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    • owainjones
    • By owainjones 16th Mar 17, 11:52 AM
    • 7Posts
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    owainjones
    Company Car / Car Allowance Questions
    • #1
    • 16th Mar 17, 11:52 AM
    Company Car / Car Allowance Questions 16th Mar 17 at 11:52 AM
    Hi,

    I've currently got a company car, but have been given 12 months notice that it is to be replaced with a £5000 / year car allowance instead.

    I've got a few questions...

    1) Is the £5k/year taxable?
    2) I will need to take out a personal loan to initially purchase a vehicle - can I claim tax relief on the interest as I'm using it to purchase a car for work use?
    3) I was going to open a separate "Flexi Savings" account and transfer the car allowance from my main current account to the savings account on a monthly basis and pay off the loan from that, then leaving the remainder in that account to pay for tax/insurance/servicing etc.

    Would that be the best way to do it? Any other hints/tips for this setup going forward?

    Many thanks!
Page 2
    • gingerdad
    • By gingerdad 17th Mar 17, 5:41 AM
    • 1,760 Posts
    • 1,281 Thanks
    gingerdad
    Not normally. Ours is 10p if you're given a car allowance. You can claim difference on your tax return though
    Originally posted by jimjames
    Christ 10p barely covers the fuel costs.

    Op : you need to check what mileage rate you can claim as with your mileage you should be quids in (you should be able to claim £11,000) towards running costs on 40,000 miles.
    The futures bright the future is Ginger
    • jimjames
    • By jimjames 17th Mar 17, 7:29 AM
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    jimjames
    Christ 10p barely covers the fuel costs.

    Op : you need to check what mileage rate you can claim as with your mileage you should be quids in (you should be able to claim £11,000) towards running costs on 40,000 miles.
    Originally posted by gingerdad
    It's only meant to cover fuel cost. Check HMRC rates, casual user rates are far higher than company car drivers.

    https://www.gov.uk/government/publications/advisory-fuel-rates/how-advisory-fuel-rates-are-calculated
    Last edited by jimjames; 17-03-2017 at 12:16 PM.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • AdrianC
    • By AdrianC 17th Mar 17, 7:32 AM
    • 14,710 Posts
    • 13,076 Thanks
    AdrianC
    It's only meant to cover fuel cost.
    Originally posted by jimjames
    Exactly. The allowance is meant to cover the rest.
    • k3lvc
    • By k3lvc 17th Mar 17, 7:35 AM
    • 1,738 Posts
    • 2,673 Thanks
    k3lvc
    You can claim difference on your tax return though
    Originally posted by jimjames

    No you can't - unless things have changed this year you can claim tax relief on the difference. Assuming the OP worked on the same model as you then 20% of 35p per mile - a far cry from the 35p per mile you're suggesting
    • DoaM
    • By DoaM 17th Mar 17, 9:28 AM
    • 2,703 Posts
    • 2,726 Thanks
    DoaM
    I suspect that Jim meant the same thing but didn't express it as such.

    You claim business miles off the company at the agreed fuel rate (I think it's 11p per mile for us), and then you can claim tax relief on the difference between HMRC rate and what the company has already given you.

    So for the OP it would be marginal tax rate (e.g. 20%) of 45-10=35p for the first 10k miles, then 25-10=15p for the next 30k miles.

    Company pay: 40k x 10p = £4,000
    Tax relief 1: 10k x (35p x 20%) = £700
    Tax relief 2: 30k x (15p x 20%) = £900

    Overall = £5,600 ... £4,000 up front (i.e. as claimed on expenses) and £1,600 in tax relief.
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    • jimjames
    • By jimjames 17th Mar 17, 12:17 PM
    • 11,896 Posts
    • 10,279 Thanks
    jimjames
    I suspect that Jim meant the same thing but didn't express it as such.
    Originally posted by DoaM
    Yes, apologies, quickly typing on the phone didnt make it very clear.
    Remember the saying: if it looks too good to be true it almost certainly is.
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