Notice of Lease Break by qse41941

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									                                                                   1. Enter your data

             Notice: getting started

             (1) Fill out the required data in the grey boxes below (* = mandatory). Where available, use the selection box. You can use the
             hyperlinks on this page to get relevant information from the Internet.

             (2) You will find that some cells have a red triangle in the top right corner. These cells provide more information. Move your cursor
             to these cells to read the information.

             (3) The green boxes provide calculated values. No need to enter data here.




                                                                             Enter your data
             To calculate your tax position
             List price including VAT                                             £15,000.00     *
             Emissions rating                                               250       23         *    Link to emissions rating
             Fuel type                                                      Diesel     2         *
             Income tax rate %                                              40%        2         *
             Tax year                                                       2004/05    2         *
             Number of days you expect to have the car for                           365 days    *
             Will your private fuel be paid for?                            Yes        1         *
             For how many days? (365 = whole year)                                   180 days    *


             To calculate running costs
             Business mileage per year                                                5,000      *
             Total annual mileage                                                    15,000      *
             AA total running costs per mile                                          £0.54      *    Link to 'Running costs' on The AA website
             AA running costs per mile (without fuel)                                 £0.44      *    Link to The AA website (homepage)
             AA running costs per mile (without depreciation)                         £0.26      *



1. Enter your data/ce5b6e5d-c628-4b42-b7e1-b3e0c1edf2a3.xls                                                                                          1/11
                                                                     1. Enter your data

             AA running costs per mile (without fuel and depreciation)             £0.16         *


             If the car isn't owned outright, enter the following
             Monthly lease payment including VAT (company)                       £300.00
             Monthly loan payment (employee)                                     £250.00


             Action

             See the results by clicking on the numbered tab below:

             2. Taxable benefit figure: to see what your tax bill is likely to be
             3. Outright ownership: to compare costs of running the car when owned outright
             Yes
             Extra salary needed if car ownership is to move from company to employee:
             No
             3.1 Extra salary: the employee's break-even position
             3.2 Extra salary: the employer's break-even position
             FUEL TYPE
             If the car isn't owned outright:
             Petrol
             4. Lease and finance: comparing running costs in the lease/loan situation
             Diesel
             Extra salary needed if lease/finance of the car is moved from company to employee:
             4.1 Extra salary: to work out the employee's break-even position
             INCOME TAX RATE
             4.2 Extra salary: to work out the employer's break-even position
             22%
             Benefit-in-kind percentages
             40%
             5. Table: A copy of the emissions data table on which the taxable benefit calculations are based is reproduced on sheet 5.

             Company car fuel benefit
             6. Ready reckoner: Here you can quickly look up the tax and employers' NI due on car fuel benefit. There’s also a table of the official “fuel
             only rate” per mile which an employee can use to make good any private fuel accidentally provided.




1. Enter your data/ce5b6e5d-c628-4b42-b7e1-b3e0c1edf2a3.xls                                                                                                  2/11
                                                                     2. Taxable benefit figure


                                                                       For the selected
                                                                                            Comparing all tax years (always full years)
                                                                           tax year

                      Tax year                                              2004/05              2003/2004   2004/2005     2005/2006
                      Taxable benefit percentage                              35                    35          35             35
                      Taxable car benefit                                  £5,250.00             £5,250.00   £5,250.00     £5,250.00
                      Taxable fuel benefit                                 £2,485.48             £5,040.00   £5,040.00     £5,040.00
                      Taxable benefit (total)                              £7,735.48         £10,290.00      £10,290.00    £10,290.00

                      Income tax on benefit                                £3,094.19             £4,116.00   £4,116.00     £4,116.00

                      Employee's tax rate                                    40%                   40%         40%            40%
                      Employees' NI rate                                    1.00%                   1%          1%            1%
                      Employers' NI rate                                    12.80%                12.80%      12.80%        12.80%


                    Action                                                                  Notice
                    The taxable benefit figure should appear on your Notice of PAYE         Cells with red triangle in top-right corner
                    Coding.                                                                 provide more information.

                    If it doesn't or is different contact the PAYE coding section at        Move cursor to these cells to read the
                    your tax office (the number's on the Notice) to get the situation       information.
                    rectified.

                    If you change company cars, make sure a Form P46 (Car) is
                    sent to your tax office.




