Comapny car allowance

[Extra 300 Driver]

Well, I have been offered a company car allowance. I get 4K a year extra to take home in my bank, thants it.

What do you think I should get? I have the Cerbera up for sale and I cant really use my 1982 Mini, although it would be fun. Thining of a 111S Elise, doesnt have to be new just a car fitting of my status in the Company.

How does the company car thing work normally?

[pdV6]

Extra 300 Driver said:

How does the company car thing work normally?

I don't think there's a "normally" you can apply; you just have to see what rules your company has in relation to "company" cars.

As you are given an allowance, it is effectively taxed income. Therefore, unless there are rules such as "4 doors, no soft-tops" etc, I reckon you have a free reign. I suspect most companies that give a car allowance would insist that you use your own car for company business and therefore you'd be expeceted to pay for fuel, wear & tear and business use insurance out of your own pocket (reimbursed by way of the allowance). Other than that, I think they'd have a hard time insisting on you using a particular type of car.

As a (not very helpful) example, MrsV6 has a pre-tax car allowance of ~£400 pcm. As she doesn't need to travel on business very often (and when she does its to London, therefore by train) we just run 2 private cars and treat the allowance as general income.

[pdV6]

Extra 300 Driver said:

I get 4K a year ... doesnt have to be new just a car fitting of my status in the Company.

Actually, that's a bit of an odd requirement. Surely they'd have to define what they mean by that to make it stick?

How many executive-type cars are there that you could buy, insure, run and maintain for just over £2k a year (assuming worst case tax)?

[silversun]

I have a car allowance of £2500 per year. Not sure how yours works, but with mine you can either take the money (as I have done) and it goes on your pay packet as taxable income each month or you can get a car from a list they give you. The majority of people seem to take the money, as I understand it, it works out financially much better that way.

[Extra 300 Driver]

pdV6 said:

Extra 300 Driver said: I get 4K a year ... doesnt have to be new just a car fitting of my status in the Company. Actually, that's a bit of an odd requirement. Surely they'd have to define what they mean by that to make it stick? How many executive-type cars are there that you could buy, insure, run and maintain for just over £2k a year (assuming worst case tax)?

I think its try try an put off people just keeping the cash and running an old banger. The oldest car, that one senior manager has, in the staff car park is a 1996 Golf and I think that get fround apon.

I am sure I would still be able to clain for fuel, just not at the normal 42p/mile

[esselte]

silversun said:

I have a car allowance of £2500 per year. Not sure how yours works, but with mine you can either take the money (as I have done) and it goes on your pay packet as taxable income each month or you can get a car from a list they give you. The majority of people seem to take the money, as I understand it, it works out financially much better that way.

Is that nett or gross? If it's gross then it doesn't leave much room to buy and run a car for a year if you include tax,insurance,servicing etc.Even if it's nett it still doesn't leave you a lot.

[T5-R]

Extra 300 Driver said:

I think its try try an put off people just keeping the cash and running an old banger. The oldest car, that one senior manager has, in the staff car park is a 1996 Golf and I think that get fround apon. I am sure I would still be able to clain for fuel, just not at the normal 42p/mile

Umm...why is a 1996 Golf frowned upon?

I used to get a car allowance with my last job and my bosses didn't give a toss what I drove, just as long as I drove something, otherwise the perk would have been taken away from me.

I think companies are starting to issue 'allowances' instead of company cars as it's easier for them (and you) when Mr.Taxman comes collecting. The allowance just gets added on to your salary and is then taxed with your monthly wage.

>> Edited by T5-R on Tuesday 13th December 09:58

[pzero64]

I get £3,000/year plus £0.40/mile for business use reducing to £0.25/mile should I exceed 10,000 miles in a financial year. No payment for to/from work miles. The £3,000/year allowance is taxed whereas the payment for business miles is a government figure and is a straight payment not subject to deductions.

Another guy here gets similar to me. We are both based in the office.

3 other guys, based onsite, get no yearly allowance but all their mileage is classed as business, so they rely on large monthly payments for the business miles to cover their costs (these guys have pretty good positions/salaries).

