Company Car Cash Allowance Calcs
Discussion
Afternoon chaps, I hope everyone is keeping safe!
I need to review my company car situation of which I have been have opted into for the last 9years!
After running through a few calculations from old threads on here I am staggered by the savings should I take the cash, providing I have worked them out correctly (circa 18.5k net!)...
Those who have opted for the cash allowance previously I have a few questions:
- How frequently do you rotate your car to minimise depreciation as this looks to be a point which concerns me, do you do this as per age/ mileage or run into the ground?
- Are there any factors I look to be missing in my spreadsheet, I have opted for the least amount of business mileage to give myself a worst case scenario in terms of claimed miles back (I won't exceed 15-20k total PA) and would keep the car for 3years.
- I am looking to purchase outright a 10-15k car..... I am tentative to consider a diesel as I would fear the potential depreciation or tax hikes given the current press around them. Loose criteria would be something VAG, 2016-20, 50k, 5seater which can handle a tip run with more oomph than the standard 150ps rep mobiles you see on the road, currently thinking of the A4s, 3 series or Octavia VRS.
Thanks for any input!
I need to review my company car situation of which I have been have opted into for the last 9years!
After running through a few calculations from old threads on here I am staggered by the savings should I take the cash, providing I have worked them out correctly (circa 18.5k net!)...
Those who have opted for the cash allowance previously I have a few questions:
- How frequently do you rotate your car to minimise depreciation as this looks to be a point which concerns me, do you do this as per age/ mileage or run into the ground?
- Are there any factors I look to be missing in my spreadsheet, I have opted for the least amount of business mileage to give myself a worst case scenario in terms of claimed miles back (I won't exceed 15-20k total PA) and would keep the car for 3years.
- I am looking to purchase outright a 10-15k car..... I am tentative to consider a diesel as I would fear the potential depreciation or tax hikes given the current press around them. Loose criteria would be something VAG, 2016-20, 50k, 5seater which can handle a tip run with more oomph than the standard 150ps rep mobiles you see on the road, currently thinking of the A4s, 3 series or Octavia VRS.
Thanks for any input!
I can't see where you've detailed the actual cost of buying the car?
I do c. 25k miles per year and have assumed my car will halve in value every 3 years. You'll retain 50% capital. Even buying outright, you need to fund the difference for when it comes to replacing it every three years.
If you're leasing, then you just need to put the monthly cost.
Have you also considered the tax/NI you'll pay on the car allowance?
I do c. 25k miles per year and have assumed my car will halve in value every 3 years. You'll retain 50% capital. Even buying outright, you need to fund the difference for when it comes to replacing it every three years.
If you're leasing, then you just need to put the monthly cost.
Have you also considered the tax/NI you'll pay on the car allowance?
B9 said:
I can't see where you've detailed the actual cost of buying the car?
I do c. 25k miles per year and have assumed my car will halve in value every 3 years. You'll retain 50% capital. Even buying outright, you need to fund the difference for when it comes to replacing it every three years.
If you're leasing, then you just need to put the monthly cost.
Have you also considered the tax/NI you'll pay on the car allowance?
Thanks B9, I do c. 25k miles per year and have assumed my car will halve in value every 3 years. You'll retain 50% capital. Even buying outright, you need to fund the difference for when it comes to replacing it every three years.
If you're leasing, then you just need to put the monthly cost.
Have you also considered the tax/NI you'll pay on the car allowance?
So I would kick start it buy purchasing the car outright at 10-15k and then look to take a cash allowance moving on after the first 3years too.
After the first 3years i would then put the 18k paid through the allowance back into the cycle to keep everything circulating including car purchase.
Interesting that you assume the value halves and something I will consider, out of interest what car do you run over 25k PA as I am find it difficult which one to go with in terms of workhorse vs refinement and have you had many unexpected costs?
chrisch77 said:
Does your company car allowance figure above take into account the income tax you'll be paying on it, if not there's 40% to come off?
It includes the 40% to come off, I have ran it through ComCar calc to get the figurehttps://comcar.co.uk/cashorcar/simple/
quinny100 said:
Will your employer pay you 45p a mile if you have a car allowance? Usually they pay a lower rate to cover fuel only.
Thanks for that, I will double check with HR as that is the figure they gave me but I can see where you are coming from as that does make sense. After 10k there is a reduced PPM.I was running a 530d via company car which was costing a small fortune for a fairly economical diesel.
