Company Car Allowance - Help/Advice
Discussion
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.
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.
Do you mean get a cheap company car as opposed to taking the money?
It's just that your post later says the company doesn't have a car scheme.
Company car will be insured and maintained by your company.
As to whether it's worth changing from taking the allowance to having a company car your post will need a bit more info.
How many miles a year do you currently do for business and pleasure?
Will the company car come with a fuel card? Will you be entitled to fuel for private mileage?
Apart from the allowance you get are you claiming back the business mileage you do?
After all that, someone much more learned than I will be able to give you a much better answer as it's been a while since I was involved with that sort of thing.
It's just that your post later says the company doesn't have a car scheme.
Company car will be insured and maintained by your company.
As to whether it's worth changing from taking the allowance to having a company car your post will need a bit more info.
How many miles a year do you currently do for business and pleasure?
Will the company car come with a fuel card? Will you be entitled to fuel for private mileage?
Apart from the allowance you get are you claiming back the business mileage you do?
After all that, someone much more learned than I will be able to give you a much better answer as it's been a while since I was involved with that sort of thing.
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.
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.
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.
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.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?
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?
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?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.I always used to go over my allowance in preference of driving something I wanted or was more pleasurable to drive. Now I think I'd ask the company to lease me one, wouldnt fancy a 3+36 anymore.
If there's a sliding scale I'd take less money and run a snottier car perhaps. Though there does seem to be some reasonable options on a DS3. They're quite fun (petrol) and 1.5DCi Qashqias were the other that stood out. Depends how many miles you want to spend in one I guess
1000pa business miles doesnt sound a lot tbh, you done your sums properly?
ETa - the way my car allowances have always been paid were net to me as a separate line item in my wage slip. The company never made any contributions towards the car directly (though as mentioned if I was negotiating now I'd be asking for that)
If there's a sliding scale I'd take less money and run a snottier car perhaps. Though there does seem to be some reasonable options on a DS3. They're quite fun (petrol) and 1.5DCi Qashqias were the other that stood out. Depends how many miles you want to spend in one I guess
1000pa business miles doesnt sound a lot tbh, you done your sums properly?
ETa - the way my car allowances have always been paid were net to me as a separate line item in my wage slip. The company never made any contributions towards the car directly (though as mentioned if I was negotiating now I'd be asking for that)
Edited by andy-xr on Saturday 23 February 15:31
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?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.
SidewaysSi said:
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.
This is because his firm is operating a company car scheme or a salary sacrifice based car scheme. Your posts imply your firm doesn't, therefore how to you intend to buy cars from your gross salary?SidewaysSi said:
...and is using his car allowance to get a £25k car for about £100 off his net salary.
Hmmm...That's probably £100 plus his car allowance and might even be plus the benefit in kind tax he would pay on a company car. He isn't getting a £25K car for £166/mth (that's £100 grossed up).
Most likely his firm has an "eco" (employee car ownership) scheme, which as Fox mentioned, works by salary sacrifice so comes out of your gross pay.
To save starting a new thread, is there a site available that makes recommendations on what level of car allowance should be given to an individual based on their role/mileage etc?
I've had my allowance for a number of years and it hasn't increased despite the increased cost of driving and a couple of promotions.
I've had my allowance for a number of years and it hasn't increased despite the increased cost of driving and a couple of promotions.
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