Car allowance pitch....
Discussion
I work for a small/medium sized company where about a dozen people get a company car (directors and senior managers). These are all bought outright (each member of staff is given a cash allowance, alongside some buying criteria) - the company allow cars to be bought up to a year old which does reduce the allowance to a smaller figure than the car type might suggest.
My car is due for change Sept/Oct time and I'd like to make a case for an allowance rather than a company supplied car. Increased CC tax rates and very limited business/personal mileage have made it harder to justify - plus I'd like some more choice. I know no-one in the company receives an allowance currently so I want to understand the implications of what I'm asking for.
One area I want to understand is, are there benefits to the company by owning a vehicle rather than paying an individual an allowance?
Pro's for the firm as I see them : flexibility - should an employee leave, reduced risk - fixed outlay for the vehicle over the term and no potential maintenance bills etc.
Any other areas I've overlooked or should be aware of?
Thanks in advance.
My car is due for change Sept/Oct time and I'd like to make a case for an allowance rather than a company supplied car. Increased CC tax rates and very limited business/personal mileage have made it harder to justify - plus I'd like some more choice. I know no-one in the company receives an allowance currently so I want to understand the implications of what I'm asking for.
One area I want to understand is, are there benefits to the company by owning a vehicle rather than paying an individual an allowance?
Pro's for the firm as I see them : flexibility - should an employee leave, reduced risk - fixed outlay for the vehicle over the term and no potential maintenance bills etc.
Any other areas I've overlooked or should be aware of?
Thanks in advance.
Some companies don't like having a 'grey fleet' due to some of the implications that can fall on the directors with regards to duty of care etc. However with a small fleet it should be easy to keep on top of the relevant checks.
Like you say, the biggest benefit is the flexibility it gives the company if you leave and new starters hate have hand me down company cars in my experience
Like you say, the biggest benefit is the flexibility it gives the company if you leave and new starters hate have hand me down company cars in my experience
If the company buys the car outright then no limit on how long the car is owned. If the car is reliable then maybe 4-5 years of ownership prior to disposal makes a great deal of sense and is quite cost effective.
Paying the employee an allowance I understand is you logging (and justifying if necessary to I.R.) exactly how many business miles you do and claiming for them @ 0.45p / mile up to 10,000 miles then 0.25/mile any additional miles.
Would you expect an allowance additionally to this as I think you would need to fund your own car completely and then claim mileage.
I suppose the question is how many BUSINESS miles a year do you do?
Also do you work from home as travelling to your place of work is no longer claimable.
That is my limited understanding.
Paying the employee an allowance I understand is you logging (and justifying if necessary to I.R.) exactly how many business miles you do and claiming for them @ 0.45p / mile up to 10,000 miles then 0.25/mile any additional miles.
Would you expect an allowance additionally to this as I think you would need to fund your own car completely and then claim mileage.
I suppose the question is how many BUSINESS miles a year do you do?
Also do you work from home as travelling to your place of work is no longer claimable.
That is my limited understanding.
Fast Bug said:
Some companies don't like having a 'grey fleet' due to some of the implications that can fall on the directors with regards to duty of care etc. However with a small fleet it should be easy to keep on top of the relevant checks.
We don't allow grey fleet. If you need a car, you get a company car. We then know it's properly insured, taxed, serviced, fit for purpose etc. Even staff who don't get a car need to use someone else's company car for any business use, even running down to the bank. zoomy said:
If the company buys the car outright then no limit on how long the car is owned. If the car is reliable then maybe 4-5 years of ownership prior to disposal makes a great deal of sense and is quite cost effective.
Paying the employee an allowance I understand is you logging (and justifying if necessary to I.R.) exactly how many business miles you do and claiming for them @ 0.45p / mile up to 10,000 miles then 0.25/mile any additional miles.
Would you expect an allowance additionally to this as I think you would need to fund your own car completely and then claim mileage.
I suppose the question is how many BUSINESS miles a year do you do?
Also do you work from home as travelling to your place of work is no longer claimable.
That is my limited understanding.
Each company car has a 3yr life, to the employee at least. Some cars are held on to after an employee change and become pool vehicles.Paying the employee an allowance I understand is you logging (and justifying if necessary to I.R.) exactly how many business miles you do and claiming for them @ 0.45p / mile up to 10,000 miles then 0.25/mile any additional miles.
Would you expect an allowance additionally to this as I think you would need to fund your own car completely and then claim mileage.
I suppose the question is how many BUSINESS miles a year do you do?
Also do you work from home as travelling to your place of work is no longer claimable.
That is my limited understanding.
With regards to logging mileage - I already have to do this to a degree. I pay for all my fuel and claim back all business mileage (currently 11p per mile).
I do very few business miles - id guess less than 2000 a year with another 8-10k for personal use.
I think you have confused using your own car for business use - vs exchanging a company car benefit for a cash alternative.
