Company Car Allowance - Help/Advice

[SidewaysSi]

I am a 40% tax payer and currently get a £3500 gross company car allowance (this may increase to £4500 in April). Given I pay £1400 tax on this, does it make sense to get a cheap car instead?

The cost on something like an Up! seems to be about £400 (car value*40%*10%). However, is this taken off gross? And how does insurance/servicing come into this?

I would be happy to lose £100 a month or so net if I could run a cheap car that was insured with everything paid for.

Somewhat confused as to whether it is worth it. The firm does not appear to have a car scheme as such or list of cars that can only be bought.

Any advice much appreciated.

[SidewaysSi]

Thanks and apologies. I would try to replace my Honda Integra with something cheap that the Mrs can use aswell. Total mileage would be no more than about 8000, of which a maximumof 1000 would be business use. Therefore the difference in rebate i.e. 45p vs 15p would not relaly be an issue.

More importantly is what goes into my account post tax - if I can lose no more than about £100 including all costs, it would be worth it.

Let me know if you need any more info.

[SidewaysSi]

Good point - I will double check but I don't think they do. We are however given a company car allowance which is added to my pay and taxed and NI'd at 40%. No doubt a daft question but if the firm does not have a car scheme, is there anyway I can choose a car option and offset the tax?

Not come across this before (my old firm had a car scheme) but is the car allowance part of my pay, just by another name?

[SidewaysSi]

Zippee said:

You get a car allowance which, barr pension contributions, bonus calcs etc is technically just extra wages.
Personally I'd just use the money towards whatever you happen to want - you can spend more or less than the allowance. I get £5,500 a year car allowance but have zero need for a work car so it goes towards my TVR running costs instead and I just see it the same as a large pay rise, which in effect it was as it was more money than they could give me as a straight rise.

Thanks - I do have other cars so not a problem. I was thinking that if I could go for a car which came out of gross salary, I may be able to offset the tax paid and have an extra set of run about wheels for minimal cost?

[SidewaysSi]

Deva Link said:

SidewaysSi said:

I was thinking that if I could go for a car which came out of gross salary,

Again, how are you planning to do that if your firm doesn't have a company car scheme?

It maybe a no-goer in which case, that is fine. It all came about last night when I met with an old bud after work over a beer. He is in a similar firm at a similar level and is using his car allowance to get a £25k car for about £100 off his net salary. That got my mind thinking about my car allowance etc.

As long as I am not losing out, then that is perfectly fine. To be honest, I live and work in London and have 3 motoring toys (not that I would tell the Mrs they are anything but needed of course). As any PHer, the more cars, the merrier so if there was an opportunity to add to the stable with little cost, I would have to jump at it!

Will check with Payroll first thing Monday but if it was just a pay rise but called "car allowance" then I will have to leave it.