Company car vs car allowance?
Discussion
With an upcoming change of job and the price of petrol seemingly on the up, the decision looms on whether I choose a company car or a car allowance as part of my new package.
I commute 60 miles per day; business mileage is likely to be an additional 200 miles per week.
I like having my own car to a spec I desire, I'll usually go for one of the 'sport' type packages and never wish to own a 4/5 door. I believe these options are rarely offered as company cars?
Is there some form of calculator I can use, where you can compare the differences taking into account petrol costs, depreciation, tax, insurance etc?
Thanks
I commute 60 miles per day; business mileage is likely to be an additional 200 miles per week.
I like having my own car to a spec I desire, I'll usually go for one of the 'sport' type packages and never wish to own a 4/5 door. I believe these options are rarely offered as company cars?
Is there some form of calculator I can use, where you can compare the differences taking into account petrol costs, depreciation, tax, insurance etc?
Thanks
car allowance
'coz if your company goes into administration like mine just did you dont have to faff around trying to find out who owns the cars / trying to buy it off the boss who speaks with a irish accent so thick not even them chaps on snatch can understand.
i digress, i'd personally go for allowance.
'coz if your company goes into administration like mine just did you dont have to faff around trying to find out who owns the cars / trying to buy it off the boss who speaks with a irish accent so thick not even them chaps on snatch can understand.
i digress, i'd personally go for allowance.
I always go with the car allowance. You get taxed on the company car so, apart from having a new car, your net take home pay is reduced.
If you shop around, or don't mind running something older, then you can end the year with money in your pocket from it all.
And you get to drive something you want, not be limited to basic spec models from a limited number of manufacturers.
Also check in your documents that there isn't a penalty for exceeding a mileage limit over the lease period too. This soon adds up and takes away all the benefits!
Not sure you will find a generic calculator, you would need to know all the terms of the Company car agreement.
If you shop around, or don't mind running something older, then you can end the year with money in your pocket from it all.
And you get to drive something you want, not be limited to basic spec models from a limited number of manufacturers.
Also check in your documents that there isn't a penalty for exceeding a mileage limit over the lease period too. This soon adds up and takes away all the benefits!
Not sure you will find a generic calculator, you would need to know all the terms of the Company car agreement.
PM and I'll send you the spread sheet I've sent to others who ask this question.
The answer is the car allowance, and the fixed profit car scheme, buy a nce 3 year old car on a private plate and pocket the money, and have a car of your own, then if you loose your job you don't spend your savngs buying a car to get to e next one.
My speread sheet uses last year's tax figures,
The answer is the car allowance, and the fixed profit car scheme, buy a nce 3 year old car on a private plate and pocket the money, and have a car of your own, then if you loose your job you don't spend your savngs buying a car to get to e next one.
My speread sheet uses last year's tax figures,
I always would recommend the allowance but as you will doing 25K miles a year this will have a considerable affect on running costs. Also if you had a comapny car how does the 60 miles commute work out .
25K a year would mean at least a set of tyres a year plus a couple of services a year and too change it probably every 2 years.
I would have the company car option - I think.
25K a year would mean at least a set of tyres a year plus a couple of services a year and too change it probably every 2 years.
I would have the company car option - I think.
For many years I have been an advocate of allowance instead of company car, however a few things here would sway me otherwise:
1. Recent redundancy has meant that I could have been lumbered with lease payments but no job - thankfully the lease expired at the same time as the job ended by coincidence.
2. For that sort of mileage you will be paying much more in lease payments and maintenance - let the company take the burden.
3. BIK levels for decent cars have dropped significantly in recent years so you get less shafted on tax. Look at BMW 318d for example.
1. Recent redundancy has meant that I could have been lumbered with lease payments but no job - thankfully the lease expired at the same time as the job ended by coincidence.
2. For that sort of mileage you will be paying much more in lease payments and maintenance - let the company take the burden.
3. BIK levels for decent cars have dropped significantly in recent years so you get less shafted on tax. Look at BMW 318d for example.
mearsy555 said:
I always go with the car allowance. You get taxed on the company car so, apart from having a new car, your net take home pay is reduced.
