Making the most of company car allowance. - Page 1 - Car Buying

Linf

Original Poster

43 posts

106 months

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Saturday 11th January 2020

Hi All,

Another one of these posts... looking advice/opinions.

I’ve been in a company car for a while (insignia), holding on waiting for the new car list to come out, which was rumoured to have a good selection on it. Said list has come out, and I have the options of an Astra or insignia. Hooray thumbup

I’ve now decided I’m sick of paying £160ish in additional tax plus £50ish of personal fuel a month, plus having my tax code messed with constantly. So, I am going to opt for a car allowance which is £5500 a year plus 26p per business mile.

I currently do approx 25000 business miles a year, mostly motorway, and about 5000 personal miles.

It should be very beneficial financially... if I pick the right car. So, the criteria specified under the car allowance is;
- Less than 6 years old
- able to seat 4 adults

My criteria is;
- estate or big boot hatch (carry gear for work plus have a young child)
- 66 plate (allows me to keep it for a few years before changing)
- auto preferably but not fussy
- diesel
- sat nav
- under 7k (looking to buy outright, no finance)
- around 100k miles but with FSH
- good mpg and cheap road tax

As said above, I’m looking to not finance anything so I can make the most out of the additional income

So far, I’ve found the standard focus’, Mondeo, Passat, octavias etc.

Any other suggestions would be appreciated.

Cheers.

Edited by Linf on Saturday 11th January 17:20

steveb8189

516 posts

220 months

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Saturday 11th January 2020

I presume you pay income tax on the £5,500 but you should get to claim some tax back on the mileage as it's <45p

I'd go octavia hatch. Massive boot but IMHO looks better than the estate version. Child seat fits well in the back.

Can you get a golf estate for that price? Perhaps better on the depreciation. Anything is going to be pretty hard to get rid of after 2 years @ 150k miles.

Dsdans

130 posts

85 months

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Saturday 11th January 2020

I know you say you want to own outright, but have you considered leasing?

steveb8189

516 posts

220 months

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Saturday 11th January 2020

Dsdans said:

I know you say you want to own outright, but have you considered leasing?

That was my first thought too but then realised there weren't too many 3 year 90,000 mile lease deals...

Linf

Original Poster

43 posts

106 months

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[news]

Saturday 11th January 2020

steveb8189 said:

I presume you pay income tax on the £5,500 but you should get to claim some tax back on the mileage as it's <45p

I'd go octavia hatch. Massive boot but IMHO looks better than the estate version. Child seat fits well in the back.

Can you get a golf estate for that price? Perhaps better on the depreciation. Anything is going to be pretty hard to get rid of after 2 years @ 150k miles.

Correct, works out at about £350 a month after tax. And yep we get quarterly tax relief on the fuel which makes me feel like I’m getting shafted even more having a company car atm.

I’ve got a few golf estates saved at the minute, currently doing a bit of research for any known issues. Depreciation is a factor, but I’m hoping it wouldn’t be more than a few grand over the 2.5 years (that’s probably me being naive though.)

Also got a few focus estates saved, seen a few under £6k.

I’ll definitely have a deeper look at Octavias, similar size to my insignia which is ideal, however I’d constantly be pineing for a VRS one.

Linf

Original Poster

43 posts

106 months

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[news]

Saturday 11th January 2020

Dsdans said:

I know you say you want to own outright, but have you considered leasing?

As Steve B said, the mileage is a killer. Plus, I’m hoping to save some of the car allowance money to help with saving to move into a bigger house.

Plus wife’s car is on finance, so don’t want to commit to two lots.

interstellar

5,033 posts

175 months

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[news]

Saturday 11th January 2020

If I was you I would take a lower mile car and turn it more often.

Buy a 70k car and turn it at 100k once a year?

Worth considering?

ZX10R NIN

30,521 posts

154 months

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Saturday 11th January 2020

Linf

Original Poster

43 posts

106 months

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[news]

Saturday 11th January 2020

interstellar said:

If I was you I would take a lower mile car and turn it more often.

Buy a 70k car and turn it at 100k once a year?

Worth considering?

Haven’t really thought about that, I know a lot of people are sceptical about cars that are over 100k so this may be worth a look into.