Chap that sits next to me was offered a job with another civil engineering company and the car deal was £6,000/year with payments of £0.09/mile to/from work and £0.13/mile business use.

The company where I work issued a memo 3 months ago offering a company wide private car deal. It offered NO yearly allowance and business mileage at the £0.40/mile reducing to £0.25/mile as above. Not one person has taken up the offer. I think most people voiced their concerns that they thought the company was taking the pee.

I was told by the MD that I would be the last person to be allowed to run my own car. This latest offer is a change in attitude and must have some benefit to the company.

[davetherave1970]

I get £450 per month through my expenses and I claim 15p per mile for any business mileage. I run a Cerb and BMW 3 series. If I'm going to do more than 150 mile round trip in a day then I take the BMW, any less I give the Cerb a run!
Taxed at end of year and is then put on my tax code.

[pentoman]

What's "a car fitting of your status in the company"?

Does that mean it can't look too flash? In that case you could look at old q-car type stuff like a Mercedes 500E, debadged E39 M5 or something?

Russell

[havoc]

pdV6 said:

Extra 300 Driver said: How does the company car thing work normally? I don't think there's a "normally" you can apply; you just have to see what rules your company has in relation to "company" cars. As you are given an allowance, it is effectively taxed income. Therefore, unless there are rules such as "4 doors, no soft-tops" etc, I reckon you have a free reign. I suspect most companies that give a car allowance would insist that you use your own car for company business and therefore you'd be expeceted to pay for fuel, wear & tear and business use insurance out of your own pocket (reimbursed by way of the allowance). Other than that, I think they'd have a hard time insisting on you using a particular type of car. As a (not very helpful) example, MrsV6 has a pre-tax car allowance of ~£400 pcm. As she doesn't need to travel on business very often (and when she does its to London, therefore by train) we just run 2 private cars and treat the allowance as general income.

What he said.

Allowance is gross, taxed as normal (not sure about NIC...think they apply), and you're expected to fund purchase, insurance etc. from it. You'll be expected to use it for 'business use', but should still get a reduced mileage rate from the company to cover petrol (mine is 9p (bar-stewards!!!) meaning I lose money on every business trip, but thankfully they're few).

What is permissible depends on company - one place I worked at it had to be <4y.o. at date of purchase and 'suitable for the image of the company'. Current place is a lot more flexible - we've everything from a Z4 to a 10y.o. Fiesta!

[baskey]

i will be getting a car allowance with my new job... thereare two options: to either use the car for work; or not... and i can't get a decent answer which to tick..! (i know it's something to do with the way you're taxed).

i won't use the car for work hardly ever. i will be working in an office in central london and as far as i can gather it's really just a way of giving me extra money but without that money being pensionable. mrs b isn't *obliged* to have a car for her job but uses it so i think we're thinking just retain the status quo - she can use our car, if i need it i'll use it and she can borrow someone's co.car from her firm...

to be honest it's a great bonus as i am office based, but i think a lot of the money would get used up just running a normalish car if you did serious mileage.

oh and i can have anything i like - as long as it 'reflects the professional image of the company' so no dropped, neon-illuminated saxo for me! seriously it could be a classic...



>> Edited by baskey on Tuesday 13th December 12:31

[silversun]

esselte said:

Is that nett or gross? If it's gross then it doesn't leave much room to buy and run a car for a year if you include tax,insurance,servicing etc.Even if it's nett it still doesn't leave you a lot.

It's gross. I know, not a great deal, but hey, every little counts.

[mindgam3]

I think the basic company car scheme in general is:

- Take the added pay per month/year and buy whatever you want

- Don't take the pay and choose a car from a pre-defined list

[Extra 300 Driver]

Thanks for the replies.

I will look more into this, but I think an Elise is the way for me. Looking at the used prices a 111R is looking very attractive.

BTW the £4K is net so an extra £350 or so a month.

[rsvmilly]

I get £7K and we have no restrictions on what we buy. I wouldn't get away with running a banger, though.

Saying that, though, the cheapest employee-owned car in the car park is an old Mazda 323 which can't be worth any more than, what, £1500?

Unfortunately, my company only pay 12p/mile business and my Evo uses more like 20-25p petrol

(I make a point never to use it for business )