taken as cash            (40% tax)  (25% tax)
>>Level 8/9 supp 3560 - tax =                 2136       2670

This is straight 25/40%, he should work this out as a 0% on his current 
allowance, then 25% or 40% if the remaining goes above his
Tax free PLUS 2,500 PLUS 23,700 This is NOT a straight cut!

Re the EXCEL workbook.

The workbook (not the software!) I've placed in TIMMII::GENERIC_.XLW.

It opens at the 'master' page, where you can input your numbers in the 
cells that have a dotted underline. These are unprotected.(I've protected the 
document to make overwriting less easy, but not impossible as there's no 
password)

The real work gets done on other pages, but reflects back onto this master page.
The sheet shows 
NOW 		Your current  over 40% taxable/take home/tax per month
NEW LEASE	What it'll cost when you change
NEW SCHEME	The new Car tax impact
TO OPT OUT	What the cash in hand is.

Richard

	.0 gives two examples to compare. 25% and 40%. It doesn't try to work
	out every combination.

	It also gives the figures for what it would cost to take a lease
	and what it would cost to take a choices scheme


	You are cutting it differently, ie what the difference is between
	talking a lease now, and opting out to take the choices scheme.


	Heather

    Total Rathole Alert...
    
    Re .12...
    
    Heather
    
    You are making a sweeping assumption that people are in their correct
    pay bands... after the recent "freezes" there are a number of people
    who are NOT getting paid even the minimum of their current band... 
    
    A large number of people (I presume its a large number, because I
    personally know several) have been promoted in the last 3 years without
    a pay rise, or with the "sweetener" that the extra Car Allowance that
    comes with level 8 will at least provide some sort of pay rise (and we
    all know whats happened to that).
    
    
    End of Rathole
    
    
    Xtine

Heather, 
I AM NOT CUTTING IT DIFFERENTLY, the piece I quoted was from .0 and 
it's *WRONG*. That's all I was pointing out. It underestimated the 
cash equivalent by missing the possible tax advantage of opting out.

I realise you can't work out every combination, that was the point of 
my explanation. So that others may understand the calculations 
involved and do it for themselves.

Richard

Hi,
	I picked up leaflet from the Bank in the street today entitled
	"BARCLAYLOAN" and I thought I would try and work out what would
	the cost of buying the Level 8/9 standard car would be, so it
	could be compared with the Lease costs in .0	   Regards.. Bryan

	Purchase of a Vauxhall Cavalier SRI 2.0I 5DR H/B  (and sell after 3yrs)
	~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

	List Price (JUN-93)				14175
	Vauxhall Delivery charge			  405
	Total List cost + delivery			14580

	Negotiated on road buy price (excl road tax)	13500
	(ought be able to get 1000 off as a cash buyer)

	Deposit out of personal savings			 3500
	Loss of interest on deposit = 3500*5%*3 yrs	  525
	Barclayloan for 10000 over 3 yrs = 359/mth =	12925	    (APR 18.9%)
	3 years road tax = 3*125 =                        375
	3 years insurance = 3*400 =                      1200
        Vauxhall Mastercover 3yrs/36000 miles            1050

	Outgoings over 3 years				19575

	Income from selling car as a 3 year old		 4600
	Income from personal savings increase
	 after 3 years  4600-3500 =                      1100 

	Cost over 3 years				13875

	Cost per year = 13875 / 3 =                      4625	    4625

	Minus supplement taken as cash			(40% tax)  (25% tax)
	Level 8/9 supp 3560 - tax =			 2136       2670

	Total Driver Cost per year (Purchase and sell) 	 2489       1955
	~~~~~~~~~~~~~~~~~~~~~~~~~~                       ~~~~       ~~~~

	Vauxhall Lease Total Driver Cost (from .0)	 2419	    1885
	~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~                 ~~~~       ~~~~

	DEC Lease Total Driver Cost (from .0)		 1985	    1240
	~~~~~~~~~~~~~~~~~~~~~~~~~~~                      ~~~~       ~~~~

>Heather, 
>I AM NOT CUTTING IT DIFFERENTLY, the piece I quoted was from .0 and 
>it's *WRONG*. That's all I was pointing out. It underestimated the 
>cash equivalent by missing the possible tax advantage of opting out.

	Okay, I'll explain again.

	.0 has two things.

	It starts from a base of not having a car or the cash, or supplement

	It then gives the figures if you took the lease and the supplement 
	towards it. (including tax hit)

	It then gives the figures if you take the cash and a choices
	(which has no tax breaks)

	Then compares the two

	This is a valid comparison, and the taxes are correct.


	You are starting from the point of already having the lease, therfore
	you would have to count in the tax hit that this considers as a break
	when you take the cash.

	So, you are cutting it differently, you are starting with a lease and
	working back (or forwards, however you cut it).

