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Post by Humph on Dec 16, 2018 10:46:11 GMT
As most of you will know, I currently have a company supplied Merc E class estate. It absolutely suits my commercial/private needs and wants, pretty much perfectly.
I very much like the car and on a level playing field would happily keep it or have it replaced with an equivalent newer one in due course.
However, as I've discussed before, the bik tax on it is eye watering and set to increase again in April.
Had a chat with my boss about it last week and he's happy to let me buy it at our company book value ( quite a bit less than it would fetch as a trade in ) and switch to a mileage allowance arrangement.
I've done the arithmetic and it would forecast a financial break even point in about 2.5 years ( because the initial period would involve recouping the purchase price as well as funding the running costs ) after which I calculate that I'd be something like £7000 a year better off than now, assuming no unforeseen bills.
That sounds great, but the car ( currently on 96,000 ) would be up around 190,000 by then and would probably need to be changed sooner rather than later. Not necessarily a problem, given the extra tax free £7k I'd have each year, and the residual value of the car as a deposit, but it makes it all a bit financially marginal again if I wanted a similar standard of car at that time.
I could, of course just stay as I am, or hand the car back and buy a Mondeo or something ( which I don't necessarily mind doing ) or I could just take what would be a very good deal on buying this one, see how it goes, and if I decide to move it on more quickly, shouldn't lose much if anything in doing so.
Lots to ponder.
Any immediate thoughts from the honourable members?
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Deleted
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Post by Deleted on Dec 16, 2018 11:58:29 GMT
Let me clarify this. After two and a half years your bank account will look no different whichever route you go down; whether it be the company car route or buying it and running it yourself using a car allowance and mileage charge to fund it?
The difference is of course that after that period, the car is yours if you bought it. But it will be a very high mileage car of limited value. During that period it is more susceptible to breakdown, with high cost repairs, not all of which would be covered by the value of the asset.
Given your mileage I would want the comfort of knowing that my employer will be funding all charges and providing a spare car in the event that mine needed to go in for repairs. As an employer I might think in your mileage and position.
If you were doing for lower mileage I would opt for the allowance route.
Alternatively you sell now before the value drops too much and buy a cheaper car. That option applies to both choices....
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Post by Humph on Dec 16, 2018 12:02:35 GMT
Yeah, you're right Espada, and what's more, my wife agrees with you, so...
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Post by tyrednexited on Dec 16, 2018 12:14:35 GMT
...I suspect you'll end up being driven by emotional rather than financial considerations, but: You would need to consider your financial position in those 2.5 years, and whether you want the additional drain to break-even whilst you're, for instance, supporting a child through University. Even when I was running a company car, it had morphed from being financially and "convenience" attractive into merely the latter, and the goalposts have moved somewhat since then. By now, I think I would have abandoned a company car and gone with an allowance (but, on my contract that would have increased my salary as well to compensate - is this an option for you?). An allowance isn't, however, an option I would have given even a moment's thought to if I was doing the stellar mileages you do. Frankly, in your position I'd be looking to keep company provision, but lose the BIK premium associated with running a "prestige" marque. You've mentioned going back to a Mondeo, well how about a Peugeot 508SW? Newer, rarer, nice-looking, well-reviewed and just about equivalent space to your current pantechnicon. Also, of course, available at a much-lower list price depending on acceptable spec. I think another factor that comes into play (and I'm not stirring here) are any plans for future retirement, as I've little doubt that you will probably choose to run something rather different when (/if  ) this arrives, and I don't think I'd want to find myself saddled with a large, diesel, high-mileage juggernaut at that point. |
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Post by Humph on Dec 16, 2018 12:22:41 GMT
Very fair points T&E, and yes the retirement thing has to considered, fortunately that looks a whole lot more possible now. Still slightly tempted by a well specced Duster, bit small for my needs, but I guess I could make it work, ( roofbox when required or something ) and the bik, if that's the way it was done, is minimal.
Genuinely, I'm not going to let emotions lead me too much here, I love my Merc, but I'm realistic enough to look beyond it if it makes a tangible difference.
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Avant
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Post by Avant on Dec 16, 2018 15:27:54 GMT
As others have suggested, the crucial factor here is your annual mileage. If the car were simply a perk, something to drive to the office and outrank the finance director's A4 or C-class, then running your own car + allowance would make perfect sense (BIK being of course why there are far fewer perk company cars around nowadays).
But you just can't guarantee that even a well-driven Mercedes won't blow its turbo or lunch its gearbox once the mileage gets into six figures. There'a a real chance of your being worse off if there's a big repair bill.
I'm afraid the only way to reduce BIK but have a car that will do the job you curently need it to do would be to change to a Mondeo or Superb estate - and would BIK be all that much less even if you did?
