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  • FIRST POST
    • 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
    • 1,783 Posts
    • 1,287 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
    • 16,043 Posts
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    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
    • 1,990 Posts
    • 3,188 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
    • 3,743 Posts
    • 3,801 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
    • 12,325 Posts
    • 10,900 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.
    • jonesy103
    • By jonesy103 21st Dec 17, 11:25 AM
    • 12 Posts
    • 0 Thanks
    jonesy103
    More company car/car allowance questions
    Sorry but I'm about to jump in here and hijack this thread but at least it's a related question

    Company car vs car allowance – HELP !!

    I currently drive a three-year-old Citroen C4 Picasso THP 155 company car (petrol) with all expenses paid (private mileage included) and I pay tax at 40%. I’m trying to work out if I would be better off by asking for a company car allowance rather than take the car.

    How much does my current vehicle actually cost me in tax, is it 40% of the sum of the car benefit (£4118) and fuel benefit (£5876) currently shown on my latest tax return ?

    If I were to opt for a car allowance in place of the vehicle what would be a good figure to start with when negotiating the allowance assuming that the car is replaced every four years ? There has been no negotiation yet regarding the type/style/age or size of the car.

    What’s your advice on claiming fuel for business mileage and how do I insure a vehicle that isn’t used just for S,D&P but includes an element of business use ?

    Our company has traditionally purchased vehicles outright but there now seems to be a leaning towards leasing. Is there any benefit to me either way or is this purely a financial issue for the company ?

    Citroen C4 Picasso THP 155 with all private and business expenses paid (petrol etc.)

    List price of car £16,995
    C02 Emissions figures 139g/km
    Engine capacity 1598cc

    2017-2018 tax figures – tax code 169T
    Car benefit - £4418
    Fuel benefit - £5876

    2016 – 2017 P111D Value - £16,995
    Cash equivalent of car - £4078
    Cash equivalent of fuel - £5328

    Estimated business mileage per year – no more than 10k max. (probably a lot less)
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