	.0 is starting with nothing, and looking at two different scenarios.

	as someone who takes the cash, I can categorically say there is no tax
 	break....it is all taxed at 40% for me. 
	(except the claim on business-to-private miles, which we discussed in a 
	different reply).

	Heather

But if you buy the car and keep it for more than the 3 years, you are onto
a real winner.  The Car is paid for over the 3 years giving you all of 
your 4th years supplement (less maintenance, tax and insurance).

A car at 4 years of age isn't too bad is it.  Theres always personal plates.

just a thought.

Dave D.

OK, Heather, lets take your points:
>>>     It starts from a base of not having a car or the cash, or 
	supplement

Doesn't say so anywhere.

>>>     as someone who takes the cash, I can categorically say there is no
	tax break....it is all taxed at 40% for me. 

Again, I repeat this depends on your circumstances. For this to happen your 
salary *BEFORE* the addition of the car allowance had to be
Personal tax allowance	 1,720
LESS medical benefit	   189 -
Plus 20% threshold	 2,500
Plus 25% threshold	23,700
			-----
			27,731

This would then put any allowance you had added to your salary directly 
into the 40% tax bracket.

However for many, me included, and most definitely level sevens and below, 
they would find (even ignoring the married persons tax free of 3,400) 
themselves paying only 25% on the allowance.

And, if like me your already in the scheme and looking at the cost of 
financing outside, you have to add the increased tax threshold. 

Richard

    
    Re several.
    
    The income tax bands quoted in a couple of examples are, I believe,
    wrong.  Allowances are tax free, the first 2500 is taxable at 20% and
    from 2501 until 23700 is taxable at 25%.  I.e. you hit 40% taxation
    23700 above your allowances rather than 26200 (23700+2500) as implied
    in a couple of responses.

    Also, I believe that the numbers quoted for personal and married 
    allowances in .20 have been transposed.
    
    Andy
    

>OK, Heather, lets take your points:
>>>>     It starts from a base of not having a car or the cash, or 
>	supplement

	It says it is comparing the current lease, to the Vauxhall lease.

       It does not say it's giveing the figures to change from lease to choices.

	Soooooooooo

	If your salary without lease or supplement is Z

	It first works out lease and allowance (call this x)
	It then works out taking the cash plus choices (call this Y)

	To look at the realative merits.  
	It then looks at the difference     x - y  (as Z is constant)


	What you are doing is starting from Z+X

	To get to Z+Y    you have to  do    

	start point  (Z+X)    -x    +  y

	So, the way you cut things, you have to subtract the tax hit, as you
	include it in the first place.

	The way .0 cuts it you don't.

	However the answer is the same.

>Again, I repeat this depends on your circumstances. For this to happen your 
>salary *BEFORE* the addition of the car allowance had to be
>Personal tax allowance	 1,720         
>LESS medical benefit	   189 -
>Plus 20% threshold	 2,500
>Plus 25% threshold	23,700
			-----
			27,731

	.0 does a 25% and a 40%, and as I said, it is good example for a 
	general comparison, before deciding if you want to go into the
	detail of getting it exact for yourself.

	However, if you want to nit-pick ...if your personal tax allowance is 
	only 1,720 then I would contact the taxman PDQ, this is way out.

	Also, you do not understand tax thresholds.
	Thresholds are just that thresholds, they are not taxable amounts.

	the first 2,500 of taxable income is taxed at 20%
	the next 21,200 of taxable income is taxed at 25%
	This gives a taxable THRESHOLD for 40% of 23,700 , the taxable AMOUNT 
	at 25% is 21,500.

	If your spreadsheet does what you say it does, it's got major
	errors.
	
>And, if like me your already in the scheme and looking at the cost of 
>financing outside, you have to add the increased tax threshold. 

	As I said before, it depends where you start from and how you cut the
	numbers.

	Heather

>   In my case I take the tax
>    into account, in your case feel free to ignore and tax effect.
 
	Both tax the tax into account

	Heather

    You are assuming the new employee didn't have a company car in their
    last comapny...
    
    
    Just nit picking...
    
    
    Xtine

    Re .-2
    
    Before you get too excited, I think that your logic is a little flawed
    (although I would prefer to take your view of it).  
    
    In the case of a DEC lease you pay nothing to DEC (for a car equivalent
    to your allowance) but you pay X pounds a year to the IR for the
    "benefit".  If you buy or lease privately your pay Y pounds to Vauxhall
    or AN other manufacturer and nothing to the IR.  You also get the allowance
    as taxed income (Z). The comparison is then Y-Z versus X (as previously 
    done). 
    