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Post by tyrednexited on Dec 16, 2018 16:23:15 GMT
.......and yes the retirement thing has to considered, fortunately that looks a whole lot more possible now...... I sincerely hope it materialises. Whilst (as I've posted here before) I was lucky enough to have enjoyed the great majority of my career, retirement is the best job yet. I've now been "out" a few days under 10 years, and the time has flown. It helps, of course, being financially sound, in reasonable health, and having enough outside interests to keep one occupied, but I commend it. |
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Post by Humph on Dec 16, 2018 18:42:15 GMT
As others have suggested, the crucial factor here is your annual mileage. If the car were simply a perk, something to drive to the office and outrank the finance director's A4 or C-class, then running your own car + allowance would make perfect sense (BIK being of course why there are far fewer perk company cars around nowadays). But you just can't guarantee that even a well-driven Mercedes won't blow its turbo or lunch its gearbox once the mileage gets into six figures. There'a a real chance of your being worse off if there's a big repair bill. I'm afraid the only way to reduce BIK but have a car that will do the job you curently need it to do would be to change to a Mondeo or Superb estate - and would BIK be all that much less even if you did? The bik would be less on a cheaper car, but as you say, not so much less, as to make a significant saving. I would still need a large load lugging car, I like pretty much everything about the Merc. I like the TC auto box, I like the RWD, l like the huge boot and I like the way it drives. It ticks all my boxes both for work and private use, so that has to have a value I suppose. The badge is a "nice to have" I guess, but it genuinely isn't anywhere near the top of my list of things I like about it. It's just such a well rounded package (for me anyway) in so many other ways. |
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Post by Humph on Dec 16, 2018 18:48:13 GMT
.......and yes the retirement thing has to considered, fortunately that looks a whole lot more possible now...... I sincerely hope it materialises. Whilst (as I've posted here before) I was lucky enough to have enjoyed the great majority of my career, retirement is the best job yet. I've now been "out" a few days under 10 years, and the time has flown. It helps, of course, being financially sound, in reasonable health, and having enough outside interests to keep one occupied, but I commend it. Well, that's the thing I've got to take into account too. I could, if I decided to, semi retire sometime soon and go freelance, but that would still require me to have access to a large estate or equivalent for the occasions when I was working, so there was a bit of a thought that if I did that, and had to buy a car, that although the one I have doesn't come without risk, at least I know it's history, I know it has been serviced properly, that it has been driven with some mechanical sympathy and hasn't been in any accidents. |
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Rob
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Post by Rob on Dec 16, 2018 18:52:51 GMT
If I was in Humph's position doing those miles then keeping a company car would be something I would do. But I'd reduce BIK by having a car with a lower list price and lower emissions. Doing huge miles means it has to be a diesel but how do the Mercedes E class diesel plugin hybrids stack up when you run your calculations?
Soon you could get a Skoda Superb 1.5TSI plugin hybrid estate - but that is unlikely to do as many MPG as your E class. but BIK would be lower and it has more space inside too. Run as a company car, I'd not be worried about the DSG :-)
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Post by Humph on Dec 16, 2018 19:01:34 GMT
Again, all fair points Rob.
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Deleted
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Post by Deleted on Dec 16, 2018 20:25:22 GMT
Looks like the 6-cyl E-class is unlikely to feature on your driveway anytime soon...  Plug-in hybrids are unlikely to assist you in the real world of long distance driving, but they may just drop the BIK enough to make still having a company car worthwhile. I wonder if any of the new van type vehicles are good enough now to justify those at vastly reduced cost? Not ideal but if they save £10,000pa I could cope. That's a lot of tax free dosh to spend on university for your son, your retirement fund or holidays. |
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Post by Humph on Dec 16, 2018 21:10:44 GMT
The kind of obvious choice in that category would be a Navara or similar, qualifies as a van y'see. But I suppose I'd have to get some tattoos and shave my hair off if I got one of those?
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Post by Humph on Dec 16, 2018 21:28:22 GMT
Anyway, we've talked about all this before, and there's no easy answer to the choice of company car really, if that's what I continue to do. But, nonetheless, the general consensus would seem to be "don't buy the Merc" then.
Thanks chaps, confirms my own thoughts mostly, but I just wanted to check your views.
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Deleted
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Post by Deleted on Dec 16, 2018 21:29:04 GMT
I am, perhaps surprisingly, risk adverse. I have to gain quite a lot of money to make risk attractive. Your current approach is risk free and you pay [some] premium for that luxury. I cannot conceivably advise you what that financial threshold is for you, but for me it'd be this;
Let's take a 5 year view;
Break even after 3, £7k per year after. Thus £14k profit over 5 years, so £2,800 per year better off. If everything goes perfectly. I have no idea what your transport expenses are, but that doesn't sound very much to me given the value and quality of the vehicle you drive, the reassurance and safety you have. That's about 3p a mile at your mileage, isn't it?
However, one of the reasons to work long and hard, which you clearly have done, is the freedom to make emotional decisions. When we are younger and poorer we have to make sensible decisions because we cannot afford not to. Surely now the most rewarding approach is to decide what you want to do and then decide if you are prepared to live with the cost, rather than try to make it sound like a profitable investment?
I do the school run in a Dodge Ram, FFS. Makes no financial sense whatsoever, no physical sense either, for that matter. AND I'm told that the smug look and condescending smile I perpetually have as I gaze down upon the lesser mortals is also very irritating.
Works for me.
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) this arrives, and I don't think I'd want to find myself saddled with a large, diesel, high-mileage juggernaut at that point.
