Company Car mileage tax question

[Sarkmeister]

Evening all

I've taken on a new role at work, and been offered a company car (or allowance) due to the number of business miles (approx 20k per year).

I'm trying to work out the best option, and am being steered towards the allowance option by a slightly limited list of company cars available.

Anyway, business miles will be claimed back at the governments recommended rate (11p/mile currently). Am I correct in saying that if I took the allowance I can then claim the tax back on the difference between this and the 45p/miles rate, up to 10k miles, 25p/mile after?

Can someone confirm that this is not possible if I actually take a company car?

Thanks in advance

[Stella Tortoise]

I used to.

The company used a separate firm to log miles and do the claims, not sure how hard it would be to DIY.

[Nine-Eighty-Six]

20k miles... take the car. Lease rates and depreciation are 'challenging' on that kind of mileage - and consumables become a significant cost. Yes, you can claim some tax back on the difference between Inland Revenue and company mileage rates - but this doesn't really compensate for the peace of mind you get with a fully expensed company car.

The big one for me, in the current climate, is that if you take out a loan or lease when opting out, that becomes a very big stress point for you should you be made redundant. (Been there, done that, bought the t-shirt and only kept my head above water due to negotiating a decent pay-off and landing a job offer just a few days before I was due to leave).

[Sheepshanks]

Sarkmeister said:

Can someone confirm that this is not possible if I actually take a company car?

Confirmed.

[anonymous-user]

When I lived in the UK I was in a similar position, 20 years ago, allowance was 500 a month plus business petrol. all added to your gross income, then claim the mileage to arrive at a taxable income. Much better than a company car, I used to run a nice 7 series, bought 2 years old sold at 5, great deal, much better than the diesel rep mobiles.
I'm not worried by latest reg, etc and at the end I had some value in the car to sell on.
At 20K a year you get say 6 K as a deduction from taxable income as opposed to having 4 K added to your salary as BIK for the car.

[Sarkmeister]

Cheers.

I was was set on on getting the car, mainly as it was easier.

However, the allowance would make me approx £200-300 better off (assuming spending £350ish a month on the car). The main risk being what would happen if I wanted to move jobs or got made redundant.

I would be getting a 2yr old ish car by the way (prob a 3 series touring).

[oop north]

Have you factored in the increases in co car tax going forward? The rates have already been set to 2020-21 and going up across the board.

I had a spell of doing 15k business miles and having the co car would have been better. Doing 20k business plus private ads up to a lot of miles, but the co car tax is a lot worse now

[anonymous-user]

200 pound or so was what I reasoned I was better off, with a car a few years old plus the value in the car at the end. for me the risk was the other way round, if I got made redundant I had a car to travel to a new job, a company car goes back, and you need to buy something at a time you don't want to spend money, and maybe can't get a loan.
The 45 p a mile was if the car was over 2 liter, (not sure these days) so buying a completed small turbo didn't work for me, and as I got company petrol, fuel economy was not an issue. I went for something with a big straight 6 that was never going to break.
If you look like for like car there is not a lot in it money wise, but if you aren't driven by the latest plate you can have nicer car and a few hundred a month.

[Sheepshanks]

Berw said:

200 pound or so was what I reasoned I was better off, with a car a few years old plus the value in the car at the end. for me the risk was the other way round, if I got made redundant I had a car to travel to a new job, a company car goes back, and you need to buy something at a time you don't want to spend money, and maybe can't get a loan.

We were offered a pretty hefty amount to opt out and I strongly suspected something was on the cards, so I bought my car cash precisely so I wouldn't have a big loan or lease hanging over me. Sure enough, company got sold 9mths later and was made redundant.

Berw said:

The 45 p a mile was if the car was over 2 liter, (not sure these days) so buying a completed small turbo didn't work for me,

Not sure what you're thinking of there but the HMRC mileage rates for business travel in your own car aren't linked to engine size and weren't 15yrs ago when I first opted out.


We had a lot of people opting out, and two weird things stood out - the number of people who leased more or less the same car as they could have had as a company car, but got leather or big wheels as option. They ended up overall no better off.

Second was the number of people who'd driven for years wth no issues then, within a few weeks of getting their own car had a big accident. Very few of them had obeyed the rule to get a like-for-like hire car included in their policy. One guy working for me was doing 1000 miles some weeks in a Ford Ka and that went on for months - the insurer said they'd screwed up and should have written his car off at the beginning.

[Sarkmeister]

I'm edging towards the company car option now, after considering the risk/cost associated with running a car for 30k miles a year.

[Condi]

Take the car, especially on those miles.

There is no question that it will be cheaper; depreciation, insurance, repairs, tyres etc all eat into running your own, and if you're paying finance on the vehicle then it gets even more expensive.

Running the company car means you can buy a fuel efficient and low tax vehicle, so the tax implications arnt too bad.

[Russ T Bolt]

Sheepshanks said:

Sarkmeister said:

Can someone confirm that this is not possible if I actually take a company car?

Confirmed.

I had this exact discussion with someone at work a few weeks ago, who thought you could claim the difference.

So I asked the helpful chap from HMRC I was talking to re the rather large tax bill I received, he said you can't, I was interested because it could have reduced my tax bill.

If you are in receipt of a car (or car allowance) you should receive the HMRC published rate per mile.

Edited by Russ T Bolt on Friday 22 December 13:39

[Sheepshanks]

Russ T Bolt said:

I had this exact discussion with someone at work a few weeks ago, who thought you could claim the difference.

So I asked the helpful chap from HMRC I was talking to re the rather large tax bill I received, he said you can't, I was interested because it could have reduced my tax bill.

If you are in receipt of a car (or car allowance) you should receive the HMRC published rate per mile.

You can claim the difference if you receive a car allowance (or even if you don't, but use your own car for business).

It doesn't apply if you have a company car - it's a different system of payment / repayment for fuel.

[Pesty]

Same boat

Currently on £550 a month allowance 40p for 10k and 25p there after.

Do around 20k miles a year. Company has been bought out and there policy is company car no opt out.

Never had a company car before. it just looks to me as if I’ll be losing thousands a year.

Other than having a nicer new car what are the benefits? Just oooks like I’ll lose thousands for the privilege,

[Sheepshanks]

Pesty said:

Currently on £550 a month allowance 40p for 10k and 25p there after.

You've been doing well there - it's very unusual to get the full mileage rates if you get an allowance.

Pesty said:

Other than having a nicer new car what are the benefits?

I treated my company cars well, but nevertheless I reckon it's a big psychological benefit that you can just stop thinking about the car. You don't have to agonise over finding a safe parking spot, or cry internally if a stone hits it on the motorway. If it makes a funny noise turn the radio up and make a mental note to mention it next service.