    However, in the private lease/buy you have added back in the "saved"
    income tax as if the IR was actually giving you this money.  They are
    just not asking that you pay it anymore. So in effect you are double
    counting the impact of the company car tax. (Y-Z-X versus X)
    
    Andy

	re: .27

	You are correct as I was in the original .0 note
	"The comparison is then Y-Z versus X"
	BUT,
	This only applies to someone who is NOT already in the scheme or
	who does not currently take the supplement as cash.
	(i.e a new employee, level 8/9, on joining the company
	or someone promoted from level 7 to level 8/9 who currently does
	not have either a DEC lease car or the supplement.

	HOWEVER,
	If you are already a level 8/9 and currently in the DEC lease Scheme
	and decide at your next renewal to come out of the scheme, then
	in working out how much extra cash you will have in your pocket to
	spend on either buying your own car, or leasing privately, you must
	take into account the saving you will make by not having to pay the
	IR Car Tax any more.
	In this case Y-Z-X versus X is therefore correct I believe.

	Y= Cost of Vauxhall Private Lease
	Z= Value of Supplement taken as cash (supplement-Income tax)
	X= Amount of IR Car Tax payable that will no longer be paid.

	Regards... Bryan
	

    
    No, I understand the comparison that you are trying to make which is
    one that many people will now be making - namely does the extra salary
    that one could get from taking the money rather than the car plus the
    "extra" money that comes from not paying company car tax give you
    enough to buy/lease something else.
    
    But my comments still stand.  The extra car allowance salary is real. 
    The "extra" car tax money is not extra income but only starts to be
    extra when you make a comparison with the previous case where you had
    to pay it.  Comparing Y-Z with X makes the difference Y-Z-X.  Comparing
    Y-Z-X with X makes the difference Y-Z-2X and hence the double counting.
    
    
    
    
    
    

    
    Your numbers are sound but they don't answer the double counting issue. 
    But, your numbers do show that you would have 3910 extra income to
    spend on a car if you were out of scheme.  The numbers quote in .0 and
    .17 are 4555 and 4625 (i.e. both greater than your money to spend).
    Hence this would imply neither means of financing a new car would be
    cheaper than the DEC lease, as had been implied by some recent replies.
    
    By the way, there is a faster way to get the 3910 that you quote.  It
    is the after tax value of the car allowance (3560*.75=2670), plus the
    money that you save by not paying Company Car tax (4961*.25=1240).  Add
    them together and you get 3910 or 325 pounds per month.
    (Assumes 25% tax).
    
    Andy
    
     

	.30 doesn't include the fact that you can claim the percentage of
	the lease used for business, against your tax.    
     
	The mail has an article today, it suggestes that companies should stop
	providing company cars, and should give drivers cash in leiu of
	cars and help them lease, with exchnge or purchase after 2-3 years....
	modelled on Vauxhall choices or Ford options.

	It says employees who face more tax from next year could be little or
	no worse off, and "perk" drivers, who do less than 2,500 will gain
	substantially.

	Heather

    Andy,
    
    check again and you'll find that .0 and .17 are in fact saying that the
    Digital lease *IS CHEAPER* but by only several hundred pounds a year.
    Much the same as my example shows.
    
    However, the figures in .0/.17 are broad strokes based on AREyou/Are
    you not a 25% tax payer. Do you know if you are and by how much?. .30
    will show you this.
    
    It may not actually prove or disprove double accounting, but it
    provides unambiguously precisely how much you get in the two scenarios.
    
    Heather, .30 doesn't show any reclaim for expenses because, in my case,
    there are none. My company milage is 0. My company car is a benefit not
    a tool. It will be quite simple to include into these calculations.
    
    
    Richard

	Wow, zero company mileage.

	Just 1 trip to Digital in Basingstoke is 30 miles.

	Even when I thought I was doing negligable miles, 6 years ago, it was 
	400 in the year.

	Heather	

    True heather, I have done the odd trip to basingstoke, but I believe it
    would be more expensive to claim the 30 miles than to ignore them. 
    
    Richard

re.30:

> EXAMPLE 2 Take the money and run
    		
>    INCOME 
>    Theoretical salary (for example)	22,000  +
>    Lease allowance			 3,560  +
                                         ^^^^^

Why did you include the full lease supplement and not the cash equivalent?

Thanks,
Dave.

    
    Re .33
    
    No.  Read reply .25 which is the one that I first took issue with.  It
    aims to show that either a private lease or a private purchase is
    definitely cheaper than a DEC lease to the tune of about 1500 pounds a
    year.  Your calculations would confirm that this is not the case.
    
    As for assumptions on tax, as long as all comparisons use the same
    assumptions then it is fair - it does not need to represent the actual
    tax situation of the author.  And, as Heather points out, to make a
    totally fair comparison you would need to also "add" some tax claim for
    running a private car on company business.  
    
    Andy 
    

	You would be surprised how the "odd" trip mounts up over a year.

	It's a 30 mile round-trip, 10 trips is 300, and definately worth 
	counting.    

