Car allowance or company car?

[steve1434]

Hi all

I have been offered a new job :d that comes with 5k car allowance or a company car, but I don't know which is best - if I take the company car I will pay tax on the benefit, but I was thinking I could PCP or lease a car to then take home some of the allowance....

Anyone got experience of this? Also I am struggling to work out what will be my take home of the 5k car allowance!?

I understand that with a company car the maintenance, insurance, tax etc is taken care of (according to contract) and I will have to sort these myself if I don't choose company car, also I will do about 20-25k annual mileage.

Any help much appreciated.

Thanks

Steve

[Iain]

Do they dictate what kind of car you need to buy if you get your own, e.g. doors, age, etc

[NovalutionGSi]

This will be interesting to know myself as well. have the same issue!

[Nova00]

as below


Hi all

I have been offered a new job :d that comes with 5k car allowance or a company car, but I don't know which is best - if I take the company car I will pay tax on the benefit, but I was thinking I could PCP or lease a car to then take home some of the allowance....

Anyone got experience of this? Also I am struggling to work out what will be my take home of the 5k car allowance!?
The allowance will be taxed at your marginal tax rate - 20% unless you are a higher rate tax payer. and also NI 12% so if a basic rate taxpayer you will keep 5000 @ 68% = 3400


I understand that with a company car the maintenance, insurance, tax etc is taken care of (according to contract) and I will have to sort these myself if I don't choose company car, also I will do about 20-25k annual mileage. Can depend on the split between business and private miles. Generally if you do a lot of private miles a wise choice to have a company car because you are taxed on a fixed amount irrespective of the private mileage you do.

You will probablty get 45p for using your private car for the first 10,000 miles, so you may even make a bit out of using your private car if you do a lot of business mileage.

Any help much appreciated.

Thanks

Steve

[steve1434]

Thanks for the replies all. From researching I eventually found the answers that mirror what Nova00 wrote.

I have been looking at the company car list, and whilst they are nice BMW and Audi etc I will have to pay around £100 a month tax on it, thus eating into my net monthly take home, whereas I could PCP an Astra GTC CDTI 165 SRI with maintenance and road tax included, plus insurance (with business use etc) and have £160 on top of my net monthly take home due to the difference in salary with car allowance.

Company policy is that the car must be under 4 years old and with a max mileage of something I can't remember, must have 4 adult seats, 2 door is fine. Fuel is done via a fuel card.

[steve1434]

I will be only doing minimal private miles in it as I live 3.5 miles from new job, and with the missus having a car and my Nova it will prob be 90% business miles over the year.

[Nova00]

almost certainly private car would be best if the company pay 45p/ mile


I will be only doing minimal private miles in it as I live 3.5 miles from new job, and with the missus having a car and my Nova it will prob be 90% business miles over the year.

[steve1434]

Yes, 45p/mile for first 10000 miles, then 25p/mile thereafter - sweet :)

[Stuart]

where can I hire an astra for £110 a month please?

[steve1434]

Who said anything about £110

To get that figure I assume you made a few assumptions Stuart......My plus £ are due to change in salary from old job to new job. Net increase of new job with company car is £100 (due to £ tax of company car). Net increase of new job with car allowance is £480. Spending £216 a month on PCP at 25k miles, then service pack at £19.99 a month (might not take this), then ins at £35 a month leaves a little over £200 a month more than I am on now....(figure in previous post of £160 included gym membership which obvs wasn't meant to be in there)

[Stuart]

I only went on that you said you'd be up £160 after the pcp.. basic (3400/12) - 160 = 110ish thats all

[steve1434]

Furry muff lol

[Stuart]

engineering reading makes things all wrong lol

[Will F]

I'm in the same situation and have been a few times. I've gone with private car each time and will be with the current situation. Not only due to the tax implications, but because I want something with 2 or 3 doors. Just make sure you triple check how much the allowance is per month

[steve1434]

Hi Will, yeah I must have checked a tonne of times and done the sums loads lol I have also learned that I could be getting a bit more in my pocket on the mileage, should I drive carefully and economically etc as the 45p a mile is, on paper, a lot more than it will cost to drive a mile, particularly on long drives as the car I have chosen gave me 64 mpg over a 120 mile trip :)

Do you get HMRC rate for business mileage Will?

[Nova00]

45p (10K miles) is that HMRC rate for private cars. The employer does not have to pay you 45p although many do.


Hi Will, yeah I must have checked a tonne of times and done the sums loads lol I have also learned that I could be getting a bit more in my pocket on the mileage, should I drive carefully and economically etc as the 45p a mile is, on paper, a lot more than it will cost to drive a mile, particularly on long drives as the car I have chosen gave me 64 mpg over a 120 mile trip :)

Do you get HMRC rate for business mileage Will?

[steve1434]

My new employer does indeed pay the HMRC rate. 45p/m for first 10k then 25p/m thereafter.

[kevw]

I've got car allowance and just buy older cheap cars (Currently Astra CDTi SRi).

Downside is that our place pay lower per mile on fuel if you have car allowance but I can claim tax back on the difference :)

[kevw]

Steve, can I ask where you can lease an Astra for that much with that mileage?

[steve1434]

Will PM you Kevw