Conference terri::cars_uk

    The lease cost quoted on VTX (when it's available ;-) are inclusive of
    VAT. However, our base supplement also includes VAT (see 802.88), i.e.
    it is #3,600 + VAT = #4140 at 15%. 
    
    My query is twofold
    
    - whilst the cost of the cars will go up with VAT, the base supplement
    is not due to be reviewed until May => mid-May
    
    - given the vagueries (sp?) of the car scheme, i.e. two quotes for the
    same car on different days can be radically different, there is no
    guarantee that the re-quotes on the cars will not be substantially
    higher.
    
    I am/was particularly interested in the 323F at 78 spondooliks per
    annum (to me). I have copied the quote from VTX. It was given as valid
    until 17/4/91. If the re-quote is unacceptably higher, I may ask for
    some 'explanation' !!!
    
    Ours not to reason why .... (you complete the quotation !!)
    
    Colin
    
    P.S. Mr Mod, I guess these would be better placed in note 802 ??

    What happens if say, you order a car at a certain price and by the time
    you get the car the base supplement goes up? Does the price you pay come
    down?
    Or even if the base supplement goes up when you already have a car,
    does the price we pay come down?
    
                   Gerry.

    .2�    What happens if say, you order a car at a certain price and by the time
    .2�    you get the car the base supplement goes up? Does the price you pay come
    .2�    down?
    
    Yes. Last year I ordered a car in June (1436), supplement changed in
    July, car delivered in November. The price I pay is 1126.
    
    Whether that was just the base supplement changing (probably), or the 
    level 8 supplement changing or both, or just pure luck - I don't know!
    
    .2�   Or even if the base supplement goes up when you already have a car,
    .2�    does the price we pay come down?
    
    No - no difference.
    
    Cheers, Chris

    Gerry. As I understand it from car fleet, the rules are as follows.

    It is the current allowance that is offset against the car at the time
    of delivery. That means that if the allowance goes up (as it has
    recently, backdated to the 1st of Feb) after you have ordered but before
    your car is delivered, you will benefit from the new rate which is
    deducted from the _total_ annual lease cost.
    This is then fixed for the period of the lease.

    For example, say you ordered from a quote in January that was �4240/�526
    (the allowance at the time was �3714) and had the car delivered today.

    Now as the allowance went to �4140 from Feb 1st to account for the dramatic
    increase in lease costs, this is the figure that payroll uses against the
    lease costs once they are received from Hertz/PHH via car fleet after your
    car is delivered.

    So instead of the quote �4240 (- �3714) = �526  you will actually be paying
                            �4240 (- �4140) = �100.


    - Roy

�    (the allowance at the time was �3714) and had the car delivered today.
    							  ^^^^^^^^^^^^^^^^^
    
    Only 'theoretical' I know, but
    wouldn't the cost have gone up with the VAT increase ?
    
    J.R.

    � wouldn't the cost have gone up with the VAT increase ?
    
    No I don't believe so. The total price of the quote (not the
    supplement) is fixed (Otherwise what is the point of it).
    
    The point is that the list price may well have gone up since the car
    was ordered. The lease company inform the company of the current
    on-the-road price at the time of delivery for tax purposes. So the
    danger is that if the car if just under the �19k tax bracket at the
    time of ordering, it may be over that when you get the car and you will
    have to pay more tax.
    
    Mind you I can't be sure as the lease scheme seems such a can of worms,
    I think they make the rules up as they go along.
    
    - Roy

    I may have missed something here, but I thought that if you ordered a
    lease car on the scheme, then the price you pay over 2.5 years (or
    whatever) is the one you were quoted, AS LONG AS YOUR CAR IS DELIVERED
    WITHIN THE 5-MONTHS LIMIT, and as long as the base supplement doesn't
    go up before your car is delivered.
    
    Am I to understand from the VTX announcement that your initial quote
    means absolutely nothing whatsoever? I've seen the 'disclaimers' on the
    VTX screens about the quotes being advisory, but I assumed this
    referred to things like the situation where people were trying to judge
    things like residual values from the car quotes. I thought the 5-month
    requote was to cater for price rises (a fair-enough system in this
    event, it would seem to me)?
    
    Does this mean that if I had ordered a Cavalier SRi in November 1990
    for March 1991 delivery at a quote of �600, then had the car delivered
    at �1800 (a real quote for a standard model that was on the system till
    a couple of weeks ago) due to the huge lease-car price rises in
    January, I would have to pay this extra �1200??????
    
    Who would let me know my car had increased in cost by �1200 since I
    ordered it??? Would I only discover when I'd taken delivery, was gaily
    driving around in my �600 car, then got my first salary slip with the
    new deduction on it???
    
