Company car advice
Discussion
Hi all,
I’ve been offered options on a new job. I’d appreciate some advice in choosing which is best. Or how I can weight it up via some sort of calculation.
I already have a car at the moment an e220d 2018 plate which I own outright.
Option one is £6,000 per year car allowance but it includes fuel. (I didn’t think fuel could be included but apparently it is.)
Option two is to take the company car they have offered a new golf 8 tsi plug-in hybrid with a fuel card.
Salary is around 53k plus a 10-15k bonus each year.
Any info on how best to weigh it up would be really appreciated.
Kind regards
I’ve been offered options on a new job. I’d appreciate some advice in choosing which is best. Or how I can weight it up via some sort of calculation.
I already have a car at the moment an e220d 2018 plate which I own outright.
Option one is £6,000 per year car allowance but it includes fuel. (I didn’t think fuel could be included but apparently it is.)
Option two is to take the company car they have offered a new golf 8 tsi plug-in hybrid with a fuel card.
Salary is around 53k plus a 10-15k bonus each year.
Any info on how best to weigh it up would be really appreciated.
Kind regards
You need to run the figures for BIK for the car, the list price, the percentage tax based on emissions and fuel type using the government list, then using your salary see what you will be paying (like 20K list price car, with a 20% emissions tax = you will be taxed on £4K a year, but pay 20%, or 40% of that £4K depending on your tax rate) which will be taken from your salary with a tax band change.
Also fuel cards are taxed very highly if they include personal miles. You will almost always be better off paying your own private fuel and claiming the business fuel at cost or whatever your company uses.
Also fuel cards are taxed very highly if they include personal miles. You will almost always be better off paying your own private fuel and claiming the business fuel at cost or whatever your company uses.
Think about items outside of the car aswell
I was buying a house in a few years so turned down the company car and took the higher income to get myself on the property ladder. Allowed me to secure a larger mortgage
For me, similar per year (£6,000) it was better to take the allowance. Do you still get advisory fuel rates or 45p per mile for travel ?
You can go online and do a direct comparison, I’m sure there’s a website. “Take home pay calculator “
I was buying a house in a few years so turned down the company car and took the higher income to get myself on the property ladder. Allowed me to secure a larger mortgage
For me, similar per year (£6,000) it was better to take the allowance. Do you still get advisory fuel rates or 45p per mile for travel ?
You can go online and do a direct comparison, I’m sure there’s a website. “Take home pay calculator “
£6k is only about £290pm as it will all be 40%
£100pm for servicing, insurance and tax leaves you about £2.3k to cover depreciation and any unexpected bills.
Unless you do big private mileage the tax on the fuel card isnt worth it and you are better just claiming business mileage.
I would run the BIK on the golf however, I run an EV as my company car as the tax is bugger all and I have a similar allowance £6.1k which is 100% not worth it when my compamy car lists at 55k.
£100pm for servicing, insurance and tax leaves you about £2.3k to cover depreciation and any unexpected bills.
Unless you do big private mileage the tax on the fuel card isnt worth it and you are better just claiming business mileage.
I would run the BIK on the golf however, I run an EV as my company car as the tax is bugger all and I have a similar allowance £6.1k which is 100% not worth it when my compamy car lists at 55k.
I only ever had one company car that I got with a promotion in early 1992 when there was no car allowance option, it was just Austin/Rover, Ford or Vauxhall!
But around the middle of the year it was obvious the firm was in financial trouble and I got made redundant just before Christmas so I had no car after I took it back to Head Office.
Next time I qualified for a company car was in late 2004 but this time with a monthly allowance option. I took the allowance for a few months while I made my mind up. Possibly a bit of "once bitten, twice shy" kicked in, but as there was nothing I fancied on the company list anyway I took the allowance and bought a 10 month old BMW 320td Compact that came with a 5 year Service Pack.
Company also offered an interest free loan to buy but anything over £5K was taxed as a BIK on the HMRC determined interest saving, so I borrowed £4,800 over 2 years! I could also claim business mileage fuel.
There were so many options I couldn't work out if I had made the best choice.
But another car later when I left in 2010 at least I still had a car!
But around the middle of the year it was obvious the firm was in financial trouble and I got made redundant just before Christmas so I had no car after I took it back to Head Office.
Next time I qualified for a company car was in late 2004 but this time with a monthly allowance option. I took the allowance for a few months while I made my mind up. Possibly a bit of "once bitten, twice shy" kicked in, but as there was nothing I fancied on the company list anyway I took the allowance and bought a 10 month old BMW 320td Compact that came with a 5 year Service Pack.
