Company car or car allowance?

mark55man · 18 August 2012 at 3:10PM

if you are driving to somewhere that is not your permanent place of work (2 years rule - really complicated, but basically not your normal place of work or somewhere you have not or are not expecting to work for 2 years)

if the company does not pay your mileage or pays you less than allowable allowance you can claim the difference between the allowance and your payment on your tax return. eg 1000 miles @45p (45p allowance - 0p assuming no payment) would be £450 - you will get back £450*2-% or £450*40%

I am not a lawyer / accountant / ... :-)

robinspain · 9 October 2012 at 9:54AM

Just just a quick question with regards car allowances.
ive been offered a position where i will get a 6k allowance per year, but, to cut a long story short, im thinking of renting a car on the weeks that i will need one. Presuming the company i work for are ok with this, are there any problems or implications with regards HMRC etc etc??

Thanks

00ec25 · 9 October 2012 at 10:38AM

robinspain wrote: »

Just just a quick question with regards car allowances.
ive been offered a position where i will get a 6k allowance per year, but, to cut a long story short, im thinking of renting a car on the weeks that i will need one. Presuming the company i work for are ok with this, are there any problems or implications with regards HMRC etc etc??

Thanks

as far as HMRC care a car allowannce is just extra taxable salary, it has nothing to do with the existence (or not) of a vehicle, ie what you spend it on (car hire) is of no interest to them
so the answer is if your company is OK with hiring then you are OK

somethingcorporate · 9 October 2012 at 10:50AM

Yep, you'll get taxed on your car allowance as if it is salary.

If you then hire a car out of your own pocket I cannot imagine your work or HMRC will care. Just make sure you have the right insurance on it (for commuting / work purposes).

robinspain · 9 October 2012 at 11:13AM

Thanks for the information, i guessed that would be the case but always good to get another opinion..

tabath · 20 October 2012 at 7:38PM

My wife has just got a job with £5800 car allowance. She is in the 40% tax bracket. Having never had a company car or tax allowance before(as her last company used to hire a vehicle for business trips) we are no sure of how this would work.

They have told here she will get 18p per mile for petrol

from what I have read on this thread I think I work it out like this.

She will be allowed to reclaim the tax on=(45-18)*10,000 =£2700 of this allowance so will infact just be taxed at 40% on £3100 of the allowance which would mean paying £1240 in tax.

So out of the £5800 allowance after tax,she would be left with £4560?

Is this correct and if so how do we reclaim the tax she paid? Or do the company do it when she puts in her expenses claims for the mileage?

Thanks for any help?

Oh and PS: If she was to get a car with a low emission rating that had the 13% benefit in kind - would she be able to claim this as it isn't a compamy car but just a car bought with a car allowance?

jimmo · 20 October 2012 at 10:32PM

Your sums are right but the reality is that your wife will suffer 40% tax (and 2% national Insurance) on her car allowance each payday.

However getting tax relief for her business mileage is a different matter.

According to the final paragraph in the following link she can make a provisional claim immediately so that her PAYE code is changed.

http://www.hmrc.gov.uk/incometax/how-to-get.htm

That is something new to me but seems fairer than the old system whereby you couldn’t claim the tax relief until the end of the tax year but, to be practical, it seems very unlikely that an amended code would reach her employer in time for her first payday.

It should all work out in the end but if money is tight she could find herself struggling in the short term.

As regards your PS… no, if she provides the car tax relief is 45ppm for the first 10,000 miles each year and 25ppm thereafter regardless.

HMRC theory is that their mileage rates reasonably reflect the true costs of running a modern, fuel efficient car.

00ec25 · 30 October 2012 at 11:26PM

mysaleshelp wrote: »

xxxxxx.com has a car calculator which may help you decide

dear newbie do not spam this board

report this post for spam

1977wilko · 13 September 2013 at 10:15AM

Hi all, have seen all the messgaes about the above, but still none the wiser, I have been offered a car allowance of £5400 or to choose a car(a golf or similar), can claim back business mileage but not personal, business miles are all quite local. Which would work out best, I have taken the allowance in a previous job just wondering if it is still the best option?
Many thanks

NacNac · 10 December 2014 at 9:28PM

Hello Everyone.

I have been reading the different posts and while very informative I have not managed to find the information I wanted. I thought to post here rather than creating a new thread as it is related.

Background: I currently own 2 cars (mine and my wife's) in good conditions while already a few years old. We have no loans or debts on those car. Therefore the only expenses are road tax, assurances, MOT, service etc... In my previous job I did not have a company car nor a car allowance.
Current situation: I got a job offer where they offer a company car + business fuel and to be agreed private fuel. The company has only one office in the UK at about 20miles from home. Any business trip will be outside of the UK (ie taking the plane).

Would you take the company car or try to remove this from the offer and get higher base salary or car allowance or else ?

At the moment, I see this business car has additional costs rather than benefits. What are you thoughts ?
thank you
PS: Not sure if that make a different but I live in the south east of England

Company car or car allowance?

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