Company Car or Car allowance. Head spinning...

[StuVT]

I've a new role starting in January and they have said I have a choice of car cash or company car.
I've looked online and seem to have a mental block. I can't for the life of me figure out what's best. I'm just in the higher tax bracket and have a fairly decent daily that would be fine. Company pays 13p per mile.

However with electric/hybrids etc being low bik tax I don't know which is best. Car allowance would be subject to 40% plus nic so of £450 not alot actually comes to me. If I go company car then am I right in thinking that if my bik is lower than 40% + nic that's the right choice? Then if I opt out of a fuel scheme I can still claim back from company and then HMRC to make up the difference?

Any advice is gratefully received.

Stu

[bennno]

Just go on to one of many calculators on line and put all your details in.

If you do a lot of miles then the tax relief at 45ppm for the first 10,000 in particular can be very worthwhile.

[MrC986]

Fully electric company cars are currently benefitting from a very low taxation level which is seeing people take this option back up who had opted out before, or to save on the levels of BIK versus combustion engined/PHEV type vehicles.

I understand if you choose to use your own car/take the car allowance, that you can claim the difference between the mileage amount that your employer pays you & the recommended HMRC rate per mile as "mileage allowance relief" via HMRC (a quick Internet search will do this).

The OP should take some personal tax advice from a qualified specialist familiar with such things as there maybe other ways to help mitigate the position further which wouldn't be necessarily obvious initially.

[TwigtheWonderkid]

bennno said:

Just go on to one of many calculators on line and put all your details in.

If you do a lot of miles then the tax relief at 45ppm for the first 10,000 in particular can be very worthwhile.

On the whole, the more miles you do, the more attractive a fully funded company car tends to be, what with increase wear and tear, tyre costs, servicing costs, insurance costs, depreciation, higher personal leasing costs etc.

[bennno]

TwigtheWonderkid said:

bennno said:

Just go on to one of many calculators on line and put all your details in.

If you do a lot of miles then the tax relief at 45ppm for the first 10,000 in particular can be very worthwhile.

On the whole, the more miles you do, the more attractive a fully funded company car tends to be, what with increase wear and tear, tyre costs, servicing costs, insurance costs, depreciation, higher personal leasing costs etc.

Part correct, the more 'personal' miles you do thats correct. With high business miles the tax relief on mileage may become compelling.

[Sheepshanks]

Depending on how you view these things, apart from the financial considerations, there's a big peace-of-mind benefit in having a company car - you don't have to worry too much where you park it, and if it makes a funny noice then you turn the radio up. Etc.

A downside is that if you leave the job you leave the car. Some people think that's good, but, again, depending on your situation, it may leave you scrabbling to find another car.

[TwigtheWonderkid]

bennno said:

TwigtheWonderkid said:

bennno said:

Just go on to one of many calculators on line and put all your details in.

If you do a lot of miles then the tax relief at 45ppm for the first 10,000 in particular can be very worthwhile.

On the whole, the more miles you do, the more attractive a fully funded company car tends to be, what with increase wear and tear, tyre costs, servicing costs, insurance costs, depreciation, higher personal leasing costs etc.

Part correct, the more 'personal' miles you do thats correct. With high business miles the tax relief on mileage may become compelling.

On the whole, not. Any mileage allowance benefits for higher miles are more than eaten up by other associated extra costs. But every case is different, so if you're doing mainly motorway miles, in a eco car that gets 65mpg on a run, then 45p a mile for 10K miles does indeed net you a pretty penny.

[shep1001]

Full electric cars are still essentially free (OK BIK is 1% this year & 2% for the following two years) I get a fully funded car for £15/mnth. Much easier than running and worrying about your own wheels

[UpTheIron]

Many moons ago I was doing 45k+ a year and a company car was a no brainer. The clincher though wasn't the small savings on running costs but when I had to park somewhere less than desirable for work. Far less worrying than leaving your own car in a dodgy car park etc.

[jonwm]

In years gone by I used to do 30k plus a year of which a fair bit was personal, I used to have the normal diesels and was paying about 350 a month.

I opted for a 330e in 2018 and had a fuel card, my work reduced the fuel card as it was kind of a salary sacrifice scheme so paid about £150 for the car and £50 for the fuel card, I left that company earlier this year and now have my own car funded by the company (it's a manufacturer car scheme) and I pay about £130 bik.
I claim the gov amount and claim back from the tax man the 40% on the difference.
I don't do as many personal miles as I used to but do miss the fuel card, it's hard chucking my own money in after having a fuel card since 2003 especially with current prices.

I would have my PHEV and fuel card back in a heartbeat, more for budgeting purposes, will be interesting to see how a full year works out financially after doing the gov claim.

Worth adding I don't pay any servicing or repairs on my car as it's part of the rental so to speak and it's changed every 6 month (chip shortage dependent)