2. Taxable benefit figure/ce5b6e5d-c628-4b42-b7e1-b3e0c1edf2a3.xls                                                                        3/11
                                                                   3. Comparing costs - outright ownership

      With fuel benefit
                                         On this sheet we compare the costs when outright ownership of the car moves from the employer to the
                                                                 1
                                         employee. You can choose wether you make the calculations with or without fuel benefit. Calculations on
      Without fuel benefit
                                         this sheet and the following are made for a whole year.

   2004/05                                  Car owned by employer                             2004/05                       Car owned by employee
                 Running costs                                                  £8,100.00                   Mileage claims (under 10,000 miles)           £2,000.00
    Employer's




                                                                                               Employer's
     situation




                                                                                                situation
                 Employers' NI on taxable benefit                    12.80%     £1,317.12                   Mileage claims (over 10,000 miles)                   £0.00




                 Total cost                                                     £9,417.12                   Total cost                                    £2,000.00

    Employer's situation - Car owned by employer                                               Employer's situation - Car owned by employee
    The employer has to pay the running costs and employers' NI on the                         The employer can pay tax-free mileage claims to the employee (under
    taxable benefit. In case there is no fuel benefit, the employer pays only fuel             10,000 miles up to 40p per mile, over 10,000 miles up to 25p per
    on business mileage                                                                        mile).



   2004/05                                  Car owned by employer                             2004/05                       Car owned by employee
                 Income tax on benefit                                          £4,116.00                   Running costs                                 £8,100.00
    Employee's




                                                                                               Employee's
     situation




                                                                                                situation
                                                                                    £0.00                   Less : mileage claims received                £2,000.00


                 Total cost                                                     £4,116.00                   Total cost                                    £6,100.00

    Employee's situation - Car owned by employer                                               Employee's situation - Car owned by employee
    The employee has to pay his tax on the benefit and, in case there is no fuel               The employee has to pay his own running costs, although mileage
    benefit, also fuel costs for personal mileage.                                             claims will reduce this figure.




                                                          HELP! If you can't get the numbers to work go back to sheet 1
                                                                  and make sure all your data has been entered


3. Outright ownership/ce5b6e5d-c628-4b42-b7e1-b3e0c1edf2a3.xls                                                                                                       4/11
                                                              3.1. Outright ownership - employee's break-even point


On this sheet we calculate the extra salary needed to compensate the employee for running the car, rather than the
company. Using the running costs calculated on sheet 3, this is the employee's break-even point.

 2004/05                                        Car owned by employee                             2004/05                                       Car owned by employee
                           Extra gross salary                                         £3,362.71                            Mileage claims paid (under 10,000 miles)                  £2,000.00
                           Less: Employees' NI                           1%              £33.63                            Mileage claims paid (over 10,000 miles)                       £0.00
                           Less: Income tax                              40%          £1,345.08                            Extra gross salary                                        £3,362.71
                           Less: Running costs                                        £8,100.00                            Employers' NI                               12.80%          £430.43
                           Mileage claims received                                    £2,000.00
                           Total cost                                                 £4,116.00                            Total cost                                                £5,793.14
    Employee's situation




                                                                                                    Employer's situation
                            Employee's situation                                                                            Employer's situation
                            When an employee decides to trade in his company car and runs                                   The employee needs additional salary not to be a winner or loser.
                            his own car instead, he will need additional salary to pay for the                              The amount is calculated opposite. Along with mileage claims and
                            running costs less the mileage claims he will receive for business                              the NI they constitute the employer's total cost if the employee
                            travel. This extra salary is calculated above.                                                  runs the car.
                            Below, we can see that the employees' total cost for running the                                Below, we compare this to total cost if the employer runs the car
                            car equal the income tax saved by not having a company car. As                                  himself.
                            an employee you break-even.



                           Total cost if employee owns car (see above)                £4,116.00                            Total cost if employee owns car (see above)               £5,793.14
                           Total cost if employer owns car (sheet 3)                  £4,116.00                            Total cost if employer owns car (sheet 3)                 £9,417.12
                           Difference (i.e. break-even)                                   £0.00                            Difference (cost to the employer)                       £3,623.98




                           HELP! If you can't get the numbers to work go back to sheet 1 and make sure all your data has been entered




3.1 Extra salary/ce5b6e5d-c628-4b42-b7e1-b3e0c1edf2a3.xls                                                                                                                                   5/11
                                                              3.2. Outright ownership - employer's break-even point

On this sheet we calculate the maximum extra salary the employer can afford to pay the employee. This is out of the
savings the company makes by not running a company car. Using the running costs calculated on sheet 3 this is the
employer's break-even point.