I opted for cash equivalent and bought a 2015 A4 Avant. It was ~£12k outright, and there are older ones with more miles on the clock going for £5k which is where I figured the 50% depreciation rate.
I worked out annual costs to be:
Depreciation: £2k
Servicing and maint: £1k (it's averaged below this over the last two years which includes a new cambelt, 4x tyres and brakes front/back)
Breakdown: £75
MOT: £50
Insurance: £500
Tax: £200
So around £4k with some wriggle room. My car allowance after tax etc is around the same, so I effectively break even.
The 530 was costing me around £500 per month, but I guess we're not comparing like for like. The 530 was new, and buying a new one probably paints a very different picture.
Important to factor in depreciation though, else it's an invisible cost. I'll probably keep it longer than the three years, as it's running well and I'm less bothered by 'new' when I realised it was costing me £500!
Reference the 45p - Our company policy is 20ppm (after all, the car allowance should cover all aspects) and I claim the tax relief for the difference from HMRC.
I opted for cash equivalent and bought a 2015 A4 Avant. It was ~£12k outright, and there are older ones with more miles on the clock going for £5k which is where I figured the 50% depreciation rate.
I worked out annual costs to be:
Depreciation: £2k
Servicing and maint: £1k (it's averaged below this over the last two years which includes a new cambelt, 4x tyres and brakes front/back)
Breakdown: £75
MOT: £50
Insurance: £500
Tax: £200
So around £4k with some wriggle room. My car allowance after tax etc is around the same, so I effectively break even.
The 530 was costing me around £500 per month, but I guess we're not comparing like for like. The 530 was new, and buying a new one probably paints a very different picture.
Important to factor in depreciation though, else it's an invisible cost. I'll probably keep it longer than the three years, as it's running well and I'm less bothered by 'new' when I realised it was costing me £500!
Reference the 45p - Our company policy is 20ppm (after all, the car allowance should cover all aspects) and I claim the tax relief for the difference from HMRC.
I have done similar calculations to you are I can't see how getting a company car makes sense if you are offered the allowance. I only get £390 a month and the cars on offer are the usual bottom of the range 1 series, A class, a mid range Golf/ T-Roc or a Toyota hybrid corolla.
Assuming the golf used in your example, at 40% tax that will cost me £312.25 a month. After tax, the £390 a month allowance works out as roughly £234 a month effectively costing me £450 a month (allowance + tax).
I found a Seat Leon 1.5 TSi for £149 a month with six months up front over two years giving an amortised cost of £186.25, or a saving of £263 a month over the company car. I ordered one, but ended up cancelling the lease car and I drive a shed, meaning the £450 goes into my Marcus account each month instead.
People at work tend to drive company cars because they have always had one, like the convenience and have never done the maths of taking the allowance and leasing your own car. The usual argument is, "if it needs a tyre I just get one fitted".
One guy I work with did 15k miles over three years in his company car, which effectively cost him £1 per mile.
Assuming the golf used in your example, at 40% tax that will cost me £312.25 a month. After tax, the £390 a month allowance works out as roughly £234 a month effectively costing me £450 a month (allowance + tax).
I found a Seat Leon 1.5 TSi for £149 a month with six months up front over two years giving an amortised cost of £186.25, or a saving of £263 a month over the company car. I ordered one, but ended up cancelling the lease car and I drive a shed, meaning the £450 goes into my Marcus account each month instead.
People at work tend to drive company cars because they have always had one, like the convenience and have never done the maths of taking the allowance and leasing your own car. The usual argument is, "if it needs a tyre I just get one fitted".
One guy I work with did 15k miles over three years in his company car, which effectively cost him £1 per mile.
B9 said:
I was running a 530d via company car which was costing a small fortune for a fairly economical diesel.
I opted for cash equivalent and bought a 2015 A4 Avant. It was ~£12k outright, and there are older ones with more miles on the clock going for £5k which is where I figured the 50% depreciation rate.
I worked out annual costs to be:
Depreciation: £2k
Servicing and maint: £1k (it's averaged below this over the last two years which includes a new cambelt, 4x tyres and brakes front/back)
Breakdown: £75
MOT: £50
Insurance: £500
Tax: £200
So around £4k with some wriggle room. My car allowance after tax etc is around the same, so I effectively break even.
The 530 was costing me around £500 per month, but I guess we're not comparing like for like. The 530 was new, and buying a new one probably paints a very different picture.
