Company Car or own with Allowance

zst1973 · 19 September 2008 at 7:11PM

HI

Can someone advise which is best

Company car with fuel card or personal car with £490 month allowance and 15p per mile.

Totally confused

Zoe

:mad:

sra · 19 September 2008 at 8:54PM

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piggeh · 19 September 2008 at 9:18PM

well if all you're doing is a 10 mile trip to work and back I'd go with the allowance. It depends on a lot of factors - you should work out how many miles your job requires and from that work out:

How many services this mileage will require for your car
Fuel costs
Approximate repair costs
RFL, MOTs etc
Depreciation
Insurance
Hire costs (if applic)

versus what outgoings you'd have with a company car.

The only outgoings with a company car are the Benefit in kind tax although I believe you'll also have to pay this on your allowance anyway.

hewhoisnotintheknow · 19 September 2008 at 9:20PM

well i assume you allready own a car, soooooo in that case i would go with the 490 a month

thats nearly 6grand a year!

piggeh · 19 September 2008 at 9:30PM

Well tbh if they own a 20k car and rack up 50k miles per year for example, they'll lose more than 6k a year in depreciation alone. It depends on the individual case.

Companies arent stupid - they've realised how much it costs them. The only way you'd benefit is if they've incentivized the allowance to get rid of the hassle of running a fleet, but it wouldnt run into thousands imo. They still have duty of care obligations which are the major headache really.

sillygoose · 20 September 2008 at 9:32AM

£490 before tax or after tax? if its after deductions then I would bite their arm off!

If its a company car you will have a tax liability depending on the vehicles CO2 can be quite a bit and usually the car is new so the terrible initial depreciation has to be borne, usually lowering the quality of the car you can have. If your high business mileage user I would go company as the car is more likely to get damaged, dinged, depreciated or worn out and its not your problem. If your a light to medium miler I would take the money and instead of leasing yourself, look at taking out as low a cost loan as possible, buy a good quality 1 year old car with 2 years warranty remaining. Keep it 2 years. If you consider your £490 + say, £90 per month in tax you would have paid for a company car, + the profit on 15p per mile if you buy a diesel that is plenty to run the car, the loan and tyres, servicing etc. Even better if you got something reliable like a Honda. You could even end up making quite a profit. Well thats what I am doing. Cost me less, better car, (no 1st year depreciation, lease company profits to pay!) and full control of the situation of what I drive, how long I keep it, when the tyres are need replacing etc.

Road_Hog · 20 September 2008 at 10:10AM

The advice given by piggeh is good/correct, and in a nutshell, if you're only doing a few miles then take the allowance, if you're doing 50K pa then let them foot the bill and all the hassle.

I would assume that it is £490 before tax and that you will be taxed on that, which you need to factor in. You will have to compare that with what the company car tax would be, e.g.

company car = no cost + company car tax= x
£490 - income tax + running costs = y

Also if you go down the allowance route, you will be able to claim the tax relief on the mileage difference HM Customs/Revenue allowance of 40p mile for the first 10K and 25p per mile there after.

That is the difference in pence multiplied by the miles done and then multiplied by your tax rate as a percentage.

zst1973 · 20 September 2008 at 12:47PM

Hi

I will average 15/2000 miles PA

I have asked for 2k extra salary if i take the company car.

I have a car already and my partner a van which i colould trade in for a car or would have to sell one.

I just do not understand if the optout is best.

£490 would be less tax which would have to cover the running costs etc of the car insurance tyres service etc.

is the 15p a mile a good rate as not sure.

The compnay car would be about 2k a year cost to me.

i previosly had just the fuel card so i have paid the tax for this for about 4 years. the compney policy has changed and i have to decide in a week which option to go for.

piggeh · 20 September 2008 at 1:24PM

Whats the company car on offer? Whats the company policy on what you're allowed to purchase on your allowance? Does it have to be no more than x years old, etc?

The other thing with using an allowance - if you get tied into any contract hire/finance deals you need to think what your position would be if you left your job (through yuor choice or not).

zst1973 · 20 September 2008 at 2:54PM

Hi

There is a choice of mondeo titanium 2.0d BMW 318d ES and a few volvos/focus etc

There is no age limit it has to have MOT AND BUSINESS insurance

I can buy any car any age.

As i already pay for 1 of my vechs (van) this is why i am struggling to decide as i could use this to pay the finance of on what i trade the van in for and own the car at the end although depreciation is going to still hit me it would not be as bad as selling the van in the current climate.

Wish it was easier than this.

If my employer says yes to 2k if i opt in is that better than the opt out????

dillydilly · 27 October 2008 at 10:38PM

I'm just doing a similar calculation but am coming out with a significant profit - surely I'm missing something somewhere, can anyone see where ?

Annual gross allowance on offer 5500
Net allowance after tax and NI 3200

Ins/Tax/Maint/Tyres (1000)
Depreciation (2000)
Cost of finance on £10k cost (500)
Saved tax on company car 2000
Tax reclaim on 20k miles 1400

Net saving per year 3100

can't be right can it ? the saving seems to be made from avoiding the huge car depreciation of a new car and the margin requirement of leasehold companies. Have I double counted/under estimated something ?

Company Car or own with Allowance

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