	I've done 720 miles so far since April, all to-and-fro from Basingstoke.
	
	For the money, it probably does cost more to reclaim than the money
	you get back, however it's worth quite a lot for tax rebate reasons.

	If you don't claim it, it's not on the P11D, so you can't get the
	tax relief.

	Heather

    Out of interest, their was an article in yesterdays Daily Mail about
    this very topic!
    
    It seemed to be suggesting that many companies are looking seriously at
    doing Fleet deals, using the choices 1-2-3 type schemes that the
    manufacturers now do.
    
    The general comment was that it would prove cost effective for both
    employer and employee.
    
    If I remember, I will bring in the article tomorrow and post the
    relevent details.
    
    regards
    
    malcolm

Interesting scheme offered by one of our customers for their qualifying staff...

1.	You choose a car,
2.	They give you the dosh up to a certain level,
3.	You top up any shortfall,
4.	They deduct a minor amount from you each month throughout the three years
	you have the car, amounting to approx 10-15% of the cost of the car,
5.	After three years the car is yours to keep, sell, give away with absolutely
	no penalty or further cost !

The guy I was speaking to about this uses the resale value of his car towards the
cost of the new car.

So simple it's brilliant.

T.
 

Who is it and are they hiring?

Dave.

    This was common in the oil industry a few years back. Let me guess it
    begins with M?
    My wife is told to go out and find any car she likes up to a year old
    and then gets a fixed amount of money and pays the rest. So long as the
    MD likes the brand!
    
    Andrew

    Re .26, Dave Kerrel asking why I included the full leaseallowance whn
    taking the cash....
    Because this is what you get. It's probably somewhere in the glossy,
    but= was also in the management addendum to the pre-announcement mail.
    
    Richard

Yes, sorry about that! I forgot, that cut is not due until next year.

Dave.

re .41, 
	.42 got the right industry, but the wrong company.   :-)

Amazing deal huh ?  And no, they're not hiring :-(

>     <<< Note 2123.40 by ARRODS::SMITHA "Il y a une sange, dans l'arbre" >>>
    
>5.	After three years the car is yours to keep, sell, give away with absolutely
>	no penalty or further cost !
    
    I would have thought that those nice men from the tax office would have
    something to say about this last point. As far as the company's books
    are concerned, the vehicle can only have been written down to a
    minimum of 25% of its original value, so surely the company is giving
    the employee a benefit, which should attract tax. Do the company pay
    the tax ?
    
    	Terry
    

re. .46

not aware of the full details because I was too gob-smacked by the concept of
having a 'company car' to sell having played with it for three years, and
keeping the money.

Yes, the taxmen are interested but the scheme caters for this in some way so that
you're taxed, not penalised.

T.

>Yes, the taxmen are interested but the scheme caters for this in some way so that
>you're taxed, not penalised.
    
    What's the difference ?  ;-)
    
    	Terry

    re .46,
    	
    	A lease car should never show up on the company's books - that is
    the whole point of the lease. The lease company would have it on their
    books, but I imagine that it would not be classified by them as a fixed
    asset, so they could quite happily write it off after three years.
    
    fwiw
    
    Rob

    A thought which occurred to me about all these car company schemes,
    Options, choices etc is what is the effect/cost of terminating the
    scheme early? Has anyone asked?
    
    One advantage of the Digital scheme is that if you leave/are made
    redundant/sacked then you walk away with no commitment. With your own
    car, however purchased one has a commitment for maybe three years, or
    an asset to sell at a below best price.
    
    One could take the opposite view and say that one would be, say, half
    way to owning your own car so it is a bit swings and roundabouts.
    
    Andrew

    
>    One advantage of the Digital scheme is that if you leave/are made
>    redundant/sacked then you walk away with no commitment. With your own
>    car, however purchased one has a commitment for maybe three years, or
>    an asset to sell at a below best price.
 
	Well, you then don't have a car, so you have to buy one.

	If you already have one, you don't have to do that.


	Heather

    Heather,
    
    I was suggesting that having taken out a 3 year deal with someone on
    say a Vauxhall Carlton, this may not be the car one would choose to
    support on the salary from one's new job as a checkout operator at
    Tesco.
    
    I agree that after 3 years one is arguably in a better position.
    
    Andrew

    But....
    
    If the car you want for PERSONAL use doesn't exist on the car scheme in
    GM variety then it suddenly becomes a whole lot more attractive. Risks
    are also for taking otherwise life would get awfully dull.

    
>    I was suggesting that having taken out a 3 year deal with someone on
>    say a Vauxhall Carlton, this may not be the car one would choose to
>    support on the salary from one's new job as a checkout operator at
>    Tesco.
 
	If you worry about this, best thing is not to be in any car
	scheme, buy one you can afford, and trade up when you've saved
	what you need.


	Heather