Advice needed - cash car allowance

josimar21 · 11 June 2017 at 3:30PM

Hi - I'm new to this forum but have a question about cash car allowance. I'm starting a new job in August and have been offered the following:

£60,000 basic
£5,833 cash car allowance
11% employer pension contribution (5% from me)

I'm trying to work out how much car allowance I'll take home monthly after tax...as I'm thinking of leasing a car. Question is - does the cash allowance get taxed in the same way as basic? Are there any other factors I need to consider?

Thanks.

Dazed_and_confused · 11 June 2017 at 3:45PM

Glass half empty
Car allowance is just a way of giving you your salary without you being entitled to any pension on that part of your income (for most companies)

Glass half full
Car allowance gives you flexibility over and above being given a company car.

On that basic salary you will pay 40% tax on all of the car allowance (plus national insurance but probably just 2% NI).

That all assumes you aren't making significant private pension contributions and also doesn't take account any child benefit charge complications from that level of salary and company pension.

josimar21 · 11 June 2017 at 4:05PM

OK, thanks. So I only get pension contribution on my basic but, apart from that, the car allowance gets dealt the same way as the basic in terms of tax.

So to work out my monthly take home (for the car) I'm looking at 42% of £5833? Which by my reckoning is £2450. Then £5833 - £2450 = £3370. And £3370 / 12 = £280.

getmore4less · 11 June 2017 at 4:23PM

You also need to know the claimable expenses for the business miles.

Advice needed - cash car allowance

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