You get taxed on the allowance as well.Check what rules/ limitations are attached to the allowance.
My company specifies the car must be 4 door and no older than 5 years
Depends on if they consider a car essential for doing your job.
WokingWedger said:
You get taxed on the allowance as well.
Check what rules/ limitations are attached to the allowance.
My company specifies the car must be 4 door and no older than 5 years
Depends on if they consider a car essential for doing your job.
Agreed, but I just see that as a smaller allowance, rather than a dent in my salary. Or am I looking at it too simplistically?Check what rules/ limitations are attached to the allowance.
My company specifies the car must be 4 door and no older than 5 years
Depends on if they consider a car essential for doing your job.
My experience was over 5yrs ago, but I was able to run a 10 year old car for peanuts (not an old banger mind, it was a well spec'd low mileage, 5dr tidy looking car - with more functions/features than the bog-standard models offered under the company car scheme). If I wanted a similar size car, albeit newer, with similar extras I would have to pay a monthly 'top-up' out of my salary.
mearsy555 said:
Agreed, but I just see that as a smaller allowance, rather than a dent in my salary. Or am I looking at it too simplistically?
A little bit yeah. I really depends on the car scheme, the company I work for atm takes any contribution you make to the car off your gross salary so you effectively make a saving on income tax although you are still taxed for the car.Randomly, they give us a slightly bigger allowance to buy a car than to take cash.
You also have to also factor in insurance, road fund, and running costs that you no longer pay for but weigh that against the difference in mileage rates (and the ability to claim tax relief if your employer isn't paying you 45p a mile on a private car).
Increasingly in the small print a lot of companies nowadays, they set a limit to the age of car you're allowed when taking cash allowance and there'll also be a line along the lines of "cash allowance = your responsibility to make sure you can get somewhere" a point that bit me on the ass when my 540 was off the road waiting for a radiator and I had to get a £100 train ticket to Leicester because work refused to fund a hire car for me as a cash allowance user.
Biggest factor is miles, the more you do, the more I'd lean to a company motor, then you can spend your time trying to get through tyres and consumables to stick it to the taxman
Edit - atroshush spellink
depends entirely on the figures, how often the car is changed, how many miles you do, etc.
In our scheme, we can get anything we want (even porkers etc). at my job level we can get a mid-spec astra or similar, maybe a low rung 1-series. Or, we get £300pm. Thing is, that £300 is taxed at 40%, leaving £160/month. Even taking into account cc tax (lets say £80 for something dull), you're only £240/month worse off. I'd suggest its difficult to run (tax, insurance, mot, depreciation, finance) even a 3 year old car for significantly under £3k per annum.
personally I take the money anyway, and run two bangers, but I suspect I'd not be in a significantly different position (financially) if I took the car
In our scheme, we can get anything we want (even porkers etc). at my job level we can get a mid-spec astra or similar, maybe a low rung 1-series. Or, we get £300pm. Thing is, that £300 is taxed at 40%, leaving £160/month. Even taking into account cc tax (lets say £80 for something dull), you're only £240/month worse off. I'd suggest its difficult to run (tax, insurance, mot, depreciation, finance) even a 3 year old car for significantly under £3k per annum.
personally I take the money anyway, and run two bangers, but I suspect I'd not be in a significantly different position (financially) if I took the car
Allowance for me. I get 30ppm for my 25k business miles and keep a detailed spreadsheet of all costs including depreciation. My current steed is an Omega Elite 3.0v6 that over the last 3 years has made me a total of £4k profit. Bonus is that the car is now depreciated to £0 on my books so anything I get when I sell it will be a plus.
But my company doesnt tell me what I can buy with the money, this Omega is now 11 years old with 170k miles on it and I will be replacing it shortly with a 6 year old S type Jag v8. A lot of places specify that you must have a car no more than 3 or 4 years old in which case the economics may not stack up due to high depreciation.
But my company doesnt tell me what I can buy with the money, this Omega is now 11 years old with 170k miles on it and I will be replacing it shortly with a 6 year old S type Jag v8. A lot of places specify that you must have a car no more than 3 or 4 years old in which case the economics may not stack up due to high depreciation.
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