Why isn't it simple? Company car or Car Allowance
Discussion
A friend as asked me to give him a hand in the hunt for a company car.
It's been years since I've had a company car and no matter how many online calculators I use, I just can't work out if he should have car allowance or a company car.
Mileage is a bit in the air atm, but assume 20k p/a business miles. Private miles won't be paid for by the company.
From that info, can anyone point me in the right direction as to what would be the best option please? If it is car allowance, how much will they have to spend on the car per month?
Thanks!
It's been years since I've had a company car and no matter how many online calculators I use, I just can't work out if he should have car allowance or a company car.
Mileage is a bit in the air atm, but assume 20k p/a business miles. Private miles won't be paid for by the company.
From that info, can anyone point me in the right direction as to what would be the best option please? If it is car allowance, how much will they have to spend on the car per month?
Thanks!
Edited by Woody3 on Saturday 24th February 23:00
To do 20K business miles plus private on top, I would take a company car with and efficient engine. Doing 25k miles a year or more in a car you fund yourself is expensive - could be 2 services and tyres every year depending on model....it also needs to be relatively new, which also means 50% is gone with depreciation every 3 years.
Take the company car www.comcar.co.uk to find "the best" for the cash
Take the company car www.comcar.co.uk to find "the best" for the cash
Woody3 said:
Salary is £30k p/a
For 20% tax payer it's usually a no-brainer to take the company car.Going back a bit we (company wide) went through this and you'd think it'd be simple but it's amazing how it varies for every user. Regular issues were some people couldn't get finance mainly because they'd changed addresses several times, or were getting massive insurance quotes.
I reckoned at the time you had to be a clear £100/mth better off taking the allowance otherwise the risk of owning the car wasn't worth it.
What might have changed a bit is how limited the company car list is due to CO2, or the user may want to opt out as they want a particular car not on the list. Many companies have limited the choice for opt-out cars too now, but that we were allowed to have anything.
What was weird in our case is how many people opted out and then did PCH on a car they could have had a company car, simply because they could spec it with big wheels or leather interior.
Having recently started a new job in January and now having the privilege of a company car or allowance, I went for the car. I'm a lower rate tax payer too. My anticipated mileage is also 20k per year.
I did the maths, spoke to a few people of what cars were usually available, and to me it was a clear winner to take the car. My allowance is slightly less at £5800 a year.
Its the depreciation and running costs of a 20k yearly mileage which sways it.
I did the maths, spoke to a few people of what cars were usually available, and to me it was a clear winner to take the car. My allowance is slightly less at £5800 a year.
Its the depreciation and running costs of a 20k yearly mileage which sways it.
On the flip side I took the cash because;
At the time I was planning on buying a house, and they took the cash into account when applying for a mortgage, whereas they wouldnt take into account a company car.
I costed my car over 4 years, which will be up in October, and any length of time I keep the car after that is a 'bonus' vs a continuing monthly payment for a c/car. Obviously the running expenses are ongoing, but the depreciation was costed over 4 years.
When I leave my job, the car comes with me, rather than having to give back your 2 year old 3 series, and buying a 10 year old Peugeot which is what some colleagues have done.
With the cash you're also free of the company car CO2 calculator, and so bigger engines and more horsepower are not an issue.
At the time I was planning on buying a house, and they took the cash into account when applying for a mortgage, whereas they wouldnt take into account a company car.
I costed my car over 4 years, which will be up in October, and any length of time I keep the car after that is a 'bonus' vs a continuing monthly payment for a c/car. Obviously the running expenses are ongoing, but the depreciation was costed over 4 years.
When I leave my job, the car comes with me, rather than having to give back your 2 year old 3 series, and buying a 10 year old Peugeot which is what some colleagues have done.
With the cash you're also free of the company car CO2 calculator, and so bigger engines and more horsepower are not an issue.
Edited by Condi on Saturday 10th February 21:51
Actually that leads us to one valid point that has not yet been disclosed....what is your friends current car situation?
If they already have a reasonable reliable car they like and meets the company car criteria and is already paid for / close to then taking the money probably makes more sense.
At the time, I only had a small van (used for outdoor hobbies) as my only transport so for me I had to obtain a car either way.
If they already have a reasonable reliable car they like and meets the company car criteria and is already paid for / close to then taking the money probably makes more sense.
At the time, I only had a small van (used for outdoor hobbies) as my only transport so for me I had to obtain a car either way.
So many threads on this subject, and ultimately not a 'one size fits all' answer.
Leasing privately on that short of mileage will be expensive, but buying with a personal loan could work out ok?
What sort of cars can he get on his company scheme? Our scheme is hybrids only, hence I came out of it as a hybrid plus company car tax doesn't work for me.
As other posters have said, check Comcar for the company car tax for the next 3 years as it is increasing.
Another thing to consider is how much will insurance be? Business cover didn't add much to the cost of mine.
Leasing privately on that short of mileage will be expensive, but buying with a personal loan could work out ok?
What sort of cars can he get on his company scheme? Our scheme is hybrids only, hence I came out of it as a hybrid plus company car tax doesn't work for me.
As other posters have said, check Comcar for the company car tax for the next 3 years as it is increasing.
Another thing to consider is how much will insurance be? Business cover didn't add much to the cost of mine.
Thanks for the replies chaps. Not as straight forward as I was hoping.
He's only got an old Corsa at the moment, so will need to change vehicles regardless.
I've just been on the phone to him and he's going to send the car list tomorrow when he's back at work and I will report back here. I'll also fill in the details on comcar.
He's only got an old Corsa at the moment, so will need to change vehicles regardless.
I've just been on the phone to him and he's going to send the car list tomorrow when he's back at work and I will report back here. I'll also fill in the details on comcar.
I had this dliemna albeit on a £4.5k allowance or £400/month
i went with the allowance as work pay the full mileage allowance (which is tax free), and i didn't have to buy a new car. So bought a 2 yera old car that had depreciated and bought the one with the biggest engine.
I'm a little bit better off overall, but drive a MUCH nicer car OR i could have had a cheaper, older car and been financially better off
i went with the allowance as work pay the full mileage allowance (which is tax free), and i didn't have to buy a new car. So bought a 2 yera old car that had depreciated and bought the one with the biggest engine.
I'm a little bit better off overall, but drive a MUCH nicer car OR i could have had a cheaper, older car and been financially better off
Condi said:
With the cash you're also free of the company car CO2 calculator, and so bigger engines and more horsepower are not an issue.
It's quite common for there to be CO2 limits on opt-out cars now - as well as the more usual restrictions on type of car, number of doors and age.Doofus said:
I'd be a little concerned that he's asked for your advice, and you're willingly giving it, even though you don't know any more about the subject than he does. Get him to enter the details in comcar and make his own decision.
He asked for my advice on cars initially, not the car allowance side of things. I said I'd look into it for him and ask on here...
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