Company car vs allowance..

[fizz47]

I know I am being very thick here but just need a sanity check.. kept figures as round figures for simplicity

40 % tax payer-
Zero Business Miles
Can opt In or out of taking private fuel but do approx. 10k miles a year so if I take company car I would opt out.

With Company Car

Take Home = 60K

Company Car - Audi A6 TDI Ultra - BIK Value = £8,188 so @40 I would be paying out of my salary £3685

For simplicity - 60K - 3.6k = TOTAL 56.4

I would still have to pay all fuel costs

No Company Car

Take Home = 60K

Car allowance = 6k but @40% it equals 3.6K

Therefore total take home = 63.6K



If I didn't take company car then I would take the private fuel reimbursement - I assume with no company car it means I basically get reimbursed 60% of actual fuel costs.


Essentially as long as a non company car costs less than 7.2k a year than I am better off ?

Am I looking at this right? Need a sanity check?

[bogie]

Yes mostly, Ive never made a company car pay...well not the car I would like to own, because I get a generous cash alternative and lose all that too if I take the car

So for me its £8000 + "free fuel" (in reality pay tax on cash value of private fuel)

or take a car, lose £8k, then pay another £5K-10K plus in tax (depending on car)

try www.comcar.co.uk for accurate calculators....

If I did 25K+ business miles a year I might be tempted by a company car, but I only do about 15K total miles these days..

For the last 17 years just been using the allowance to fund/run 3-4 year old more luxury cars and with the fuel costing 40% I can afford to shop for all those big engine bargains that no-one wants to run these days

[fizz47]

bogie said:

Yes mostly, Ive never made a company car pay...well not the car I would like to own, because I get a generous cash alternative and lose all that too if I take the car

So for me its £8000 + "free fuel" (in reality pay tax on cash value of private fuel)

or take a car, lose £8k, then pay another £5K-10K plus in tax (depending on car)

try www.comcar.co.uk for accurate calculators....

If I did 25K+ business miles a year I might be tempted by a company car, but I only do about 15K total miles these days..

For the last 17 years just been using the allowance to fund/run 3-4 year old more luxury cars and with the fuel costing 40% I can afford to shop for all those big engine bargains that no-one wants to run these days

Thanks Bogie .

I'm being a lazy bugger and even though I know it would be cheaper to purchase my own car I think I'm going to go with the convenience of getting the company car.

[Targarama]

Figures look right to me.

Been through all this with the wife this past week. She can get an A3 Etron and was tempted as the BIK seemed OK (needs to be an Auto and I won't let her get a diesel).

However when she realised that after 3-4 years of having no car allowance (£285 after tax to her) and paying £100 a month odd BIK she'd end up with nothing. Instead of buying a 12-15k car on a loan and ending up with say £5k worth of car.

Company cars are great if you want a 'drive and forget' option and don't care what you drive as long as its shiney and new.

FWIW she does 18-20k a year. Company pays her fuel (card). She's been in a Fiesta the past 3 years (new driver so nothing too juicy), taken it from 35k to 90k miles with minimal maintenance needed above routine 10k servicing (1 puncture, 1 blistered tyre replaced out of cycle and 1 coolant cap). She will go for a Z4,Juke or Quashqai next. None are on the company car list.

[xjay1337]

I am a 40% rate tax payer. I was being paid a car allowance £400 per month.
It has come out of my taxable income, I am now on a different tax code and also looking at a tax underpayment circa £600. (There goes my car fund).

[Frik]

Targarama said:

Figures look right to me.

Been through all this with the wife this past week. She can get an A3 Etron and was tempted as the BIK seemed OK (needs to be an Auto and I won't let her get a diesel).

However when she realised that after 3-4 years of having no car allowance (£285 after tax to her) and paying £100 a month odd BIK she'd end up with nothing. Instead of buying a 12-15k car on a loan and ending up with say £5k worth of car.

Company cars are great if you want a 'drive and forget' option and don't care what you drive as long as its shiney and new.

FWIW she does 18-20k a year. Company pays her fuel (card). She's been in a Fiesta the past 3 years (new driver so nothing too juicy), taken it from 35k to 90k miles with minimal maintenance needed above routine 10k servicing (1 puncture, 1 blistered tyre replaced out of cycle and 1 coolant cap). She will go for a Z4,Juke or Quashqai next. None are on the company car list.

Does depend on what your list looks like. As a 25k a year driver it's a tool for the job that I don't need to worry about spending some of my own private time looking after and will get me to wherever I need to go without hassle. We don't have a list either, just a couple of loose requirements and a monthly lease cost. If I wasn't doing the mileage it'd be a different decision altogether.

Any particular reason you won't "let her" get a diesel?

[xjay1337]

If you own a diesel it means you don't have a penis, according to PH.

[Targarama]

Frik said:

Any particular reason you won't "let her" get a diesel?

Several. Children killing emissions, NVH, stinky refuelling. She hates them too but may buy one without thinking 'because it was yellow' or something then regret it for the next 4 years.

