car allowance vs company car - costings?
Discussion
trying to work out the difference in take home with company car vs car allowance
just handed back a 118i BMW p11d value of £29280 and BIK showing at 8491 or £1700 at 20% and taking a car allowance of £4500 p.a. instead
am i right in saying the car allowance will be taxed at 20% so £375 - 20% £300 a month extra in the paypacket after tax but also less £150 a month i was paying in tax for the company car?
will find out at the end of this month anywy when the payslip comes through but just curious if anyone could advise in the mean time.
just handed back a 118i BMW p11d value of £29280 and BIK showing at 8491 or £1700 at 20% and taking a car allowance of £4500 p.a. instead
am i right in saying the car allowance will be taxed at 20% so £375 - 20% £300 a month extra in the paypacket after tax but also less £150 a month i was paying in tax for the company car?
will find out at the end of this month anywy when the payslip comes through but just curious if anyone could advise in the mean time.
already got a car, somewhat dull and boring diesel kuga but ideal for lugging back and forward to work,
more or less paid off (still owe about 2k on it but certainly reckon i'll be better off within a couple of months
big difference in fuel payments through expences too 11p/mile for the bmw vs 45p a mile for the private car. with a predicted 10k business miles a year it will add a few extra £££ into the pot
more or less paid off (still owe about 2k on it but certainly reckon i'll be better off within a couple of months
big difference in fuel payments through expences too 11p/mile for the bmw vs 45p a mile for the private car. with a predicted 10k business miles a year it will add a few extra £££ into the pot
if you already have a fully paid for car, you're quids in
You'll be getting an extra £450 per month to use that car and will recover 45p per mile for business miles to do so.
Now, one can argue that you need to factor some of your £450 to replace that car when the time comes but it seems a bit of a no-brainer to me.
You'll be getting an extra £450 per month to use that car and will recover 45p per mile for business miles to do so.
Now, one can argue that you need to factor some of your £450 to replace that car when the time comes but it seems a bit of a no-brainer to me.
plan being to put the expenses and car allowance into a seperate account every month and let a kitty build up for 1, a replacement work car and 2 to pay for the resto project on my Omega 
might even add business use to the Omega once its back on the road and run that for work at 45p/mile
might even add business use to the Omega once its back on the road and run that for work at 45p/mile
There are rules at our place about what you can and can't use if opting out.
No pickup trucks, no 2 seaters and nothing over 10 years old. I think they might have relaxed the age limit now though.
A lot depends on your annual mileage but generally, if you want a brand new car every 3 years then take the company option. If you are happy to run around in something older and a lot cheaper, then you will be quids in.
No pickup trucks, no 2 seaters and nothing over 10 years old. I think they might have relaxed the age limit now though.
A lot depends on your annual mileage but generally, if you want a brand new car every 3 years then take the company option. If you are happy to run around in something older and a lot cheaper, then you will be quids in.
Just remember that a company car is a fixed cost, and your own car isn't. Your own car may be the cheaper option, but have a couple of accidents and maybe a conviction, and suddenly your insurance bill is 3 times what it was. Run over a broken bottle and wreck 2 tyres. You never know what the future holds.
A company car allows you to know what your costs are for maybe 3 years ahead. That in itself has a value.
A company car allows you to know what your costs are for maybe 3 years ahead. That in itself has a value.
TwigtheWonderkid said:
Just remember that a company car is a fixed cost, and your own car isn't. Your own car may be the cheaper option, but have a couple of accidents and maybe a conviction, and suddenly your insurance bill is 3 times what it was. Run over a broken bottle and wreck 2 tyres. You never know what the future holds.
A company car allows you to know what your costs are for maybe 3 years ahead. That in itself has a value.
While true, would a company car policy also be subject to "reasonable driving" IE if you had 9 points and crashed the car twice i suspect your Fleet Manager wouldn't be very happy... A company car allows you to know what your costs are for maybe 3 years ahead. That in itself has a value.
mfmman said:
Is your employer paying you the £4500 a year and 45p per mile? Quite a good deal if they are
You raise a good point.That's something worth checking - private car vs car allowance rates are not guaranteed to be the same and may only be the HMRC company car recommended rates.