    I don't mind variations of a couple of hundred quid or so between two
    quotes for identical vehicles on different days, but surely �1200
    difference is insupportable?
    
    
    SD
                          

    �I would have to pay this extra �1200??????
    
    No. Lets get one thing clear. The quotes in vtx contain 2 costs the
    "total cost" and the "cost to supplement holders". Forget about the
    cost to supplement holders for a minute (although this is the one we
    tend to remember as that is what we will be charged (but not
    necessarily as I will explain)).
    
    The quote you mentioned in November for �600 was probably 4314/600
    and the �1800 quote was like 5514/1800 (remember at that time the
    allowance was �3714).
    
    So as the allowance is now �4140, if the car was delivered in March as
    in your example the November quote would cost you 4314 - 4140 = �174
    (This is providing you don't have a requote which you get if the car is
    not delivered within 5 months). The other quote would work out -
    5514 - 4140 = �1374.
    
    This means that if the allowance is increased in May to compensate for
    the VAT increase , the cost to supplement holders in the new vtx quotes 
    will be wrong as they will benefit from the increase providing the car
    is delivered after the increase.
    
    Hope this is clear.
    
    - Roy 

    Sorry SD, I think I missed the point. What part of the vtx announcement
    were you referring to ?
    
    - RS

No one has answered my question yet - since VAT is reclaimed by the
company, why should the VAT rate change affect costs?

Peter.....

    
    Haven't you learnt yet, Peter.
    
    If people start answering questions you haven't answered it means they 
    don't know the answer to your question! :^)
    
    Mark

I've been wondering exactly the same thing. All I could work out was that the 
part of the VAT that can't be claimed back is the extra we have to pay on 
top of the supplement. So if you had to put an extra 1000 pounds towards 
the car it will now be 1025 cos of the extra 2.5% VAT. Is this right ?

And if it is why don't carfleet simply adjust the quotes?

How about someone from carfleet telling us the FACTS for once....

								G.P 

    Peter,
    
    I thought .1 covered it -
    
    �The lease cost quoted on VTX (when it's available ;-) are inclusive of
    �VAT. However, our base supplement also includes VAT (see 802.88), i.e.
    �it is #3,600 + VAT = #4140 at 15%.

re .13;

But the company doesn't pay VAT on the rentals - it gets them back.

Or am I missing something?

All the cheap lease offers you see advertised are only available to
companies, who can claim back the VAT and therefore make them so cheap.

And if you don't get the car, but take the money, don't you get
"The basic car cost" + 15% to allow for the VAT? WIll this now got to 17�%

Confused of SBP.....

    Re: .12
    
    You got it!
    
    A few years ago, Digital had one of its discussions with the taxman,
    and as usual, LOST.
    
    The taxman deemed that if an employee paid extra to get a better car,
    that was over and above the standard car required for business
    purposes, thus you couldn't "miss out" the VAT from the extra that you
    pay. Hence all car quotes above the Escort Ghia/Sierra GL/Cavalier GL
    increased by the VAT percentage on the extra amount.
    
    Lets hope that he doesn't notice the extra amount is taken of GROSS
    salary, and thus is income-tax free (or rather, lets hope that we don't
    fall out with him again and he enforces it!).
    
    Car fleet cannot just adjust the quotes, because it is the fleet
    companies that make 'em up, and they are probably legal contracts.
    
    Why Digital cannot just ABSORB the 2�% VAT for the current quotes
    amazes me. How much is it going to cost to re-quote the several hundred
    active quotes?
    
    I bet you a lot more than:
    
    �0.25*(the extra cost on the few cars ordered in the next month or so)
    
    mb
    
    p.s.
    
    Taxman may be VATman or C&Eman or something else, but you get my drift!

    Has anyone else had their order forms sent back yet? I got mine back
    unprocessed on Tuesday even though it was sent in over a week before and 
    could easily have been processed before the 1st April.
    
    It has taken since the 16th Feb for car fleet and insurance to confirm
    my car as a write off and for them to process my quotes. Now I have to
    go back to the start and submit more quotes and order against one of
    those. So you can guarantee it will be at least 4 months before they
    actually manage to order and deliver something, and for all that time 
    my cost centre is going to have to pick up the cost of a hire car. I
    think this may well cost the company a hell of a lot more than the
    extra 2.5% VAT.
    
    Cheers,
    
    Bitter & Twisted (and getting more so with every day that passes that I
    have to drive a Rover) of Basingstoke. 

    
    VAT is a funny business: firstly I am a partner in a company (a
    smallish photographic business) that until recently leased a number of
    cars from PHH - after discussions with the taxman, Land Rover, and our
    accountants we recently switched to lease purchasing from Land Rover.
    
