Car allowance? How much cash do you get post tax?
Discussion
[mods this might be one for the jobs, but wasn't sure....]
If you get a car allowance how much do you get each month post tax?
what would you feel reasonable if you were paid 40p/22p per mile for fuel?
We have to run a "prestige" car less than 5 years old, and we're having a "discussion" with management about what a fair monthly figure would be.
I do about 17k miles a year purely on business miles.
If you get a car allowance how much do you get each month post tax?
what would you feel reasonable if you were paid 40p/22p per mile for fuel?
We have to run a "prestige" car less than 5 years old, and we're having a "discussion" with management about what a fair monthly figure would be.
I do about 17k miles a year purely on business miles.
I think I get about 350 quid a month pre-tax (which wouldn't run anything very "prestige" on the scheme). How much tax you pay obviously depends on what you do with it.
ETA: I believe it will run a poverty spec 320d, but that's about the closest you'll get.
ETA: I believe it will run a poverty spec 320d, but that's about the closest you'll get.
Edited by kambites on Wednesday 21st August 10:42
You would need C. £300-£400 net to run something like an E220/320D on a PCP/personal contract hire. There are current personal hire rates of £263 with £2.5k deposit for an E220 with 10k miles so assume that the 17k miles would take this to £300pm or so? plus allow a bit extra for the accumulation of the next deposit?
You should then pay the reccomended mileage rates (12-26ppm IIRC) and aid any employees to complete a tax return to reclaim any differance between the 12-26ppm to cover insurance/tax etc.
You should then pay the reccomended mileage rates (12-26ppm IIRC) and aid any employees to complete a tax return to reclaim any differance between the 12-26ppm to cover insurance/tax etc.
Edited by kiethton on Wednesday 21st August 11:07
Mr E said:
By "prestige" I assume they mean "recent Audi/BMW/Merc oil burner"?
Volvo/jag/Lr etc also ok probably wouldn't be happy with Kia/Ford/Vauxhall etc
Honda probably "just" ok.
Its all a bit silly and the age thing is a pain.
Comcar doesn't really help if you get a "cash" car allowance.
£465 per month before tax, 26ppm fuel allowance for petrol engines over 2 litres, car can be any make or model as long as it is fit for purpose.
Running a 3.0si Z4 I end up £350 per year in the good after everything including servicing, tyres, insurance etc.
The stricter they are with the policy the more frustrating it is for you. 17k miles a year isnt a huge amount so it may be cheaper to run a petrol. Most people nowadays arent really that bothered about their vendors/partners having 'prestiege' cars so dont feel you should get a German marque.
I would push the bosses to be more leinient with the rules...after all, you will be spending your time their, not them!
Running a 3.0si Z4 I end up £350 per year in the good after everything including servicing, tyres, insurance etc.
The stricter they are with the policy the more frustrating it is for you. 17k miles a year isnt a huge amount so it may be cheaper to run a petrol. Most people nowadays arent really that bothered about their vendors/partners having 'prestiege' cars so dont feel you should get a German marque.
I would push the bosses to be more leinient with the rules...after all, you will be spending your time their, not them!
Some misinformation posted in this thread.
It is important to separate car allowances and company cars.
If you take a car allowance you just pay income tax on the amount at whatever rate you are at (20, 40 or 45%)... Most companies' car allowances are around the £4k upwards mark, with a lot at £5k in my experience. Obviously depends on the industry. A £5k car allowance for a 40% tax payer equates to £250 per month after tax.
You pay no company car tax if you take an allowance. If you get a Fiesta or a Ferrari you just pay the income tax on your allowance at the appropriate rate.
What you will get is a mileage rate, proabbly reduced from the normal personal car rate, to cover your fuel and some element of maintenance on business miles. You can claim back the differnece between your mileage rate and 45p, multiplied by your tax band up to 10,000miles from HMRC.
You will also generally need to insure the car yourself. You will also only be able to get a personal lease deal. So I think those rates quoted above are business rates (although the poster has said personal) and a bit light. All of that needs to be factored into the calculation as an employee debating an allowance or a company car.
If you take a company car you pay tax based on the C02 emmisions, the list price of the car and your tax band.
Fuel cards complicate things further, but in my expereince are fairly few and far between these days, certainly for personal mileage.
Cheers Eric - Edited the upper tax rate.
It is important to separate car allowances and company cars.
If you take a car allowance you just pay income tax on the amount at whatever rate you are at (20, 40 or 45%)... Most companies' car allowances are around the £4k upwards mark, with a lot at £5k in my experience. Obviously depends on the industry. A £5k car allowance for a 40% tax payer equates to £250 per month after tax.
You pay no company car tax if you take an allowance. If you get a Fiesta or a Ferrari you just pay the income tax on your allowance at the appropriate rate.
What you will get is a mileage rate, proabbly reduced from the normal personal car rate, to cover your fuel and some element of maintenance on business miles. You can claim back the differnece between your mileage rate and 45p, multiplied by your tax band up to 10,000miles from HMRC.
You will also generally need to insure the car yourself. You will also only be able to get a personal lease deal. So I think those rates quoted above are business rates (although the poster has said personal) and a bit light. All of that needs to be factored into the calculation as an employee debating an allowance or a company car.
If you take a company car you pay tax based on the C02 emmisions, the list price of the car and your tax band.
