Company Car v Allowance - Page 1 - Car Buying

Scout-Sweep

Original Poster

20 posts

68 months

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Wednesday 30th December 2020

Hi All

I am very new to all this I’ve always had a Company Car, however in February/March I’m going to have start looking for a new / used vehicle as my Company have now decided that they want us to now have an allowance instead of Company Car. My lease isn’t actually up until 31st August 2021, however I have been told to start looking Feb/Mar as it can take that long to sort out new vehicle.

My question / need of advice, is I’ve been told that I’ll be given an allowance of £5500 per annum which will be taxed at 40% so approximately £3300 after tax. I currently have Company Car of Mercedes C-Class 220d AMG Line Estate currently BIk Tax of £5197 per annum, I was wondering whether anyone could advise how much per month including maintenance and insurance I should be looking at spending without having to add any of my own money towards a vehicle.

Jag_NE

3,335 posts

128 months

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Wednesday 30th December 2020

Can you advise what mileages you do and what rules there are around type of car etc.

Sporky

11,925 posts

92 months

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Wednesday 30th December 2020

Also what mileage rate they'll pay for your business travel.

Baldchap

9,620 posts

120 months

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Wednesday 30th December 2020

The joy of an allowance is that you have the asset at the end. If you consider BIK Vs the after tax allowance (I didn't think they were taxed?), then that's your budget for car, insurance and tax. You can of course typically claim per for use of own car though, which, depending on your company policies and mileage may well cover insurance, fuel and tax.

bencollins4

1,239 posts

234 months

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Wednesday 30th December 2020

Guess that would depend on any requirements for the car imposed by the company, mileage, what you are thinking of buying etc.

I just buy what I want with my allowance but have never leased as anything mildly interesting is very expensive at 30k miles a year.

The spinner of plates

18,084 posts

228 months

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Wednesday 30th December 2020

It all comes down to the annual mileage you do.

Without knowing that we’re all guessing.

covmutley

3,350 posts

218 months

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Wednesday 30th December 2020

If you have your car until August, and switching to an allowance, I don't get why they are still sorting your next car for you?

Scout-Sweep

Original Poster

20 posts

68 months

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Wednesday 30th December 2020

Hi All

Thanks for the reply’s. I do 20000 - 25000 per annum usually ! We have to have either diesel or hybrid, 5 doors. We have been told that we can go for used vehicle if we want but only up to 3 years old. They have said first 10000 miles paid at 45p per mile and 15p thereafter

Pit Pony

11,139 posts

149 months

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Wednesday 30th December 2020

Scout-Sweep said:

Hi All

Thanks for the reply’s. I do 20000 - 25000 per annum usually ! We have to have either diesel or hybrid, 5 doors. We have been told that we can go for used vehicle if we want but only up to 3 years old. They have said first 10000 miles paid at 45p per mile and 15p thereafter

Why 15p ? The HMRC allows 25p after 10k. I do t think 15p a mile is going to cover the fuel And servicing.

Bear in mind that you might be getting an allowance, but what if you commit to a 3 year contract, only to be made redundant before the end.

Scout-Sweep

Original Poster

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68 months

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Wednesday 30th December 2020

Pit Pony said:

Why 15p ? The HMRC allows 25p after 10k. I do t think 15p a mile is going to cover the fuel And servicing.

Bear in mind that you might be getting an allowance, but what if you commit to a 3 year contract, only to be made redundant before the end.

I have to admit that is a fear I have about being left with a vehicle that I can’t afford if the worse did happen.

bencollins4

1,239 posts

234 months

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Wednesday 30th December 2020

Scout-Sweep said:

Hi All

Thanks for the reply’s. I do 20000 - 25000 per annum usually ! We have to have either diesel or hybrid, 5 doors. We have been told that we can go for used vehicle if we want but only up to 3 years old. They have said first 10000 miles paid at 45p per mile and 15p thereafter

Buy used then if you can, something just under 3 years old. Regards running costs, I managed about 5p per mile maintenance costs and 11/12p per mile fuel costs running a 6 year old E90 330d over 90k miles and 3 years. Adding in depreciation at around 8/9p per mile I reckon I just about covered it for my 25p / mile rate, keeping the allowance ( and saving bik tax).

I didn't take in to account insurance as that varies massively and I would have to pay that for a car regardless of business use or personal.

Jag_NE

3,335 posts

128 months

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Wednesday 30th December 2020

I highly doubt you can go out and lease and maintain like for like with the budget. I’d be getting a bank loan for 15k and buy something like a diesel insignia.

Pit Pony

11,139 posts

149 months

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Wednesday 30th December 2020

The age limit on the car would piss me off, but them I'm doing 20K business miles a year in a car that cost £525 and is nearly 20 years old. The first 45p a mile fund the servicing repairs insurance tyres because a 3.2 petrol V6 barge costs about 19p a mile on fuel, but the 25p a mile probably only covers the fuel And tyres. I did a calculation in the summer, and I reckoned I was getting about £1500 profit out of using my own car for business. Current working from home so its costing me to own a car that u hardly use.

ANYWAY.
I'd be looking at this in terms of whether i could make a tax free profit out of the situation you are in. Within the rules.

ZX10R NIN

30,484 posts

153 months

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Wednesday 30th December 2020

Scout-Sweep

Original Poster

20 posts

68 months

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Wednesday 30th December 2020

ZX10R NIN said:

wow that is brilliant thanks for your help

covmutley

3,350 posts

218 months

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Wednesday 30th December 2020

That seems a pretty mean allowance given stipulations on age and if the bulk of that is business miles.

I would agree with the car loan route, but suggest you buy as older car as the company rules allow. Doing 25k miles a year will destroy the value very quickly!!

Court_S

14,662 posts

205 months

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Wednesday 30th December 2020

Scout-Sweep said:

Pit Pony said:

Why 15p ? The HMRC allows 25p after 10k. I do t think 15p a mile is going to cover the fuel And servicing.

Bear in mind that you might be getting an allowance, but what if you commit to a 3 year contract, only to be made redundant before the end.

I have to admit that is a fear I have about being left with a vehicle that I can’t afford if the worse did happen.

You can claim mileage relief back from HMRC if there’s a shortfall. Chap at work does it and it’s a decent chunk to add to his monthly pot.

I opted out last year because the BIK was becoming punitive, especially on diesels. We have some rules, but they’re more relaxed than yours. I doubt you’ll be able to get the equivalent opting out.