    The situation was that on the leased vehicles we could not reclaim the
    VAT - even though we are VAT registered and the vehicles are work
    vehicles for the company (not employees company cars). However under
    lease purchase the commercial vehicles (Defender 90 vans, Defender 110
    12 seaters, and Defender 130 box-vans), which do not attract car tax
    (being classed as commercial) allow us to reclaim the VAT...
    
    As for the impact of the VAT changes on our car scheme, the basic
    allowance is listed as �3600+VAT, so it should go up automatically to
    �4230. However not only do PHH and Hertz have to increase their quotes
    to compensate for the increased costs of vehicles due to VAT
    (incidentally some 'tax break' cars like the Saab 9000 XS are not going
    up - the makers are swallowing the increase VAT), but the lease itself,
    beig considered a service draws VAT so will increase... Since the
    allowance is currently based on a "hybrid" car - approximately a
    mixture of Cavalier and Sierra I gather - the allowance should be
    increased by more than the increase in VAT (if my calculations are
    correct it should increase by 4.4% from �4140 to �4322)
    
    ====
    
    The increases in CCT (company car tax) raise another issue in my mind.
    As the Chancellor of the Exchequer said in his budget speech this tax
    is supposed to be a tax on the "benefit in kind" that the employee
    receives by being able to use the company car for private motoring,
    including driving to work.
    
    Consider now a "typical employee" who does 15000 private miles, and
    10000 business miles. If we assume that the allowance increases on
    April 1 to �4230, the value of the private usage is 60% of this, or
    �2538. However the taxman reduces our allowances by �2650. In other
    words he is taxing us on �112 of "benefit in kind" that we are not
    receiving! Indeed many of us drive a smaller proportion of private
    mileage than 60% (I myself only do about 40% private mileage) and are
    being even more heavily overtaxed. 
    
    It seems to me that the CCT has now increased to the point - and
    threatens to increase still further in the future - where the present
    basis of computing the car allowance and business supllement on the
    value of a "standard car" should be dropped in favour of basing it on
    the taxman's assesment of the value of the car in kind. Let us assume
    that Digital adopted a "typical" value of 60% of usage being private.
    In order to compensate for the current tax levels the basic allowance
    would have to be set at �4418 (only slightly more than the figure I
    derived above of �4322), and it also gives a simple three band 'market
    supplement' - the lowest band being employees who upgrade to a larger
    than 2 litre car (tax is �4250) who need a total allowance of �7085,
    and hence a market supplement of �2667. The second band would be those
    who upgrade to a car over �19250 and under �29000 (tax is �5500) who
    need a total allowance of �9165, and hence a market supplement of
    �4747, and finally those who upgrade to a luxury car over �29000, (tax
    of �8900) who need a total allowance of �14828, or a market supplement
    of �10410. (Note these supplements need not allign with present ones
    :-))
    
    Of course this still leaves the anomaly of the employee who chooses to
    take a car of a higher grade than at present, but unless the governemtn
    change the rules to base the tax on the actual percentage of the actual
    benefit received that is used for personal use, then the above is the
    most ecquitable solution I can think of and the employee who opts for a
    higher taxed car than appropriate for his 'grade' takes the tax hit
    that goes with it...
    
    /. Ian .\

    Leaving aside the interesting discussion on Company Car Tax ;-),
    according to the Times this sunday, a lot of retail stores are taking
    advantage of the VAT change to increase prices by up to 10%. Of course,
    this is extremly unlikely to happen with the cars on our lease
    scheme.........!!??
    
    Colin
    
    P.S. To return to CCT, I currently do around 75% personal miles, so I'm
    quite happy to pay it. If I had to run a car of equivalent standard,
    I'd be a lot worse off. On the other hand, if I had to buy my own car,
    I would be unlikely to need it for business, and so would buy a second
    hand banger instead !!!

    Apparently Hertz has such tremendous buying power that Ford and
    Vauxhall are offering cars to them at _half_ the list price.
    
    If this is so, it would certainly compensate for the low resale value that
    they are suffering at present. This makes the massive increase in the
    lease costs even more farcical.
    
    - Roy
    
    PS Re: .16 Bad luck Spike about the returned order. Keep us informed.

    There are two certainties in this life, death and taxation.  On the
    whole I suspect death is less painful.
    
    I am in the process of becoming a small business and the VAT is indeed
    a complex business.  The only light at the end of the tunnel is the
    fact that I won't pay CCT on the car my business buys for my use.  Over
    the years I have had endless grief with CCT and the problems of getting
    the TAXMANto recognise that I do over 18,000 company miles.  As a
    result of claiming a refund in 88/89 I was assesed with 1/2 the rate
    for 90/91. Despite a P11D showing 24,000 miles for 89/90 no refund was
    forthcoming until last Saturday, the very last day of the tax year and
    the last day they could refund without paying me interest!  The refund
    for 88/89 was immediatly cancelled by a garage bill for the family car.
    