Important to factor in depreciation though, else it's an invisible cost. I'll probably keep it longer than the three years, as it's running well and I'm less bothered by 'new' when I realised it was costing me £500!
Reference the 45p - Our company policy is 20ppm (after all, the car allowance should cover all aspects) and I claim the tax relief for the difference from HMRC.
Thanks for the costs break down, thats been really helpful. I opted for cash equivalent and bought a 2015 A4 Avant. It was ~£12k outright, and there are older ones with more miles on the clock going for £5k which is where I figured the 50% depreciation rate.
I worked out annual costs to be:
Depreciation: £2k
Servicing and maint: £1k (it's averaged below this over the last two years which includes a new cambelt, 4x tyres and brakes front/back)
Breakdown: £75
MOT: £50
Insurance: £500
Tax: £200
So around £4k with some wriggle room. My car allowance after tax etc is around the same, so I effectively break even.
The 530 was costing me around £500 per month, but I guess we're not comparing like for like. The 530 was new, and buying a new one probably paints a very different picture.
Important to factor in depreciation though, else it's an invisible cost. I'll probably keep it longer than the three years, as it's running well and I'm less bothered by 'new' when I realised it was costing me £500!
Reference the 45p - Our company policy is 20ppm (after all, the car allowance should cover all aspects) and I claim the tax relief for the difference from HMRC.
In terms of the tax relief, am I right in saying that... If you completed 8k in year one and you are paid 20ppm you can then file for a rebate and collect 25ppm x 8k miles you traveled = £1,600? Is that relatively straightforward to claim for i.e fuel receipts and a form?
Joey Deacon said:
I have done similar calculations to you are I can't see how getting a company car makes sense if you are offered the allowance. I only get £390 a month and the cars on offer are the usual bottom of the range 1 series, A class, a mid range Golf/ T-Roc or a Toyota hybrid corolla.
Assuming the golf used in your example, at 40% tax that will cost me £312.25 a month. After tax, the £390 a month allowance works out as roughly £234 a month effectively costing me £450 a month (allowance + tax).
I found a Seat Leon 1.5 TSi for £149 a month with six months up front over two years giving an amortised cost of £186.25, or a saving of £263 a month over the company car. I ordered one, but ended up cancelling the lease car and I drive a shed, meaning the £450 goes into my Marcus account each month instead.
People at work tend to drive company cars because they have always had one, like the convenience and have never done the maths of taking the allowance and leasing your own car. The usual argument is, "if it needs a tyre I just get one fitted".
One guy I work with did 15k miles over three years in his company car, which effectively cost him £1 per mile.
Pleased you have come to a similar conclusion with your own finances as I appear to as well.Assuming the golf used in your example, at 40% tax that will cost me £312.25 a month. After tax, the £390 a month allowance works out as roughly £234 a month effectively costing me £450 a month (allowance + tax).
I found a Seat Leon 1.5 TSi for £149 a month with six months up front over two years giving an amortised cost of £186.25, or a saving of £263 a month over the company car. I ordered one, but ended up cancelling the lease car and I drive a shed, meaning the £450 goes into my Marcus account each month instead.
People at work tend to drive company cars because they have always had one, like the convenience and have never done the maths of taking the allowance and leasing your own car. The usual argument is, "if it needs a tyre I just get one fitted".
One guy I work with did 15k miles over three years in his company car, which effectively cost him £1 per mile.
Out of interest what do you class as a shed (make, age, miles?) and how many miles per annum do you travel as i have thought about the shed route!
I love that "if it needs a tyre I just get one fitted", this is a comment I always hear - but you pay a fortune for this privilege, that tyre suddenly becomes expensive
tredd said:
Pleased you have come to a similar conclusion with your own finances as I appear to as well.
Out of interest what do you class as a shed (make, age, miles?) and how many miles per annum do you travel as i have thought about the shed route!
I love that "if it needs a tyre I just get one fitted", this is a comment I always hear - but you pay a fortune for this privilege, that tyre suddenly becomes expensive
My shed is 13 years old and has covered 90k miles now. Technically this fails the criteria for taking the allowance as the car is supposed to be newer than 7 years old but nobody has ever asked. I am in a strange position where I only do about 500 company miles a year so I just don't bother claiming the mileage allowance. We don't get the 45p a mile, I believe it is only 11p a mile if you take the allowance so I am only missing out on about £50 a year!Out of interest what do you class as a shed (make, age, miles?) and how many miles per annum do you travel as i have thought about the shed route!
