Hi All

Basically, my mate (20) has a honda civic type R 2.0L insured on a company car policy through his dad's business.

He does work for his dad's business and because it is classed as a company car, his insurance is £500 for the year.

So, despite him being my age, his insurance is probably ££££ cheaper than mine where a typical gocompare for me comes out at £7000 and above.

Is he just lucky he can do this?

Sam

He will still get hammered via other means i.e. company car benefit-in-kind via his tax code.

Have you tried to quantify what that costs him monthly?

I never knew about that to be honest.

Surely though, it will still be much less than standard insurance

sammclean23 said:

I never knew about that to be honest.

Surely though, it will still be much less than standard insurance

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What year is his Civic - I need a list price and then I will let you know the car benefit...

I have no idea to be honest mate. All I know it's not the new shape, so im guessing <04

Ok, hard to do without any details, but I have found a Honda Civic 3dr - 2.0 i-VTEC Type-R online with a list price of £16,747 - ignore any options and presuming it is an 05 plate

The BIK on this will be at 33% = £5,527 - so if he is a basic rate tax payer, the cost to him will be £1,105.40 pa, so £92.11 per month; this of course doubles if he is into the 40% bracket.

This also ignores any fuel benefits and presumes he pays for his own fuel as well.

However, you say it is an 04 plate, so ignore the above

Don't forget, he doesn't actually own the car. Still, there is nothing untoward in what he is doing.

Thanks a lot for explaining mate. So really..he cant touch the car as 1. Its not his and 2. Why would a company car policy allow mods.

Thanks

sammclean23 said:

Thanks a lot for explaining mate. So really..he cant touch the car as 1. Its not his and 2. Why would a company car policy allow mods.

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All depends on the company and their policies. He may still be able to mod it as long as it is all declared :shrug:

By the way, did he tell you it only costs £500 to insure? Maybe he is just blagging it...

Cost his dad that much, maybe he is just talking outa his rear end though...

Either way im sure it's much cheaper than normal insurance, I suppose if he is in a position to do it through company car policy then why not, but as you pointed out, there are other costs too.

Could have cost £500 to add him to the company policy which is quite hefty in those terms.
A lot of company policies don't allow under 21s which might explain the price tag. Without any info it's all speculation though, sounds like his dads paying to bills anyway so if it was 500 or 5000 it makes no difference to his pocket

I doubt it will be a company car. Rather his dad has a trade policy and has put him on it so won't effect his tax. I'm not sure at what point a car becomes a company one that effects your tax.

volxstu said:

I doubt it will be a company car. Rather his dad has a trade policy and has put him on it so won't effect his tax. I'm not sure at what point a car becomes a company one that effects your tax.

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Yeah fair point really I was only going on what the OP said i.e. it was a company car, but confusion no doubt abounds.

A car becomes a company car if it is actually owned by the company [on finance or otherwise] and if provided to an employee with private use involved, a benefit in kind comes into play ...

Ahh ok so if the employee owns the car or it's only used for work then it's not deemed as a company car.

volxstu said:

Ahh ok so if the employee owns the car or it's only used for work then it's not deemed as a company car.

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Well, to clarify this further, a company car can either have private use on it or not [I should have made that clearer].

If there is no private use, it is still a company car but the users of it won't get hit for tax; an example would be a pool car, that is left on the premises overnight.

If there is private use, it is still a company car but the employee gets hit for tax, as in the worked example in this thread.

If the employee owns the car, then it is the employees car and not a company car; the employee may still be using his car for work purposes, but he can claim relevant expenses accordingly, usually using the Authorised Mileage Rates. Of course, it is also up to the employee to ensure it is properly ensured for business use.

What about car allowances? Is that just counted as a company car and they pay BIK tax, or do they just see it as "pure" salary in tax terms?

Cheers,

Tom

unfortunately, I have no idea how his dad has done it, nor how he has managed to get insured on it. But the above explanations have cleared a lot of things up that I was unsure about

either way, he is paying peanuts compared to what it would cost mr.average!

TallTom said:

What about car allowances? Is that just counted as a company car and they pay BIK tax, or do they just see it as "pure" salary in tax terms?

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Car allowance is just that; it gets added to your salary and you pay TAX/NIC on it accordingly.

It is then up to the individual to decide what they want to do with that money.

Stu, do you work in the finance field? just curious as you seem to have good knowledge around it

sammclean23 said:

Stu, do you work in the finance field? just curious as you seem to have good knowledge around it

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Kind of, I am a self-employed qualified accountant with 18 years odd experience