 2004/05                                        Car owned by employee                            2004/05                                      Car owned by employee
                           Extra gross salary                                        £6,575.46                           Mileage claims paid (under 10,000 miles)                 £2,000.00
                           Less: Employees' NI                             1%          £65.75                            Mileage claims paid (over 10,000 miles)                       £0.00
                           Less: Income tax                              40%         £2,630.18                           Extra gross salary                                       £6,575.46
                           Less: Running costs                                       £8,100.00                           Employers' NI                              12.80%          £841.66
                           Mileage claims received                                   £2,000.00
                           Total cost                                                £2,220.48                           Total cost                                               £9,417.12
    Employee's situation




                                                                                                  Employer's situation
                           Employee's situation                                                                          Employer's situation
                           The employee receives extra salary which is calculated                                        Here we calculate the employer's break-even point: how much
                           opposite. Above we calculate total costs.                                                     extra salary he can afford to give the employee (along with
                                                                                                                         mileage payments) so that his total costs don't exceed the
                           Below we compare these costs with total costs for the employee                                savings from not running a company car.
                           if he had a company car.
                                                                                                                         Below we can see that with the calculated salary, costs for the
                                                                                                                         employer are the same whether it's a company or employee run
                                                                                                                         car.


                           Total cost if employee owns car (see above)               £2,220.48                           Total cost if employee owns car (see above)              £9,417.12
                           Total cost if employer owns car (see sheet 3)             £4,116.00                           Total cost if employer owns car (see sheet 3)            £9,417.12
                           Difference (cost to the employee)                        £1,895.52                            Difference (i.e. break-even)                                 £0.00




                           HELP! If you can't get the numbers to work go back to sheet 1 and make sure all your data has been entered




3.2 Extra salary/ce5b6e5d-c628-4b42-b7e1-b3e0c1edf2a3.xls                                                                                                                                  6/11
                                                                4. Comparing costs - where the car is not owned outright

            With fuel benefit                   Where the car is not owned outright the comparison of costs is slightly different. On this sheet we
                                                                          1
                                                compare the cost to the company of a leased car with that of a car financed by the employee. You can
            Without fuel benefit
                                                choose wether you make the calculations with or without fuel benefit. Calculations on this sheet and the
                                                following are made for a whole year.

         2004/05                                   Car leased by employer                        2004/05                     Car financed by employee
                       Running costs (without depreciation)                         £3,900.00                 Mileage claims paid (under 10,000 miles)        £2,000.00
          Employer's




                                                                                                 Employer's
           situation




                                                                                                  situation
                       Employers' NI on taxable benefit                  12.80%     £1,317.12                 Mileage claims paid (over 10,000 miles)             £0.00
                       Annual lease payments                                        £3,600.00
                       Less: VAT back on leasing payments                            £268.09
                       Total cost                                                   £8,549.03                 Total cost                                      £2,000.00

           Employer's situation - Car leased by employer                                         Employer's situation - Car financed by employee
           The employer has to pay the running costs and employers' NI on the                    The employer can make tax-free mileage payments to the employee
           taxable benefit. If a monthly payment for leasing is entered on sheet 1, "            (under 10,000 miles at 40p per mile, over 10,000 miles at 25p per
           Enter Your Data", the annual payments must be added in too.                           mile).



         2004/05                                   Car leased by employer                        2004/05                     Car financed by employee
                       Income tax on benefit                                        £4,116.00                 Running costs (without depreciation)            £3,900.00
          Employee's




                                                                                                 Employee's
           situation




                                                                                                  situation
                                                                                       £0.00                  Less: mileage claims received                   £2,000.00
                                                                                                              Annual finance payments                         £3,000.00
                       Total cost                                                   £4,116.00                 Total cost                                      £4,900.00

          Employee's situation - Car leased by employer                                          Employee's situation - Car financed by employee
          The employee has to pay tax on the benefit, and in case there is no fuel               The employee has to pay the running costs. Any business mileage
          benefit, fuel costs for personal mileage.                                              claims reduce this cost. If a monthly payment for finance is entered
                                                                                                 on sheet 1, "Enter your data", the annual payments must be added in
                                                                                                 too.




                       HELP! If you can't get the numbers to work go back to sheet 1 and make sure all your data has been entered


4. Lease and finance/ce5b6e5d-c628-4b42-b7e1-b3e0c1edf2a3.xls                                                                                                             7/11
                                                     4.1. Employee finances their own car - employee's break-even point


On this sheet we calculate the extra salary needed to compensate the employee for running the car, instead of the
company. Using the running costs calculated on sheet 4 this is the employee's break-even point.

