Typical car allowance for junior team member?

[pmanson]

Hi All,

Unfortunately i'm not a director (yet) but I could do with a bit of guidance re. car allowances.

I've been with my current company for close to a year and in that time i've driven a not inconsiderable amount of miles (ranging from 200 - 1000 miles pcm with a typical month being 800 miles). As an Account Manager I can only expect that to increase as time goes on.

Currently I can claim the standard 40ppm but i'd like to ask for a car allowance at my review when it comes around... however I don't know how much I should ask for/look to negotiate?

I've looked at similar roles online but they only state Salary of £x + Car allowance.

Thanks,
Phill

[VeeFour]

My current opt-out rate is £5.5k / year.

[Mattt]

I'd say anywhere from 4k for Grad, upto £10k or so for Senior levels.

[pmanson]

Thanks guys - much appreciated

[DickSkruttock]

pmanson said:

Hi All,

Unfortunately i'm not a director (yet) but I could do with a bit of guidance re. car allowances.

I've been with my current company for close to a year and in that time i've driven a not inconsiderable amount of miles (ranging from 200 - 1000 miles pcm with a typical month being 800 miles). As an Account Manager I can only expect that to increase as time goes on.

Currently I can claim the standard 40ppm but i'd like to ask for a car allowance at my review when it comes around... however I don't know how much I should ask for/look to negotiate?

I've looked at similar roles online but they only state Salary of £x + Car allowance.

Thanks,
Phill

The current rate is now 45ppm for the first 10000.

[pmanson]

DickSkruttock said:

The current rate is now 45ppm for the first 10000.

Our FD thinks the 40ppm rate is more than generous so I have to claim any additional back from the tax man

[Pints]

pmanson said:

DickSkruttock said:

The current rate is now 45ppm for the first 10000.

Our FD thinks the 40ppm rate is more than generous so I have to claim any additional back from the tax man

I didn't realise they could do that. If that's the case, I really do need to brush up on my tax.

[pmanson]

Pints said:

pmanson said:

DickSkruttock said:

The current rate is now 45ppm for the first 10000.

Our FD thinks the 40ppm rate is more than generous so I have to claim any additional back from the tax man

I didn't realise they could do that. If that's the case, I really do need to brush up on my tax.

It works (i think) like this:

10,000 miles claimed @ £0.40 = £4,000
10,000 miles (additional 5p) per mile = £500

I think you can then claim tax relief on the £500, so a 20% tax payer could claim £100 back / 40% tax payer £200.

As I understand it the same works if you have a car allowance:

10,000 miles @ £0.45 = £4,500

Mileage allowance (say 14p) = 10,000 x £0.14 = £1,400

Claim for tax man = 10,000 x £0.31 = £3,100 (Then you claim either 20 or 40% back depending on your earnings)

[Eric Mc]

Pretty much spot on. And you can go back at least six years (although that is soon to be reduced to three - so get a move on if you have any back claims).

[pmanson]

Eric - Will I have to do anything (apart from make the tax claim on the difference between the rate paid and the government rate) or will it (as I assume) all be sorted by PAYE?

Also how does it work in terms of my tax band? All being well I should jump up to the 40% threshold once commission is taken into consideration? I'm guessing that when I make the claim in April next year I tell them my tax code etc and HMRC work it all out for me?

Thanks,
Phill

[Mattt]

You'll be lucky.

It might be easiest for you to do a Self Assessment each year.

[pmanson]

I've had confirmation today - £4800 per annum.

With the mileage I do (10-12k private, 8k business) i'm looking at a PCP deal on a Skoda Octavia VRS.

The savings i'll make from going from a petrol car that does 30mpg avg to a diesel that does 45mpg+ will allow me cover the additional costs.

Fingers crossed that my credit history (no missed payments but some stuff on my credit card)

Edited by pmanson on Thursday 16th June 21:15

[texasjohn]

Bear in mind that your £4800 allowance will be treated as 'income' therefore subject to Tax and possibly NI too.

I take an allowance in lieu of a company car and it gets taxed as salary.

So, your £400 a month becomes £300 ish (assuming you're on 20% tax).

It still might be worth having the VRS and paying a little towards it yourself.

You'll be able to claim back a little more (4 or 5p) in pence per mile if you get a diesel just over 2 litres, Mercedes, Ford and Honda spring to mind as they are all 2.1 - 2.2 engines.

Personally I have a 3.0 petrol and claim back a whopping 26p per mile for 'fuel only' allowance. My car will do high thirties MPG on a run, so I don't do too bad. Plus, claim the 19p per mile (45p - 26p) difference as tax relief at the end of the year.

[sider]

Yeah, you really take into account all the costs - which im sure you have.

My car allowance is £6k P/A and my sister really can't get her head round the fact that i keep my cars 4 yrs yet dont drive a £24k car!

Obviously, tax is the big reduction, followed by insurance. After that is the car payment and an amount i put aside to cover likes of road tax, tyres etc.

Trust me, that £6k doesn't go far!

I'd really prefer to tell my bosses to put the £500 a month that it costs them to pay me, towards a car from a leasing company for me to use - but they can't be bothered with the hassle!