Car Allowance / Lease options
Discussion
Hi All
I realise there has been a few topics like this before, but none too recent for me to get a reference point.
I am lucky enough to have been offered a job with a car allowance. The allowance is 8.5k per yr. I haven't had a car allowance before, only company cars, and I haven't received the full rules etc yet. I guess I would have to take tax off of that allowance, but I'm keen to understand if this would be enough to get something fairly comfortable or if I need to push for a little more.
Anyone have any experience of this? What sort of car options may be available to me.
Thanks a lot.
I realise there has been a few topics like this before, but none too recent for me to get a reference point.
I am lucky enough to have been offered a job with a car allowance. The allowance is 8.5k per yr. I haven't had a car allowance before, only company cars, and I haven't received the full rules etc yet. I guess I would have to take tax off of that allowance, but I'm keen to understand if this would be enough to get something fairly comfortable or if I need to push for a little more.
Anyone have any experience of this? What sort of car options may be available to me.
Thanks a lot.
That's quite generous.
You are right in that it's taxable.
I get just under 7k a year, but the rules in our scheme are quite good, we can pretty much drive whatever we want as long as it's roadworthy and insured for business use.
Conversely I can take a car with a monthly lease cost up to 475 per month. In reality because it's through one company and has to be a fully maintained lease there's not a lot worth having.
You are right in that it's taxable.
I get just under 7k a year, but the rules in our scheme are quite good, we can pretty much drive whatever we want as long as it's roadworthy and insured for business use.
Conversely I can take a car with a monthly lease cost up to 475 per month. In reality because it's through one company and has to be a fully maintained lease there's not a lot worth having.
Depending on tax rate you'll either have a take home of 425 or 567pcm.
You need to consider if you want this amount (or less) to pay for the whole car costs or simply the lease or finance costs.
Clearly you need to know the rules first before even looking it might be a requirement to be a diesel and below xCO2 it might have to have 4 doors it might have to be under 3 years old beyond which you can no longer use it and car allowance would cease in theory until you replaced it with a compliment vehicle.
It could be no sports cars etc
OR it might not have any age restriction and can be anything you like provided its reliable.
You need to consider if you want this amount (or less) to pay for the whole car costs or simply the lease or finance costs.
Clearly you need to know the rules first before even looking it might be a requirement to be a diesel and below xCO2 it might have to have 4 doors it might have to be under 3 years old beyond which you can no longer use it and car allowance would cease in theory until you replaced it with a compliment vehicle.
It could be no sports cars etc
OR it might not have any age restriction and can be anything you like provided its reliable.
HHP said:
That's great thanks for the feedback guys. How much do you think the NI contribution would be?
Isn't it only 1-2% beyond x salary. Go only a salary calculator site with this years tax allowances first time out in your basic get your monthly take home then do it again but add in the car 8.5k it will give you the accurate value.
I've just moved to my 3rd job that comes with an allowance. The first one was only 4.5k and the other two have been 7.5k.
I'm a higher rate tax payer but I 'give' myself the cash at 20% rate and transfer it into a different account. I then run ALL the car costs out of this monthly figure. For me that's currently 550 a month.
None of my companies have ever imposed rules for the allowance. Most of them see it as salary in all but name, you see they don't have to pay pension contributions against your car allowance!
The only thing any boss ever said was I would be expected to hire a car if mine was off the road for more than a few days at once as my job involved being mobile, hence the car allowance. I just use that as an excuse to run two cars from the allowance!!
I'm a higher rate tax payer but I 'give' myself the cash at 20% rate and transfer it into a different account. I then run ALL the car costs out of this monthly figure. For me that's currently 550 a month.
None of my companies have ever imposed rules for the allowance. Most of them see it as salary in all but name, you see they don't have to pay pension contributions against your car allowance!
The only thing any boss ever said was I would be expected to hire a car if mine was off the road for more than a few days at once as my job involved being mobile, hence the car allowance. I just use that as an excuse to run two cars from the allowance!!
As others have said that's a fairly generous amount, mine is about 7.5k.
Our rules are pretty relaxed with the exception of :
a) No commercial vehicles.
b) No classics
c) No two seaters, and the catchall
d) Nothing that would cause the company to seen to be in disrepute??