Company also offered an interest free loan to buy but anything over £5K was taxed as a BIK on the HMRC determined interest saving, so I borrowed £4,800 over 2 years! I could also claim business mileage fuel.
There were so many options I couldn't work out if I had made the best choice.
But another car later when I left in 2010 at least I still had a car!
Either is going to be affordable on a decent salary like that, so the question I'd be asking first is "do you really want to drive a Mk8 Golf just to save a few quid?" As you currently drive around in something significantly bigger and better, I suspect the answer may be no.
Key things to check/think about are:
1. What's the maximum age of cars allowed on the grey fleet? Many companies only allow you to use cars up to 7 years old, which would mean you need to replace the Merc in 2 years time if you take the allowance.
2. What mileage (business/personal) are you expecting to do? If the business miles are fairly inconsequential to the overall wear of the car, taking the allowance is probably a better option. If it's going to be 30k business miles per year, you're better off wearing out someone else's car!
3. Do they allow you to pay more (salary sacrifice) to upgrade to something higher spec? This might be a good option if there are a lot of company miles involved and you'd prefer a car more similar to your current one.
Key things to check/think about are:
1. What's the maximum age of cars allowed on the grey fleet? Many companies only allow you to use cars up to 7 years old, which would mean you need to replace the Merc in 2 years time if you take the allowance.
2. What mileage (business/personal) are you expecting to do? If the business miles are fairly inconsequential to the overall wear of the car, taking the allowance is probably a better option. If it's going to be 30k business miles per year, you're better off wearing out someone else's car!
3. Do they allow you to pay more (salary sacrifice) to upgrade to something higher spec? This might be a good option if there are a lot of company miles involved and you'd prefer a car more similar to your current one.
Hi All,
Thanks so much this is really useful info. I think I’m more swayed to keep the merc as it is nicer. My predecessor does around 20k miles per year but covers the whole UK. Whereas the role will now only be everything under Oxford. So I think I’ll be doing around 15k. Based on my quick calculations of visits to key customers at the set frequency.
Regards the claiming back of fuel If I take the allowance is where I’m maybe at a disadvantage. They said the £6k allowance includes any fuel I use as well. Which I thought doesn’t really seem fair in todays world with high fuel prices.
I didn’t realise the salary sacrifice was an option so I’ll explore that a little more too thanks for highlighting that.
Thanks so much this is really useful info. I think I’m more swayed to keep the merc as it is nicer. My predecessor does around 20k miles per year but covers the whole UK. Whereas the role will now only be everything under Oxford. So I think I’ll be doing around 15k. Based on my quick calculations of visits to key customers at the set frequency.
Regards the claiming back of fuel If I take the allowance is where I’m maybe at a disadvantage. They said the £6k allowance includes any fuel I use as well. Which I thought doesn’t really seem fair in todays world with high fuel prices.
I didn’t realise the salary sacrifice was an option so I’ll explore that a little more too thanks for highlighting that.
I'm struggling with the concept of the employer not paying business mileage. I picked the very first MPG reference I could find which was 15p per mile for your car. Your estimated mileage fuel cost works out at about 75% of your car allowance post tax/NI.
I do think that that you could claim AMAP rates (45p for the first 10k, 25p thereafter) though, since the employer is not paying a rate per mile so could claim back some money via a tax rebate using the above rates. But you may wish to check this with HMRC first
I do think that that you could claim AMAP rates (45p for the first 10k, 25p thereafter) though, since the employer is not paying a rate per mile so could claim back some money via a tax rebate using the above rates. But you may wish to check this with HMRC first
LastPoster said:
I'm struggling with the concept of the employer not paying business mileage. I picked the very first MPG reference I could find which was 15p per mile for your car. Your estimated mileage fuel cost works out at about 75% of your car allowance post tax/NI.
Yes, this bit doesn't make much sense, and certainly doesn't give any incentive to take the allowance option. The OP could conceivably end up spending all their allowance on fuel which is hardly an attractive alternative to a company car.My employer pays a similar allowance, but business travel is reimbursed separately at 18p a mile. At the end of the year, we can submit a MAR claim to HMRC to reclaim income tax on the difference between the 18p/mile reimbursement, and the HMRC's AMR (45p/mile on the first 10k, then 25p/mile beyond that) on the business miles travelled.
I'd suggest the OP double checks that policy re included mileage, as it sounds incredibly unattractive, and being honest, more than a little unreasonable. It also puts considerable risk onto the employee given that any cost of an unexpected rise in business mileage is shouldered by them, and not the business.