Before you make the request, you might just want to check any plug in hybrids available to you on the current scheme if you're paying BIK for the car.
I was going to switch from a company car to an allowance until I realised I could go from an S-Max (the joy of small kids!) to a Merc C350e estate which was about £16k more expensive, but actually end up paying £60 a month less, so much lower was the BIK.
I was going to switch from a company car to an allowance until I realised I could go from an S-Max (the joy of small kids!) to a Merc C350e estate which was about £16k more expensive, but actually end up paying £60 a month less, so much lower was the BIK.
Kermit power said:
Before you make the request, you might just want to check any plug in hybrids available to you on the current scheme if you're paying BIK for the car.
I was going to switch from a company car to an allowance until I realised I could go from an S-Max (the joy of small kids!) to a Merc C350e estate which was about £16k more expensive, but actually end up paying £60 a month less, so much lower was the BIK.
I've had a look into it already for exactly this - but nothing available within budget. Totally agree - if I could pick up a vehicle with low BIK I'd be keen to stay in the scheme. Even looked at commercial vehicles - Ford Ranger, etc - but none within reach.I was going to switch from a company car to an allowance until I realised I could go from an S-Max (the joy of small kids!) to a Merc C350e estate which was about £16k more expensive, but actually end up paying £60 a month less, so much lower was the BIK.
jimmy7 said:
I've had a look into it already for exactly this - but nothing available within budget. Totally agree - if I could pick up a vehicle with low BIK I'd be keen to stay in the scheme. Even looked at commercial vehicles - Ford Ranger, etc - but none within reach.
Are you not allowed to top it up with your own cash?You'd need to check how much car allowance you'd have left after paying tax, and what that would actually get you. A lot of schemes I've seen wouldn't get you in a car near what's being offered as a company car. I'd usually advise against opting out, but with a mileage as low as yours it would be worth considering. You'd have to make sure that your insurance covers you for business use as well, it will be more expensive but probably not by a massive amount.
You'll also struggle to find plug in hybrids at the moment, most manufacturers are having supply issues at present. That and WLTP is playing havoc for manufacturers
You'll also struggle to find plug in hybrids at the moment, most manufacturers are having supply issues at present. That and WLTP is playing havoc for manufacturers
Fast Bug said:
Some companies don't like having a 'grey fleet' due to some of the implications that can fall on the directors with regards to duty of care etc. However with a small fleet it should be easy to keep on top of the relevant checks.
Like you say, the biggest benefit is the flexibility it gives the company if you leave and new starters hate have hand me down company cars in my experience
depends on the business mileage people are doing - in some organisations the car allowance is a hang over from times past when pure 'perk' cars were treated less onerously tax wise ...Like you say, the biggest benefit is the flexibility it gives the company if you leave and new starters hate have hand me down company cars in my experience
it also addresses Grading things where you might have managers who are single site and managers who are multi site or look after small branches as a regional role in the same Pay grade - so the 'mobile' ones doing loads of business miles get a company supplied vehicle and the others who might only be doing a few tens to hundreds of miles a month for the company get the allowance.
from a compliance point of view a company owned / leased fleet that is serviced to the time / mileage requirementso f the manufacturer by suitable maintainer and spot hires is the lowest risk solution.
In Arduis Fouette said:
from a compliance point of view a company owned / leased fleet that is serviced to the time / mileage requirementso f the manufacturer by suitable maintainer and spot hires is the lowest risk solution.
Totally irrelevant to the OP's question, but whenever I cycle to work, I go past Pimlico Plumbers' HQ in Vauxhall. They have a maintenance garage for their vehicles on site which is at least as big as the average Kwik Fit. It got me wondering just how big a fleet you need to have before it makes sense to have your own presumably full time employed mechanics and workshops rather than having them serviced by a third party?Kermit power said:
In Arduis Fouette said:
from a compliance point of view a company owned / leased fleet that is serviced to the time / mileage requirementso f the manufacturer by suitable maintainer and spot hires is the lowest risk solution.
Totally irrelevant to the OP's question, but whenever I cycle to work, I go past Pimlico Plumbers' HQ in Vauxhall. They have a maintenance garage for their vehicles on site which is at least as big as the average Kwik Fit. It got me wondering just how big a fleet you need to have before it makes sense to have your own presumably full time employed mechanics and workshops rather than having them serviced by a third party?when the cost of providing what you need , when you need it is the same or less than the bill from sending the work out to someone else , or where you are reasonably sure that if you over provide it you'll be able to get the work from other people to keep it busy...
Fast Bug said:
You'd need to check how much car allowance you'd have left after paying tax, and what that would actually get you. A lot of schemes I've seen wouldn't get you in a car near what's being offered as a company car.
It’s also heavily dependent on the particular vehicle.Once you go beyond the standard company car fodder, the tax implications can make taking the allowance very attractive.
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