I did it for ten years and ranged from a nearly new on PCP, to a 3.5k Saab 95 I ran for 2 years and sold for 2k.
You will of course have to pay for everything, tax, ins, repair & maint, hire cars, and of course have to arrange it all.
Our rules are pretty relaxed with the exception of :
a) No commercial vehicles.
b) No classics
c) No two seaters, and the catchall
d) Nothing that would cause the company to seen to be in disrepute??
I did it for ten years and ranged from a nearly new on PCP, to a 3.5k Saab 95 I ran for 2 years and sold for 2k.
You will of course have to pay for everything, tax, ins, repair & maint, hire cars, and of course have to arrange it all.
eltax91 said:
I've just moved to my 3rd job that comes with an allowance. The first one was only 4.5k and the other two have been 7.5k.
I'm a higher rate tax payer but I 'give' myself the cash at 20% rate and transfer it into a different account. I then run ALL the car costs out of this monthly figure. For me that's currently 550 a month.
None of my companies have ever imposed rules for the allowance. Most of them see it as salary in all but name, you see they don't have to pay pension contributions against your car allowance!
The only thing any boss ever said was I would be expected to hire a car if mine was off the road for more than a few days at once as my job involved being mobile, hence the car allowance. I just use that as an excuse to run two cars from the allowance!!
Also its not base salary so not bonus able... I'm a higher rate tax payer but I 'give' myself the cash at 20% rate and transfer it into a different account. I then run ALL the car costs out of this monthly figure. For me that's currently 550 a month.
None of my companies have ever imposed rules for the allowance. Most of them see it as salary in all but name, you see they don't have to pay pension contributions against your car allowance!
The only thing any boss ever said was I would be expected to hire a car if mine was off the road for more than a few days at once as my job involved being mobile, hence the car allowance. I just use that as an excuse to run two cars from the allowance!!
The car allowance thing is pretty good (vs company car) until you have a crash/blown engine etc. There's generally less fat on the bone these days (especially if some of the allowance is free of tax due to business miles) to build up a contingency fund.
Make sure you keep some reserve! (and make sure your firm max the tax free element)
Make sure you keep some reserve! (and make sure your firm max the tax free element)
2 sMoKiN bArReLs said:
By maxing tax free I mean ensure the taxable amount is reduced by business mileage rate, which can be paid free of tax. The firm also save 'ers NI
Not quite sure what you mean. In a cash car allowance there are no tax free elements based on business or private milage (AFAIK), you just pay tax and NI as it's just seen as additional earnings.The fuel allowance is something else of course, but that's not on topic.
SidJames said:
2 sMoKiN bArReLs said:
By maxing tax free I mean ensure the taxable amount is reduced by business mileage rate, which can be paid free of tax. The firm also save 'ers NI
Not quite sure what you mean. In a cash car allowance there are no tax free elements based on business or private milage (AFAIK), you just pay tax and NI as it's just seen as additional earnings.The fuel allowance is something else of course, but that's not on topic.
I get 15,000 per annum car allowance. If I were to do no business miles that would be it.
For every business mile I do I get paid 45p per mile tax free (up to 10,000 miles). So, if I do say 10000 business miles a year my 15k is split 10500 taxable, 4500 tax free. I get 40% of 4500 more, company saves 500 ish NI. All according to HMRC rules
2 sMoKiN bArReLs said:
SidJames said:
2 sMoKiN bArReLs said:
By maxing tax free I mean ensure the taxable amount is reduced by business mileage rate, which can be paid free of tax. The firm also save 'ers NI
Not quite sure what you mean. In a cash car allowance there are no tax free elements based on business or private milage (AFAIK), you just pay tax and NI as it's just seen as additional earnings.The fuel allowance is something else of course, but that's not on topic.
I get 15,000 GBP (pound sign not working) per annum car allowance. If I were to do no business miles that would be it.
For every business mile I do I get paid 45p per mile tax free (up to 10,000 miles). So, if I do say 10000 business miles a year my 15k is split 10500 taxable, 4500 tax free. I get 40% of 4500 more, company saves 500 ish NI. All according to HMRC rules
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