 2004/05                                        Car financed by employee                            2004/05                                      Car financed by employee
                           Extra gross salary                                          £1,328.81                            Mileage claims paid (under 10,000 miles)                  £2,000.00
                           Less: Employees' NI                            1%               £13.29                           Mileage claims paid (over 10,000 miles)                        £0.00
                           Less: Income tax                              40%             £531.53                            Extra gross salary                                        £1,328.81
                           Less: Running costs without depreciation                    £3,900.00                            Employers' NI                                12.80%         £170.09
                           Less: Annual finance payments                               £3,000.00
                           Mileage claims received                                     £2,000.00
                           Total cost                                                  £4,116.00                            Total cost                                                £3,498.90
    Employee's situation




                                                                                                     Employer's situation
                            Employee's situation                                                                             Employer's situation
                            When an employee decides to trade in his leased company car                                      The employee needs additional salary not to be a winner or loser.
                            and finance his own car instead, he will need additional salary to                               The amount is calculated opposite. Along with mileage claims
                            pay for the running costs and the finance, less the mileage claims                               and NI they constitute employer's total costs if the employee
                            he will receive for business travel. This extra salary is calculated                             runs the car.
                            above.
                                                                                                                             Below, we compare this to total cost if the employer leases the
                            Below, we can see that the employee's total costs for running the                                car.
                            car equal the income tax on the benefit-in-kind of a company car,
                            so the employee breaks even.



                           Total cost if employee owns car (financed)                  £4,116.00                            Total cost if employee owns car (financed)                £3,498.90
                           Total cost if employer owns car (leased)                    £4,116.00                            Total cost if employer owns car (leased)                  £8,549.03
                           Difference (i.e. break-even)                                    £0.00                            Difference (cost for the employer)                       £5,050.13




                           HELP! If you can't get the numbers to work go back to sheet 1 and make sure all your data has been entered


4.1 Extra Salary/ce5b6e5d-c628-4b42-b7e1-b3e0c1edf2a3.xls                                                                                                                                      8/11
                                                     4.2. Employee finances their own car - employer's break-even point


On this sheet we calculate the maximum extra salary the employer can afford to pay the employee. This is out of the
savings the company makes by not running a company car. Using the running costs calculated on sheet 4 this is the
employer's break-even point.

 2004/05                                        Car financed by employee                         2004/05                                       Car financed by employee
                           Extra gross salary                                        £5,805.88                            Mileage claims paid (under 10,000 miles)                 £2,000.00
                           Less: Employees' NI                          1%              £58.06                            Mileage claims paid (over 10,000 miles)                      £0.00
                           Less: Income tax                             40%          £2,322.35                            Extra gross salary                                       £5,805.88
                           Less: Running costs without depreciation                  £3,900.00                            Employers' NI                                12.80%        £743.15
                           Less: Annual finance payments                             £3,000.00
                           Mileage claims received                                   £2,000.00
    Employee's situation




                                                                                                   Employer's situation
                           Total cost                                                £1,474.53                            Total cost                                               £8,549.03

                            Employee's situation                                                                           Employer's situation
                            The employee receives extra salary which is calculated opposite.                               Here we calculate the employer's break-even point: how much
                            Above we calculate total costs, including loan payments.                                       extra salary he can afford to give the employee (along with
                                                                                                                           mileage payments) so that his total costs don't exceed the
                            Below we compare these costs with total costs for the employee                                 savings from not running a leased company car.
                            if he had a leased company car.
                                                                                                                           Below we can see that with the calculated salary, costs for the
                                                                                                                           employer are the same whether it's a company or employee run
                                                                                                                           car.


                           Total cost if employee owns car (financed)                £1,474.53                            Total cost if employee owns car (financed)               £8,549.03
                           Total cost if employer owns car (leased)                  £4,116.00                            Total cost if employer owns car (leased)                 £8,549.03
                           Difference (i.e. cost to the employee)                  £2,641.47                              Difference (i.e. break-even)                                £0.00




                           HELP! If you can't get the numbers to work go back to sheet 1 and make sure all your data has been entered


4.2 Extra salary/ce5b6e5d-c628-4b42-b7e1-b3e0c1edf2a3.xls                                                                                                                                    9/11
                                                                       5. Table - taxable benefit

  This table shows the Taxable Benefit percentage for company cars according to tax year and fuel type.

  Example. Emissions Rating = 160 gr/km. Taxable Benefit for a petrol car is 16% for 2003/2004, 18% for
  2004/2005 and 19% for 2005/2006.