Fuel cards complicate things further, but in my expereince are fairly few and far between these days, certainly for personal mileage.
Edited by panholio on Wednesday 21st August 11:08
Cheers Eric - Edited the upper tax rate.
Edited by panholio on Wednesday 21st August 11:59
A car allowance is just additional salary so is taxed just like normal salary.
If you have an agreed Gross Annual Salary of £30,000 and an annual Car Allowance of £2,000, you will pay PAYE AND Class 1 NI on a "salary" of £32,000.
Your employer will also pay Employer's NI on an amount of £32,000.
By the way, the top rate of Income Tax is no longer 50% but 45%.
If you have an agreed Gross Annual Salary of £30,000 and an annual Car Allowance of £2,000, you will pay PAYE AND Class 1 NI on a "salary" of £32,000.
Your employer will also pay Employer's NI on an amount of £32,000.
By the way, the top rate of Income Tax is no longer 50% but 45%.
Hi Guys, I'm clear on the tax position, and we've been buying private vehicles paid for by a "cash car allowance" for almost 2 years now.
We used to all have Audi A6s, and the argument is that they company doesn't pay a sufficient car allowance to run these types of vehicles. I don't feel comfortable posting what we receive on an open forum as I know there are other PHers within the company!
We used to all have Audi A6s, and the argument is that they company doesn't pay a sufficient car allowance to run these types of vehicles. I don't feel comfortable posting what we receive on an open forum as I know there are other PHers within the company!
When I was opted out, I was clearing circa £350pm take-home on the car allowance.
We had to have something under 3 years old, 5 door, non 4x4.
If you are expected to run something "prestige" I would be asking for a decent allowance; more than £6k pa, which is the norm. Especially if you're a 40%+ tax payer.
We had to have something under 3 years old, 5 door, non 4x4.
If you are expected to run something "prestige" I would be asking for a decent allowance; more than £6k pa, which is the norm. Especially if you're a 40%+ tax payer.
Muzzer79 said:
When I was opted out, I was clearing circa £350pm take-home on the car allowance.
We had to have something under 3 years old, 5 door, non 4x4.
If you are expected to run something "prestige" I would be asking for a decent allowance; more than £6k pa, which is the norm. Especially if you're a 40%+ tax payer.
thanks Muzzer, We had to have something under 3 years old, 5 door, non 4x4.
If you are expected to run something "prestige" I would be asking for a decent allowance; more than £6k pa, which is the norm. Especially if you're a 40%+ tax payer.
we're on substantially less than that, I can't make the numbers add up, and wanted to make sure I wasn't going mad.
panholio said:
Some misinformation posted in this thread.
It is important to separate car allowances and company cars.
If you take a car allowance you just pay income tax on the amount at whatever rate you are at (20, 40 or 45%)... Most companies' car allowances are around the £4k upwards mark, with a lot at £5k in my experience. Obviously depends on the industry. A £5k car allowance for a 40% tax payer equates to £250 per month after tax.
You pay no company car tax if you take an allowance. If you get a Fiesta or a Ferrari you just pay the income tax on your allowance at the appropriate rate.
What you will get is a mileage rate, proabbly reduced from the normal personal car rate, to cover your fuel and some element of maintenance on business miles. You can claim back the differnece between your mileage rate and 45p, multiplied by your tax band up to 10,000miles from HMRC.
You will also generally need to insure the car yourself. You will also only be able to get a personal lease deal. So I think those rates quoted above are business rates (although the poster has said personal) and a bit light. All of that needs to be factored into the calculation as an employee debating an allowance or a company car.
If you take a company car you pay tax based on the C02 emmisions, the list price of the car and your tax band.
Fuel cards complicate things further, but in my expereince are fairly few and far between these days, certainly for personal mileage.
Cheers Eric - Edited the upper tax rate.
Very helpful, thankyou. I get 8k a year, £1500 free fuel and a fuelcard. Tax returns are a nightmare !It is important to separate car allowances and company cars.
If you take a car allowance you just pay income tax on the amount at whatever rate you are at (20, 40 or 45%)... Most companies' car allowances are around the £4k upwards mark, with a lot at £5k in my experience. Obviously depends on the industry. A £5k car allowance for a 40% tax payer equates to £250 per month after tax.
You pay no company car tax if you take an allowance. If you get a Fiesta or a Ferrari you just pay the income tax on your allowance at the appropriate rate.
What you will get is a mileage rate, proabbly reduced from the normal personal car rate, to cover your fuel and some element of maintenance on business miles. You can claim back the differnece between your mileage rate and 45p, multiplied by your tax band up to 10,000miles from HMRC.
You will also generally need to insure the car yourself. You will also only be able to get a personal lease deal. So I think those rates quoted above are business rates (although the poster has said personal) and a bit light. All of that needs to be factored into the calculation as an employee debating an allowance or a company car.
If you take a company car you pay tax based on the C02 emmisions, the list price of the car and your tax band.
Fuel cards complicate things further, but in my expereince are fairly few and far between these days, certainly for personal mileage.
Edited by panholio on Wednesday 21st August 11:08
Cheers Eric - Edited the upper tax rate.
Edited by panholio on Wednesday 21st August 11:59
Gassing Station | Jobs & Employment Matters | Top of Page | What's New | My Stuff