Linf

Original Poster

43 posts

106 months

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Sunday 12th January 2020

ZX10R NIN said:

This is outstanding, thank you! Really like the look of the Mazda 6, hadn’t considered these.

ZX10R NIN

30,521 posts

154 months

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Sunday 12th January 2020

No problem I forgot to add the Astra Estate:

BiTurbo SRI Nav

https://www.autotrader.co.uk/classified/advert/201...

Elite Nav

https://www.autotrader.co.uk/classified/advert/201...

https://www.autotrader.co.uk/classified/advert/201...

https://www.autotrader.co.uk/classified/advert/201...

& the Kia Ceed 4

https://www.autotrader.co.uk/classified/advert/201...

GT Line

https://www.autotrader.co.uk/classified/advert/201...

quinny100

1,012 posts

215 months

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[news]

Sunday 12th January 2020

Have a look at the Hyundai i40 Tourer. I much preferred the i40 pool car we had at work to the Insignia that replaced it.

Alfa Pete

472 posts

255 months

[report]

[news]

Sunday 12th January 2020

Just playing devils advicate here and I have recently come out of a company car but do make sure sure you do your sums carefully.

Pluses

Factor in BIK saving
Extra cash allowance
Mileage allowance
Claiming back difference to 45p

But

Factor in depreciation
Servicing
Tyres
Insurance ( I had no NCD and needed to have business use- expensive!)

Tax
The tax of £200 a month is pretty good for a fully expenses car that you don’t have to budget for maintenance/ tax insurance on.

I’ve gained choice and like owning my own car but the savings are marginal once I’ve totted everything up and I’m playing the market in terms of depreciation.

Some of the cars suggested aren’t that disimilar to the Insignia or the Astra so are you really gaining anything?

Edited by Alfa Pete on Sunday 12th January 20:03

Edited by Alfa Pete on Sunday 12th January 20:06

Linf

Original Poster

43 posts

106 months

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[news]

Sunday 12th January 2020

Alfa Pete said:

Just playing devils advicate here and I have recently come out of a company car but do make sure sure you do your sums carefully.

Pluses

Factor in BIK saving
Extra cash allowance
Mileage allowance
Claiming back difference to 45p

But

Factor in depreciation
Servicing
Tyres
Insurance ( I had no NCD and needed to have business use- expensive!)

Tax
The tax of £200 a month is pretty good for a fully expenses car that you don’t have to budget for maintenance/ tax insurance on.

I’ve gained choice and like owning my own car but the savings are marginal once I’ve totted everything up and I’m playing the market in terms of depreciation.

Some of the cars suggested aren’t that disimilar to the Insignia or the Astra so are you really gaining anything?

Edited by Alfa Pete on Sunday 12th January 20:03

Edited by Alfa Pete on Sunday 12th January 20:06

I keep going over and over this in my head at the moment too. I think part of it is I’m annoyed at paying BIK on a older insignia with the prospect of going into another insignia after.

My plan is to run a cheaper car for a couple years and then upgrade again once I’ve saved up a bit more.

At the minute my sums are showing an additional £750 a month going on to car allowance;
- £350 approx after tax for car allowance
- £200 (current BIK and personal fuel spend)
- £200 fuel claim back (average 2000 miles @ 26p a mile, minus a budget of £320 for fuel to cover that and any personal fuel)

Plus the additional 45p claim back.

Then setting aside £300 a month to cover all the fun stuff like depreciation/tyres/maintenance/insurance, will still leaving me a nice £450 a month up which can be saved up.

NCB wise, my wife’s car is insured with myself as the main driver with 9 years NCB so will be transferring them and putting her to the main driver, had a look at a multi car policy which is showing the total insurance cost at an additional £40 a month to what I’m paying now.

It is a bit of a risk doing this as I lose the stress free driving that I’ve previously had, but as you said it gives more choice and freedom. For example my boss has an S4, which makes me jealous lol.