I know they are very good these days and drive lots of different rental cars with diesel engines. Just not for us.

[Happy Jim]

fizz47 said:

Essentially as long as a non company car costs less than 7.2k a year than I am better off ?

Am I looking at this right? Need a sanity check?

Presumably you have to take the company car for 4 years, therefore £28.8K of cash and nothing to show for it at the end, yeah......private is the right way!

[fizz47]

Happy Jim said:

Presumably you have to take the company car for 4 years, therefore £28.8K of cash and nothing to show for it at the end, yeah......private is the right way!

eekkk pretty much as you say ...

The question is will I still be with the company in 4 years?

My last car (owned outright) including depreciation, Tyres, Insurance and Maintenance was costing about 3.5k per annum.

So confused right now - do I go for convenience or financial sense?


Also found out that on my list is the BWW M140i which looks awfully tempting....

[oop north]

fizz47 said:

eekkk pretty much as you say ...

The question is will I still be with the company in 4 years?

My last car (owned outright) including depreciation, Tyres, Insurance and Maintenance was costing about 3.5k per annum.

So confused right now - do I go for convenience or financial sense?


Also found out that on my list is the BWW M140i which looks awfully tempting....

The tax on a 140i would be nightmarish. Bear in mind that company car tax rates are heading up every year so cost quite a bit worse than current rates of tax suggest

[Happy Jim]

fizz47 said:

eekkk pretty much as you say ...

The question is will I still be with the company in 4 years?

My last car (owned outright) including depreciation, Tyres, Insurance and Maintenance was costing about 3.5k per annum.

So confused right now - do I go for convenience or financial sense?


Also found out that on my list is the BWW M140i which looks awfully tempting....

About the only benefit of the Co car scheme is being able to hand it back and not have payments should you leave....BUT, why would you leave?

1. You get sacked because you are rubbish and got caught? - tough :-)
2. You found another job and resigned - therefore not an issue
3. You got made redundant - and probably got a package to cover you for a while.

The right answer is of course do what you did last time (£3.5K per year) but make it more interesting! I'm doing that and currently running a Merc S class (about £3.5K per year including the extra fuel that it guzzles)....you can then use the "Spare" £3.7K per year to fund a toy for the garage and be no worse off - tada!

[fizz47]

Happy Jim said:

About the only benefit of the Co car scheme is being able to hand it back and not have payments should you leave....BUT, why would you leave?

1. You get sacked because you are rubbish and got caught? - tough :-)
2. You found another job and resigned - therefore not an issue
3. You got made redundant - and probably got a package to cover you for a while.

The right answer is of course do what you did last time (£3.5K per year) but make it more interesting! I'm doing that and currently running a Merc S class (about £3.5K per year including the extra fuel that it guzzles)....you can then use the "Spare" £3.7K per year to fund a toy for the garage and be no worse off - tada!

Agree on all of the above -

As to why I would leave my job - most likely to be that I find another role.

The line of work I am in means it is very unlikely that company car would even be an option in other companies- most companies in my field would just make your remuneration higher and not even entertain cash vs company car.

Assuming I was in this company 3 years and I have to move - I would have to return the CC and would still have to purchase another car.


Therefore have decided 100% not to go CC option and take the cash instead.

Have multiple threads running but as of now top 3 choices in no order

1) SLK 55 AMG
2) Porsche 996
3) cheap run about and a weekend toy like a caterham.

All of the above much more fun than a 2.0 TDI Audi.


Thanks for everyone's input!!!

[Mr Tidy]

OP, FWIW the only time I had a company car I got made redundant in less than a year and that was a real PITA! (My mate told me I should have left the car in a ditch)! :Laugh:

Anyway I once more qualified for a car or car allowance in 2004. The car budget wouldn't get me what I wanted so I took the allowance. (Plus the firm gave an interest free loan for car purchase, although if it's more than £5,000 it is taxed as a BIK - so I took £4,800 over 2 years!)

HMRC have a mileage allowance for fuel that you can claim for business miles if you are on a company car/car allowance without it attracting tax - currently 10p per mile for a 1601 to 2000 diesel.

But I could also claim tax back on the difference between that and the mileage rate for employees not on a company car/car allowance (40p per mile when I was doing it). So you would get 40% back in your tax code on 40p less 10p for every business mile, assuming it hasn't changed.

Hope that makes sense - it certainly helped convince me that the allowance was the better option, especially as it meant when I left in 2011 I just kept my car!

[talksthetorque]

I make it you have 63.6k a year to spend on a car if you wish

Only thing I can see wrong from the figures is you missed paying NI on the allowance.
2% of 6K = £120.( if you are standard PAYE)
Not moving the goalposts that much, but if someone searching about this is in the 12% bracket it's worth making the point.

As there is 0 b usiness miles I assume they can't restrict what car you have.
Allowance all the way would be my decision here.

I travel 15-20k pa for business, have an allowance, and have to have a car under 5 years old
I lease a cheaper maintained car for work - still capable of 200 miles in comfort - and the OH has a Z4MC run with the difference.