Car allowance changed to company car - fair/legal?

Car allowance changed to company car - fair/legal?

Author
Discussion

AlasdairMc

Original Poster:

555 posts

127 months

Friday 19th August 2016
quotequote all
My wife and I both get car allowances, so we have one car on a PCP with business usage covering us both. This ensures that we are both allowed to drive the car for business - if one of us went for a company car, then the other could not use it for business.

My wife's employment contract is potentially changing, to remove the cash allowance and give a company car instead. This is obviously a PITA for us both, but leaves us with a car on a PCP and a reduced cash allowance. Is her employer allowed to do this?

It is our understanding that they are doing this because they need a pool car, and while she uses our car for business daily it's a private car so her colleagues cannot get use of it.

The employer is mindful of the fact they gave her a car allowance to get a car (with some strings attached around age etc), so they can't expect her to be able to just hand the car back and suffer no financial penalty. What is best practice in these situations, would they generally allow her to run the PCP to term?

Thoughts?

Sy1441

1,116 posts

160 months

Saturday 20th August 2016
quotequote all
From experience it will be based on her contract. Every company car scheme i've been part of has been much like bonus i.e non-contractual and part of employee benefits and at the discretion of the business at all times.

I'd imagine they could remove / alter the company car benefit at any time without notice.

AlasdairMc

Original Poster:

555 posts

127 months

Saturday 20th August 2016
quotequote all
Thanks. I think mine is embedded in my contract, but hers seems to be discretionary as you say. It does seem unfair that you're given an allowance to buy a car but are expected to just hand the car back at the immediate behest of your company.

It's a real PITA as I was pricing up a lovely new car today and it's perfectly affordable at the moment but less so on one allowance

davepoth

29,395 posts

199 months

Sunday 21st August 2016
quotequote all
What if both of you need the car for business at the same time?

GT03ROB

13,263 posts

221 months

Sunday 21st August 2016
quotequote all
davepoth said:
What if both of you need the car for business at the same time?
I thought the same. Surely the allowance is so you have a car for business when required? And both of you could need it at the same time.

AlasdairMc

Original Poster:

555 posts

127 months

Sunday 21st August 2016
quotequote all
davepoth said:
What if both of you need the car for business at the same time?
Very, very unlikely - I haven't ever actually needed the car for business.

andy-xr

13,204 posts

204 months

Tuesday 23rd August 2016
quotequote all
I've been burned by car allowances before, field sales jobs and mostly through redundancy processes and then going into either no job, or a job that didnt have a car allowance, so I was sat with a £400/month bill every month that someone else used to be paying, and now I have to pay it.

I'd never get another car on lease that relied on someone else making the payments on.

Answer to question - if contract says so, they can do what they want. Even if contract doesnt say so, they can start a process of everyone getting company cars or access to a pool car (I preferred the latter, no tax implication)

phil-sti

2,679 posts

179 months

Tuesday 23rd August 2016
quotequote all
If I had a company car and they wanted it used as a pool car I'd tell them too stick it.

55palfers

5,910 posts

164 months

Tuesday 23rd August 2016
quotequote all
phil-sti said:
If I had a company car and they wanted it used as a pool car I'd tell them too stick it.
Me too.

You will be paying (a lot of?) tax on the car - will there be a contribution from the company?

stumpage

2,111 posts

226 months

Tuesday 23rd August 2016
quotequote all
55palfers said:
phil-sti said:
If I had a company car and they wanted it used as a pool car I'd tell them too stick it.
Me too.

You will be paying (a lot of?) tax on the car - will there be a contribution from the company?
Yes the lease cost and running costs for your car. Remember it is the Tax man making you pay for it not the company.

With that in mind then, if the company are giving you a car allowance they are contributing to your car so therefore you should be happy for others in the company to use it.

Shirt587

360 posts

135 months

Wednesday 24th August 2016
quotequote all
stumpage said:
55palfers said:
phil-sti said:
If I had a company car and they wanted it used as a pool car I'd tell them too stick it.
Me too.

You will be paying (a lot of?) tax on the car - will there be a contribution from the company?
Yes the lease cost and running costs for your car. Remember it is the Tax man making you pay for it not the company.

With that in mind then, if the company are giving you a car allowance they are contributing to your car so therefore you should be happy for others in the company to use it.
Think there's a bit of confusion here. If the company pays for a car and it is officially a pool car, there are two consequences. 1) it's not yours, 2) there's no benefit in kind so you wouldn't be taxed. There's rules around pool cars to stop this being abused.

Equally, if they are giving you a car allowance there is an expectation that you will use the car for business purposes. It would be the worlds most bonkers scheme if they give you a car allowance but let you use anyone else's car that is also getting an allowance. All that would happen is as soon as someone gets a really good deal (Golf R, etc) then everyone else would be clamouring to use it all the time. Allowances work so you can drive yourself around, and occasionally take passengers...

stumpage

2,111 posts

226 months

Wednesday 24th August 2016
quotequote all
Shirt587 said:
Think there's a bit of confusion here. If the company pays for a car and it is officially a pool car, there are two consequences. 1) it's not yours, 2) there's no benefit in kind so you wouldn't be taxed. There's rules around pool cars to stop this being abused.

Equally, if they are giving you a car allowance there is an expectation that you will use the car for business purposes. It would be the worlds most bonkers scheme if they give you a car allowance but let you use anyone else's car that is also getting an allowance. All that would happen is as soon as someone gets a really good deal (Golf R, etc) then everyone else would be clamouring to use it all the time. Allowances work so you can drive yourself around, and occasionally take passengers...
The point I was tying to make was relating to people not letting the company have use of their (well actually the companies) car due to the company not contributing to the cost of the car. I was pointing out that the company does contribute fully to the cost of the car. It's the Tax man that make you pay for having the benefit of taking it home and using it as your own.

It would be bonkers to have a car allowance scheme that made people swap but the point I was making was if the argument is. "I won't let them use my car as they don't contribute to it" when talking about CCs when actually they do pay for the car in its entirety, you could say the same about letting the company use a car paid for by a car allowance as the company has clearly contributed to the cost.

Having a CC and letting another member of staff use it now and again is no big deal in my eyes as the company have paid for the car. I have the privilege of taking it home and using as my own and selecting the car, colour, spec. If someone wants to rag the hell out of it while it's out of my sight then why do I care. Any repairs, tyres, damage, cleaning will all be paid for by the company so why is it a concern to me.

Pool cars are different and usually sit in company unloved and dirtier on the inside than the company skip. Whole different thing in my mind.