Car Allowance - Cash or Lease?

[ian in lancs]

I'm trying to understand whether to take 750pm in cash, say 450pm cash (40% tax) or to pay for a lease car. One i'm interested in is 450pm plus vat. If the car is £42k how much does that cost me?

I guess I'm saying I can trouser £450pm cash and sort myself out or pay £??? cash and have an all expenses paid car.

I don't understand how to work it out! Can anyone can help me please? I've asked couple of lease companies but not getting anywhere.

Edited by ian in lancs on Tuesday 23 August 20:46

[Vitorio]

Depends on how many miles you expect to do, and what kind of car would be OK (dont know if you will be needing something smart to turn up at clients)

I chose the cash option this year, current assignment is easier/cheaper to reach by public transport, and i can drive a car i like rather then something boring off the approved brands list with an eco engine etc..

[ian in lancs]

Vitorio said:

Depends on how many miles you expect to do, and what kind of car would be OK (dont know if you will be needing something smart to turn up at clients)

I chose the cash option this year, current assignment is easier/cheaper to reach by public transport, and i can drive a car i like rather then something boring off the approved brands list with an eco engine etc..

8000mls/pa personal. Negligible co miles. Client angle isn't important. I have a Z4M, Focus ST daily and wife has a newish 325d. All paid for. Thinking of cashing the Focus ST in and switching to a no hassles X4d daily driver and trying to understand what the net impact on take home pay would be.

[deckster]

Or take the third option, which is keep the cars you have and treat it as a £9k pay rise. I know what I'd do.

[anonymous-user]

Using your tax code you can work out what the 750 per month means to you after tax.

Then calculate the company car tax on the car you have in mind

https://www.gov.uk/tax-company-benefits/tax-on-com...

you need to be a few quid ahead to cover insurance, maintenance etc

[ian in lancs]

The bit proving I'm thick is why am I paying company car tax when I'm paying arval cash - other than allowance what has my employers to do with it?

[Vitorio]

ian in lancs said:

The bit proving I'm thick is why am I paying company car tax when I'm paying arval - other than allowance what has my employers to do with it?

If you lease privately, in your own name, there wont be company car tax.

Then it is just a matter of taking the allowance, seeing how much of that is left after normal taxes, and paying your lease out of that.

Honestly, i wouldnt bother with a lease in your case, pocket the money, stick it into the Z4M, whatever.. Dont throw it away on renting someones elses car.

[anonymous-user]

ian in lancs said:

The bit proving I'm thick is why am I paying company car tax when I'm paying arval cash - other than allowance what has my employers to do with it?

If you are getting paid cash you will pay no company car tax.
If your employer pays your petrol for private mileage there is benefit in kind on that.

If you are getting a cash allowance to buy a car then you pay normal income tact on that.

[ian in lancs]

Right, so I reduce the 750pm by tax & ni to get about 450 cash. Then I look at the car I want from arval, pay the monthly 450 plus vat, say 540. I have a lease car but am 90pm worse off than I was before the allowance. Versus the 450 cash I could have so the car is costing me 540pm. Yes?

[anonymous-user]

ian in lancs said:

Right, so I reduce the 750pm by tax & ni to get about 450 cash. Then I look at the car I want from arval, pay the monthly 450 plus vat, say 540. I have a lease car but am 90pm worse off than I was before the allowance. Versus the 450 cash I could have so the car is costing me 540pm. Yes?

Broadly speaking yes you are correct.

If you had a company car - you wouldn't have the allowance, but you would be paying Co Car tax.

[QuartzDad]

£450+VAT is expensive. If you must have a X4d right now it's probably the going rate but with a degree of flexibility there are deals to be had - check out the lease car thread on here. My daily is a 335d Touring which costs £337/month amortised.

[ian in lancs]

QuartzDad said:

£450+VAT is expensive. If you must have a X4d right now it's probably the going rate but with a degree of flexibility there are deals to be had - check out the lease car thread on here. My daily is a 335d Touring which costs £337/month amortised.

that's 455+v for an xDrive30d M Sport 5dr Step Auto; covery everything except fuel. The poverty spec xDrive20d SE 5dr is 359+v