Opting Out

Your employer may offer you the option of taking a higher salary so that you can buy and run your own car, rather than using a vehicle provided by the company. Before you make that decision, there are a number of things you'll need to take into account:

  • Opting out of the system will give you a much wider variety of cars to choose from.
  • Although buying you own car will mean that you escape the company car tax, which may be particularly hefty if you intend to run a car that has high carbon dioxide emissions, you will have to pay income tax on the higher salary.
  • If you are buying your own car, you will not only have to pay the initial purchase price, but you will also be paying for depreciation, road tax, servicing, insurance, fuel and consumables, such as tyres.

You'll need to work out how much you'd have to pay in company car tax and 'free' fuel, and compare that to how much extra money you will be given (after it has been taxed) and the costs of buying and running your own car.

Running Your Own Car

If you do decide to opt out of your company car scheme altogether, you'll need to know how to minimise your costs:

  • Look for cars that have low fuel consumption and low carbon dioxide (CO2) emissions, to keep running costs and road tax down.
  • Think about using a personal leasing company or personal contract plan (PCP) when finding your new car. These two options are usually for a fixed period of time and can be set-up to include all maintenance and servicing costs. Whilst this may not be the cheapest option, it does offer the benefits of a fixed monthly budget and convenience of included garage costs.
  • Look around for insurance providers who will take your company car driving record into account to supply you with a no-claims bonus; this can make a huge difference to your premium.