HELP! Company car or car allowance?

It's a really difficult one, this.

If you are going to be expected to use your car quite a lot for company business, it might be better to get the company car as they will pick up all major maintenance costs etc, and cars are normally replaced every 3 years. Obviously, the downside is that it is a taxable benefit and how much depends on the published level of emissions. In addition, remember that if your car is more than a year or two old, it will need replacing at some point and high mileage will affect its resale value.

That said, if you're happy that £400 pm will cover your costs and a bit more, even if you buy a new car, then having a car allowance might be more profitable for you but it does mean you need to arrange all the maintenance and are liable for all costs. Company cars might be covered for breakdown and all you need to do when you need the car servicing is make a call.

Are you able to change your mind at certain stages? I would be tempted to go for the car allowance in case the job doesn't work out but if you can switch, perhaps consider down the line if you want to switch to the car once you're settled in and know you're going to stay. The worst thing about having a company car is giving it back and potentially being without a car between jobs.

kateab

maninthestreet wrote: »

£400pm - I assume that's before income tax and NI? If so, that's only about £280 pounds, after tax + NI, to fund a car. Not a lot, when you take Road Tax and Insurance into consideration.

That is true, but as previous poster said, the matter is more complicated then this.
Don't forget that the OP will also have to pay company car tax if they have company car.
So the question is:
Do you pay for everything on your car yourself and get circa £280 a month to fund it
OR
do you get a car with no problems for yourself and pay circa £60-150 a month in tax for the privilege of having company car?
(this amount depends on the list price of the car and Co2 emmissions..)