320d is all you need said:
TwigtheWonderkid said:
Just remember that a company car is a fixed cost, and your own car isn't. Your own car may be the cheaper option, but have a couple of accidents and maybe a conviction, and suddenly your insurance bill is 3 times what it was. Run over a broken bottle and wreck 2 tyres. You never know what the future holds.
A company car allows you to know what your costs are for maybe 3 years ahead. That in itself has a value.
While true, would a company car policy also be subject to "reasonable driving" IE if you had 9 points and crashed the car twice i suspect your Fleet Manager wouldn't be very happy... A company car allows you to know what your costs are for maybe 3 years ahead. That in itself has a value.
Landcrab_Six said:
mfmman said:
Is your employer paying you the £4500 a year and 45p per mile? Quite a good deal if they are
You raise a good point.That's something worth checking - private car vs car allowance rates are not guaranteed to be the same and may only be the HMRC company car recommended rates.
This is a good point. I take a car allowance and my mileage rate is 14p / mile. Company cars can still be worth it in some circumstances but at the time I started to receive my allowance I had already paid for my car and owned it outright. When I did the maths it was a no brainer for me even taking into account the risk of something major going wrong and having to pay for the repairs or a replacement car from my own pocket. I calculated that running something like a BMW320d for 4 years as a company car was costing between £28-£30k! You could buy a decent basic spec Mondeo or Insignia for £10-12k and run it for 4 years for relatively little money (ignoring depreciation and assuming nothing big goes wrong).
Diesels have been hammered in recent years - but now with Mercedes A-class based PHEVs and the Golf GTE coming in at 35 quid a month for a basic rate tax payer, the calculation is very different - a fully expensed (bar private fuel) company car for just over 400 quid a year definitely is a no brainer to me, if only for the peace of mind and lack of hassle it provides.
There are all sorts of scenarios you can play out and there is never a right answer, I have opted out and in over 20 years depending on my circumstances and the specific deals of the company car offer at the time
Who would have thought we would be where we are now, I'd rather be being paid a car allowance for a car I hardly use than paying a benefit in kind still at full rate!
Who would have thought we would be where we are now, I'd rather be being paid a car allowance for a car I hardly use than paying a benefit in kind still at full rate!
My car allowance is very similar to yours and I came to the same conclusion, having a company car would cost me around £450 a month in BIK tax and lost car allowance.
I drive a £1200 shed and took the allowance and I estimate in the last three years it has saved me over £14K. There are supposed to be rules regarding the car, but nobody has ever asked for proof and I rarely drove to customers pre covid anyway.
Even pre Covid, one person I worked with did 15K miles in three years in total, and the other did 1800 miles in the first six months of ownership.
The guy who did 15K miles has now taken the allowance and is leasing a Seat Leon for £200 a month.
It seems to me the only people who keep the company car are those who have always had one and like having a new car every three years.
By the way, don't be too confident on getting 45p a mile, I thought the same but we get the lower rate as if we had a company car as we are taking the allowance.
I drive a £1200 shed and took the allowance and I estimate in the last three years it has saved me over £14K. There are supposed to be rules regarding the car, but nobody has ever asked for proof and I rarely drove to customers pre covid anyway.
Even pre Covid, one person I worked with did 15K miles in three years in total, and the other did 1800 miles in the first six months of ownership.
The guy who did 15K miles has now taken the allowance and is leasing a Seat Leon for £200 a month.
It seems to me the only people who keep the company car are those who have always had one and like having a new car every three years.
By the way, don't be too confident on getting 45p a mile, I thought the same but we get the lower rate as if we had a company car as we are taking the allowance.
Edited by anonymous-user on Wednesday 10th February 13:35
Joey Deacon said:
By the way, don't be too confident on getting 45p a mile, I thought the same but we get the lower rate as if we had a company car as we are taking the allowance.
That's pretty standard, but you claim the tax difference back. So, if you get 11ppm for example, you can claim back the tax between that and 45ppm.
45-11=34.
Basic rate > 34*0.2 = 6.8ppm back from the taxman
Higher rate > 34*04 = 13.6ppm back from the taxman.
If you've not been doing this from memory you can go back 5 years and reclaim. Although I have a feeling that may have changed, it's been a while since I looked.
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