I love that "if it needs a tyre I just get one fitted", this is a comment I always hear - but you pay a fortune for this privilege, that tyre suddenly becomes expensive
Read your company handbook with regards to taking the allowance, I would be surprised if there are not a list of requirements with regards to the car you lease/purchase to qualify.
tredd said:
Thanks for the costs break down, thats been really helpful.
In terms of the tax relief, am I right in saying that... If you completed 8k in year one and you are paid 20ppm you can then file for a rebate and collect 25ppm x 8k miles you traveled = £1,600? Is that relatively straightforward to claim for i.e fuel receipts and a form?
Nope, you can claim tax relief on that £1600. Ie 40% in your case. In terms of the tax relief, am I right in saying that... If you completed 8k in year one and you are paid 20ppm you can then file for a rebate and collect 25ppm x 8k miles you traveled = £1,600? Is that relatively straightforward to claim for i.e fuel receipts and a form?
Are there any plug-in hybrid options on your car list?
I'm moving from a 520d, costing me around £400 / month in BIK to an X1xDrive25e plug-in (when factories re-open and the get around to building it) - which drops it to £135 / month. This does go up over subsequent years, but never goes over £200 / month. It's an absolute no-brainer.
Looking at a car with 145g/km CO2 rating is absolute insanity anyway - even if you don't go plug-in, you really need to get that below 99g/km for a company car to make sense.
I'm moving from a 520d, costing me around £400 / month in BIK to an X1xDrive25e plug-in (when factories re-open and the get around to building it) - which drops it to £135 / month. This does go up over subsequent years, but never goes over £200 / month. It's an absolute no-brainer.
Looking at a car with 145g/km CO2 rating is absolute insanity anyway - even if you don't go plug-in, you really need to get that below 99g/km for a company car to make sense.
TurnedEmo said:
Looking at a car with 145g/km CO2 rating is absolute insanity anyway - even if you don't go plug-in, you really need to get that below 99g/km for a company car to make sense.
This.The hassle free motoring factor of a company car is a no brainer for me. I've always viewed it as someone else's job to keep me mobile at all times.
As an example, the passenger door of my first company car was ripped off in the early hours in the middle of SoHo by some uninsured French woman. I called the fleet company who flat-bedded us to a hire car place at Kings Cross (Hertz I seem to recall) which opened up especially just so I could get replacement car. I dread to think how I would have attempted to sort that out myself had it been my own car.
Mgd_uk said:
tredd said:
Thanks for the costs break down, thats been really helpful.
In terms of the tax relief, am I right in saying that... If you completed 8k in year one and you are paid 20ppm you can then file for a rebate and collect 25ppm x 8k miles you traveled = £1,600? Is that relatively straightforward to claim for i.e fuel receipts and a form?
Nope, you can claim tax relief on that £1600. Ie 40% in your case. In terms of the tax relief, am I right in saying that... If you completed 8k in year one and you are paid 20ppm you can then file for a rebate and collect 25ppm x 8k miles you traveled = £1,600? Is that relatively straightforward to claim for i.e fuel receipts and a form?
OP: Watch for errors and "man maths" calculations - I particularly liked the way you dismissed the original purchase price of the car!
OP, insurance at £3K over 3 years, so £1000 a year, is hugely variable. What will it be if you make a claim, or 2 claims, or pick up some points? How much is the excess, assume that will be down to you? 2 claims = 2 excesses to pay. You will need to hire a car if yours is off the road. All stuff that your firm would do for you in a company car.
And as said, 145g for a co car, that's insanity. Mines 112 and that's high in my firm. But it's offset by a low list price.
And as said, 145g for a co car, that's insanity. Mines 112 and that's high in my firm. But it's offset by a low list price.
TwigtheWonderkid said:
OP, insurance at £3K over 3 years, so £1000 a year, is hugely variable. What will it be if you make a claim, or 2 claims, or pick up some points? How much is the excess, assume that will be down to you? 2 claims = 2 excesses to pay. You will need to hire a car if yours is off the road. All stuff that your firm would do for you in a company car.
Like-for-like replacement car option on insurance was 'mandatory' for our opt-out drivers. I'm not aware of anyone who took it though because no-one ever thinks they'll have an at-fault crash - I had a guy working for me who was 4 months of 2500 miles per month in a Ford Ka while his month old A4 was repaired.Gassing Station | Finance | Top of Page | What's New | My Stuff