Thanks again,
This is my predicament I have told them I struggle to see how they can’t pay business miles. As it turns out this is very new to them. Before they had everyone on a company car scheme with fuel card which you get taxed heavily on but they have full control of the fleet. It’s only because I really want to keep my car they have looked into it for me and offered it as an option.
My current arrangement means I can claim back the difference with HMRC I’m still yet to do this at the moment but I will call HMRC to find out if my new potential employer won’t pay anything towards fuel how much I can claim back from them.
I did mention I’ve never heard of an employer not pay business miles before! And there is no fuel card with this option only if I take the company car.
This is my predicament I have told them I struggle to see how they can’t pay business miles. As it turns out this is very new to them. Before they had everyone on a company car scheme with fuel card which you get taxed heavily on but they have full control of the fleet. It’s only because I really want to keep my car they have looked into it for me and offered it as an option.
My current arrangement means I can claim back the difference with HMRC I’m still yet to do this at the moment but I will call HMRC to find out if my new potential employer won’t pay anything towards fuel how much I can claim back from them.
I did mention I’ve never heard of an employer not pay business miles before! And there is no fuel card with this option only if I take the company car.
I'm pro company car on this one. Made the mistake of getting my own car.
First benefit is it's a fully expensed car, you pay your BIK and that's pretty much it. No insurance, no maintenance, no monthly payments. Best part is things like tyres and unexpected failures are totally covered by the lease provider (in most cases).
A colleague of mine took the cash allowance and bought an Audi A6, had a rock hit the radiator and hit with an unexpected 600 bill.
Putting all that wear on a car that's not yours is a lot easier to stomach than putting all those miles and wear on a personal car that you actually like. Stuff like motorway stonechips can be gutting.
The BIK payment will be quite low considering it's a PHEV. Certainly sub £200 a month which when you consider what you get in exchange is a pretty stonking deal.
If you find that its a bit dull driving around in a golf all the time, you could use the funds freed up by the sale of the E Class for a fun weekender etc or pocket the rest and do what you please anyway.
First benefit is it's a fully expensed car, you pay your BIK and that's pretty much it. No insurance, no maintenance, no monthly payments. Best part is things like tyres and unexpected failures are totally covered by the lease provider (in most cases).
A colleague of mine took the cash allowance and bought an Audi A6, had a rock hit the radiator and hit with an unexpected 600 bill.
Putting all that wear on a car that's not yours is a lot easier to stomach than putting all those miles and wear on a personal car that you actually like. Stuff like motorway stonechips can be gutting.
The BIK payment will be quite low considering it's a PHEV. Certainly sub £200 a month which when you consider what you get in exchange is a pretty stonking deal.
If you find that its a bit dull driving around in a golf all the time, you could use the funds freed up by the sale of the E Class for a fun weekender etc or pocket the rest and do what you please anyway.
I'm in a similar position and not sure which is the best option to take.
I can either take the £6600pa car allowance, or a company car (EV). Company policy says the vehicle can't be older than 10 years old for the car allowance and both of mine are 13 years old, so I'll need to buy something anyway.
40% tax rate so I'll only really get half the allowance. Company car comes with all costs covered apart from charging and I'll do very little business mileage (~5k business miles a year).
I'm steering more towards a company car with all of the costs covered, low BIK with it being an EV, losing half the allowance due to the higher tax rate and then having to buy a new car either way due to the age of my current one.
Is there anything that I'm missing/forgetting?
I can either take the £6600pa car allowance, or a company car (EV). Company policy says the vehicle can't be older than 10 years old for the car allowance and both of mine are 13 years old, so I'll need to buy something anyway.
40% tax rate so I'll only really get half the allowance. Company car comes with all costs covered apart from charging and I'll do very little business mileage (~5k business miles a year).
I'm steering more towards a company car with all of the costs covered, low BIK with it being an EV, losing half the allowance due to the higher tax rate and then having to buy a new car either way due to the age of my current one.
Is there anything that I'm missing/forgetting?
T_S_M said:
I'm in a similar position and not sure which is the best option to take.
I can either take the £6600pa car allowance, or a company car (EV). Company policy says the vehicle can't be older than 10 years old for the car allowance and both of mine are 13 years old, so I'll need to buy something anyway.
40% tax rate so I'll only really get half the allowance. Company car comes with all costs covered apart from charging and I'll do very little business mileage (~5k business miles a year).
I'm steering more towards a company car with all of the costs covered, low BIK with it being an EV, losing half the allowance due to the higher tax rate and then having to buy a new car either way due to the age of my current one.
Is there anything that I'm missing/forgetting?