LunarOne

7,292 posts

166 months

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Monday 13th January 2020

I had a car allowance of £500/mth back in the early 2000s which would have got me a new Focus or something like that. Instead I considered the money as a step up to a much nicer car. In the end I bought a new fully loaded BMW 330Ci Coupe on Hire purchase. By the time I left the company the car was paid off and it was mine. OK so I only did 12k a year total but I still own it to this day!

interstellar

5,033 posts

175 months

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Monday 13th January 2020

Linf said:

I keep going over and over this in my head at the moment too. I think part of it is I’m annoyed at paying BIK on a older insignia with the prospect of going into another insignia after.

My plan is to run a cheaper car for a couple years and then upgrade again once I’ve saved up a bit more.

At the minute my sums are showing an additional £750 a month going on to car allowance;
- £350 approx after tax for car allowance
- £200 (current BIK and personal fuel spend)
- £200 fuel claim back (average 2000 miles @ 26p a mile, minus a budget of £320 for fuel to cover that and any personal fuel)

Plus the additional 45p claim back.

Then setting aside £300 a month to cover all the fun stuff like depreciation/tyres/maintenance/insurance, will still leaving me a nice £450 a month up which can be saved up.

NCB wise, my wife’s car is insured with myself as the main driver with 9 years NCB so will be transferring them and putting her to the main driver, had a look at a multi car policy which is showing the total insurance cost at an additional £40 a month to what I’m paying now.

It is a bit of a risk doing this as I lose the stress free driving that I’ve previously had, but as you said it gives more choice and freedom. For example my boss has an S4, which makes me jealous lol.

Just checking the bit where you say

“Plus the additional 45p claim back”

You won’t get 45p at any point if your employer is giving you 26p you can only claim the tax relief on the difference between 45p and 26p so 19p

Then depending on your tax band , let’s assume it’s 40% you will only get 0.08p (40% of 19p) per mile back from hmrc on the first 10000 miles only.

This equates to £800 in total (so about £65 a month).

After 10000 miles per year you can only claim up to 25p per mile and your employer is giving you 26p so for any mileage above 10k your claim is nil.

You might know this but the way I read your message it doesn’t read like you had taken this into account.

Oilchange

9,686 posts

289 months

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Monday 13th January 2020

Bloody hell, isn't it just worth getting paid more. What a pain in the ass

Linf

Original Poster

43 posts

106 months

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[news]

Monday 13th January 2020

interstellar said:

Just checking the bit where you say

“Plus the additional 45p claim back”

You won’t get 45p at any point if your employer is giving you 26p you can only claim the tax relief on the difference between 45p and 26p so 19p

Then depending on your tax band , let’s assume it’s 40% you will only get 0.08p (40% of 19p) per mile back from hmrc on the first 10000 miles only.

This equates to £800 in total (so about £65 a month).

After 10000 miles per year you can only claim up to 25p per mile and your employer is giving you 26p so for any mileage above 10k your claim is nil.

You might know this but the way I read your message it doesn’t read like you had taken this into account.

It’s all a minefield, unsure how my company works it but we get paid for all the mileage.

Previously when I was putting my own fuel in my company car we used to get a tax free lump every three months which was to do with the 45p per mile difference.

Linf

Original Poster

43 posts

106 months

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[news]

Monday 13th January 2020

Oilchange said:

Bloody hell, isn't it just worth getting paid more. What a pain in the ass

The things we do to make an extra buck ey

interstellar

5,033 posts

175 months

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Monday 13th January 2020

Linf said:

interstellar said:

Just checking the bit where you say

“Plus the additional 45p claim back”

You won’t get 45p at any point if your employer is giving you 26p you can only claim the tax relief on the difference between 45p and 26p so 19p

Then depending on your tax band , let’s assume it’s 40% you will only get 0.08p (40% of 19p) per mile back from hmrc on the first 10000 miles only.

This equates to £800 in total (so about £65 a month).

After 10000 miles per year you can only claim up to 25p per mile and your employer is giving you 26p so for any mileage above 10k your claim is nil.

You might know this but the way I read your message it doesn’t read like you had taken this into account.

It’s all a minefield, unsure how my company works it but we get paid for all the mileage.

Previously when I was putting my own fuel in my company car we used to get a tax free lump every three months which was to do with the 45p per mile difference.

Doesn’t matter what the company does you will need the above for your calculations as it’s hmrc regulated so after 10000 miles you won’t be able
to claim any tax relief.