                                                                                Taxable benefit percentage
  Emissions Rating
                                                2003/04                     2004/05                     2005/06               2006/07
   (in grams/km)
                                          Petrol       Diesel         Petrol       Diesel         Petrol       Diesel   Petrol       Diesel
    140 or less               1            15           18             15           18             15           18       15           18
       145                    2            15           18             15           18             16           19       16           19
       150                    3            15           18             16           19             17           20       17           20
       155                    4            15           18             17           20             18           21       18           21
       160                    5            16           19             18           21             19           22       19           22
       165                    6            17           20             19           22             20           23       20           23
       170                    7            18           21             20           23             21           24       21           24
       175                    8            19           22             21           24             22           25       22           25
       180                    9            20           23             22           25             23           26       23           26
       185                   10            21           24             23           26             24           27       24           27
       190                   11            22           25             24           27             25           28       25           28
       195                   12            23           26             25           28             26           29       26           29
       200                   13            24           27             26           29             27           30       27           30
       205                   14            25           28             27           30             28           31       28           31
       210                   15            26           29             28           31             29           32       29           32
       215                   16            27           30             29           32             30           33       30           33
       220                   17            28           31             30           33             31           34       31           34
       225                   18            29           32             31           34             32           35       32           35
       230                   19            30           33             32           35             33           35       33           35
       235                   20            31           34             33           35             34           35       34           35
       240                   21            32           35             34           35             35           35       35           35
       245                   22            33           35             35           35             35           35       35           35
       250                   23            34           35             35           35             35           35       35           35
       255                   24            35           35             35           35             35           35       35           35
       260                   25            35           35             35           35             35           35       35           35
       265                   26            35           35             35           35             35           35       35           35



5. Table - taxable benefit/ce5b6e5d-c628-4b42-b7e1-b3e0c1edf2a3.xls                                                                           10/11
                                                                     6. Company car fuel benefit - ready reckoner 2004/5


                    The main table below shows the employers' NI and employee's income tax on a range of car fuel benefit figures.


                           Car benefit                    Fuel benefit for P11D           Employers' NI                Employee's income tax
                             % age                         (based on £14,400)               at 12.8%           22% Taxpayer             40% Taxpayer
                               15                              £2,160.00                    £276.48              £475.20                   £864.00
                               16                              £2,304.00                    £294.91              £506.88                   £921.60
                               17                              £2,448.00                    £313.34              £538.56                   £979.20
                               18                              £2,592.00                    £331.78              £570.24                  £1,036.80
                               19                              £2,736.00                    £350.21              £601.92                  £1,094.40
                               20                              £2,880.00                    £368.64              £633.60                  £1,152.00
                               21                              £3,024.00                    £387.07              £665.28                  £1,209.60
                               22                              £3,168.00                    £405.50              £696.96                  £1,267.20
                               23                              £3,312.00                    £423.94              £728.64                  £1,324.80
                               24                              £3,456.00                    £442.37              £760.32                  £1,382.40
                               25                              £3,600.00                    £460.80              £792.00                  £1,440.00
                               26                              £3,744.00                    £479.23              £823.68                  £1,497.60
                               27                              £3,888.00                    £497.66              £855.36                  £1,555.20
                               28                              £4,032.00                    £516.10              £887.04                  £1,612.80
                               29                              £4,176.00                    £534.53              £918.72                  £1,670.40
                               30                              £4,320.00                    £552.96              £950.40                  £1,728.00
                               31                              £4,464.00                    £571.39              £982.08                  £1,785.60
                               32                              £4,608.00                    £589.82             £1,013.76                 £1,843.20
                               33                              £4,752.00                    £608.26             £1,045.44                 £1,900.80
                               34                              £4,896.00                    £626.69             £1,077.12                 £1,958.40
                               35                              £5,040.00                    £645.12             £1,108.80                 £2,016.00


                    Fuel only rates for paying back private fuel

                                                                          Fuel cost per mile
                    Engine size                                  Petrol                        Diesel
                                                                                                          If an employee wishes to make good any private fuel
                    Up to 1400cc                                  10p                            9p
                                                                                                          accidentally provided they can use the official "fuel only
                    1401 - 2000cc                                 12p                            9p       rate" per mile.
                    Over 2000cc                                   14p                           12p


6. Car fuel benefit/ce5b6e5d-c628-4b42-b7e1-b3e0c1edf2a3.xls                                                                                                           11/11

								
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