Does your place do salary sacrifice cars? If your mileage is low might be cheaper to take the allowance and order a car that way.I can either take the £6600pa car allowance, or a company car (EV). Company policy says the vehicle can't be older than 10 years old for the car allowance and both of mine are 13 years old, so I'll need to buy something anyway.
40% tax rate so I'll only really get half the allowance. Company car comes with all costs covered apart from charging and I'll do very little business mileage (~5k business miles a year).
I'm steering more towards a company car with all of the costs covered, low BIK with it being an EV, losing half the allowance due to the higher tax rate and then having to buy a new car either way due to the age of my current one.
Is there anything that I'm missing/forgetting?
T_S_M said:
I'm in a similar position and not sure which is the best option to take.
I can either take the £6600pa car allowance, or a company car (EV). Company policy says the vehicle can't be older than 10 years old for the car allowance and both of mine are 13 years old, so I'll need to buy something anyway.
40% tax rate so I'll only really get half the allowance. Company car comes with all costs covered apart from charging and I'll do very little business mileage (~5k business miles a year).
I'm steering more towards a company car with all of the costs covered, low BIK with it being an EV, losing half the allowance due to the higher tax rate and then having to buy a new car either way due to the age of my current one.
Is there anything that I'm missing/forgetting?
Im doing exactly the same - although my car allowance is £paltry and leases been v.expensive just now, an EV company car just makes sense - £30 BIK for a year or so then £60 for the next couple of years. My company even have a policy where any car funded by a car allowance needs to be zero emissions - not on such a low allowance it won't be. I can either take the £6600pa car allowance, or a company car (EV). Company policy says the vehicle can't be older than 10 years old for the car allowance and both of mine are 13 years old, so I'll need to buy something anyway.
40% tax rate so I'll only really get half the allowance. Company car comes with all costs covered apart from charging and I'll do very little business mileage (~5k business miles a year).
I'm steering more towards a company car with all of the costs covered, low BIK with it being an EV, losing half the allowance due to the higher tax rate and then having to buy a new car either way due to the age of my current one.
Is there anything that I'm missing/forgetting?
I really can't see any downsides for me, my lease expires soon - ill save a fortune in personal 'fuel' - the company even pay for a charger at my home!
A lot depends on mileage you are doing, I always had company cars and fuel cards from 2002 up until last year, it was a big shock to come out of the scheme but they went all electric.
I have 3 kids and dog and we go camping and bike riding lots, I took the £7200 allowance and bought a transporter T6.
Touch wood in the 14 months I've had it it's only needed service and rear brakes.
My mileage from work has gone from 30k a year to 5k of late so for me it's not an issue.
I'm also building up a bit of equity in the transporter.
My work are ok with it as it's got 5 doors and 5 sests, I wouldn't say they were over the moon but not said anything to me officially.
I have 3 kids and dog and we go camping and bike riding lots, I took the £7200 allowance and bought a transporter T6.
Touch wood in the 14 months I've had it it's only needed service and rear brakes.
My mileage from work has gone from 30k a year to 5k of late so for me it's not an issue.
I'm also building up a bit of equity in the transporter.
My work are ok with it as it's got 5 doors and 5 sests, I wouldn't say they were over the moon but not said anything to me officially.
Hi,
I’m handing back my company car in Jan as the business has stopped supplying them and moving everyone into car allowance.
Pro of a company car:
New car every 4 years or 80k miles (it was for me anyway)
Not a penny to spend on maintenance
If it breaks or get damaged, no stress about it
Against:
Only 11p a mile on diesel. With my own car I’ll be getting 28p plus I can claim another 17p via HMRC at the end of the year (or something similar)
My 2018 V60 cost me a fortune in tax.
If your are doing a lot of miles (18-20k +), I would say company car, if not keep what you have
I’m handing back my company car in Jan as the business has stopped supplying them and moving everyone into car allowance.
Pro of a company car:
New car every 4 years or 80k miles (it was for me anyway)
Not a penny to spend on maintenance
If it breaks or get damaged, no stress about it
Against:
Only 11p a mile on diesel. With my own car I’ll be getting 28p plus I can claim another 17p via HMRC at the end of the year (or something similar)
My 2018 V60 cost me a fortune in tax.
If your are doing a lot of miles (18-20k +), I would say company car, if not keep what you have
greggy50 said:
Does your place do salary sacrifice cars? If your mileage is low might be cheaper to take the allowance and order a car that way.
Unfortunately not, its either a supplied company car or you take the car allowance. If I had a car that met the criteria currently I'd probably go with the car allowance, but having an older car currently means I'll have to change it anyway.
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