    Moral.  You will never win.  If Digital tried to absorb the 2.5%
    increase in VAT then it would be a taxable benefit and we would have to
    pay tax on it.  If you think this is nitpicking think back to the M&S
    vouchers we get a Christmas.
    
    Rob (who briefly held a cheque for 230 pounds from the Revenue, until
    the financial adviser relieved him of it to pay some boring bill)

    
    Re .20
    
    How are you planning to avoid CCT on the car your company buys for you?
    
    I'm sure a large portion of the noters here would love to know! :^)
    
    Mark

    I just had a peek at vtx.
    
    There is  a new quote on there showing that the allowance has increased
    in line with the vat. Its now �4230 (3600 + 17.5%) 
    It used to be �4140 (3600 + 15%)
    
    So things shouldn't be too bad after all.
    
    - Roy

	Peter,

	I have always taken the money instead of a car, and since the rules
	changed regarding DIGITAL claiming the VAT back, I do NOT get the
	VAT portion of the car supplement.

	So if the car supplement goes up 2.5% because of VAT, it won't effect 
	the money I receive, I don't get the 15% either.


	Heather

	PS anyone know where I can buy a car VAT-less......?

    
    RE .23
    
    � PS anyone know where I can buy a car VAT-less......?
    
    Second hand?
    
    Mark

    
    
    How much do you get if you opt out of the car scheme??
    
                  Gerry.

	Okay, I checked the figures, they are updated every 1st of June.

	You have a supplement depending on level, this supplement covers the
	extras that other people get at the same grade, in similar industries, 
	that we don't.

	For all levels the car bit is the same - �3000, and this should cover
	the "standard" car. If you're in the scheme you could be paying more,
	depending on your choice.

	for 8/9 the extras in addition to the �3000 are �1300
	for 10/11              				�2200
	for 12+		       				�3250

	Because of the VAT claim back, you had one choice to opt in, or opt out.
	If you opted in at your last renewal, and this was after the VAT change,
	then I don't beleive you have the choice to take the �3000 as salary 
	any more, but you need to check this with your manager.

	Heather

    Well according to Fleet a couple of weeks back the amount you get
    before tax at level 7 or below is �3600. You can opt out anytime at the
    end of your current lease, but you can't reenter the scheme ever again.
    
    Cheers,
    
    Spike.

There was a ruling some time back that once you'd opted to take a car instead of 
"management Supplement", then even if you opted out of the car scheme you could
not get the cash instead, although the basic supplement would be given.  Have
things changed?

Brian (take the money and drive)

	This is the mail sent out last June...............


    Please find below the approved Car Supplements effective 1-July 1990.
    
    Could you ensure that these are circulated to your HRO administrators and 
    that your management teams are informed accordingly.
    
    Personnel Systems will be processing a Mass update for all employees with 
    a standard supplement, however it will be necessary for a manual 
    adjustment of any funny supplements! Exclusion lists are currently being 
    prepared by Mei-Mei and will be available to your administrators asap.
    
    Please call me if you are not sure about this communication.
    
    Regards
    
    Trevor


                                 FY91 CAR SUPPLEMENT PROPOSAL


                     CAR SUPPLEMENT                       CASH EQUIVALENT
               EXISTING PROPOSED INC�  INC%        EXISTING PROPOSED INC� INC%



BELOW LEVEL 8      -        -      -     -          2,750   3,000   250   9.1%

LEVELS 8/9      1,200    1,300   100   8.3%         3,950   4,300   350   8.9% 


LEVELS 10/11	1,950    2,200	 250  12.8%         4,700   5,200   500  10.6%


LEVEL 12+	2,950    3,250	 300  10.2%         5,700   6,250   550   9.6%



    All I can think is that the base has increased from �3000 to �3600 since
    last July, however, I was asked how much you get if you take the cash,
    and you get the �3000, this is changed ONCE a year, and does not go up
    during the year to reflect the current base cost.

    With regard to in/out and what you get, this is my understanding.........

    You have one chance to get out of the scheme if you are in it, this 
    was the first renewal after the VAT changes. As this was about 2 years
    ago, most people have already made the choice of in or out.

    If you made the choice to stay in, then the excise (VAT) people 
    understand that the car is required for your job. 
    If you then say you no longer need the car, then you don't have the �3000
    either, as this is for a car to do your job.

    As I say, this is my understanding, I could be wrong or out-of-date.

	Heather


                          






									       Compensation & Benefits
									            29-May-1990