Company Car or Cash?

gapbap

Hi
I have a new job and have the option of a company car or cash. I have also been offered a fuel card.

I am pretty confident I will not be doing many company miles (max 2000 per annum - if any).

I do not know the options on the actual car (model/eng size etc) but do know that the cash option is £455 per month (before tax).

So the question is whether I take the car or the cash?

If I take the cash I would intend to buy a reasonable family sized car, as opposed to a cheap run about. The car will be the main car for the family as well as being used for a 28mile journey to work each day.

Any help/advice would be appreciated!! Thanks in advance

ceeforcat

The age old question!

What does an extra £455 gross per month mean to you? If you are a higher rate taxpayer it is equivalent to £268 extra net, if not around £313.

For me it’s the company car every time! Are to able to finance the car, insure it, tax it and repair it for the above amount of money? Moreover, with a company car you are not the loser when it comes to depreciation. Take the car but refuse the car fuel benefit which, on the quoted business mileage, will cost you. Instead, claim between 9p and 12p (off the top of my head) on your business mileage.

gapbap

Thanks and this is the conclusion I was coming to, however I am keen to gauge opinion.

I am a 40% tax payer and so I was thinking I need to purchase/insure/tax/maintain/depreciate for less than £268 per month to make taking tha cash worthwhile. Further I did have a couple of accidents against me a couple of years ago so insurance is not cheap presently.

Anyone disagree?

TighterThanTwoCoatsOfPain

we have just taken the company car option... No change of job so we are just looking at it as getting a brand new car and all it costs u is the extra tax. For such low mileage i would not take the fuel car if its an option. Will probably double (or more?) your tax liability.

LittleVoice

gapbap wrote: »

Hi
I have a new job and have the option of a company car or cash. I have also been offered a fuel card.

I am pretty confident I will not be doing many company miles (max 2000 per annum - if any).

I do not know the options on the actual car (model/eng size etc) but do know that the cash option is £455 per month (before tax).

So the question is whether I take the car or the cash?

If I take the cash I would intend to buy a reasonable family sized car, as opposed to a cheap run about. The car will be the main car for the family as well as being used for a 28mile journey to work each day.

Any help/advice would be appreciated!! Thanks in advance

If you are female and likely to become pregnant - take the car.

gapbap

Hi Littlevoice,

no I am not female and hopefully wont become pregnant. thanks for the advice anyway.

Mr GAPBAP

cogito

I had to take the car or cash option a few years ago. My current deal is £500 per month car allowance plus the IR approved business mileage rate of 40p per mile.

After tax, the £500 becomes £300 but I don't pay company car tax so effectively I get to keep the £500. I run my car for 5 years ( a condition of the deal is that I lose the allowance if I keep it any longer) but the car was paid for after 3 years so I bank the allowance and, with the 40p per mile, this more than covers the depreciation and running costs. I also get to own the car.

It works for me but wouldn't for everyone.

chrissiewants2save

I vote take the car for the same reasons as ceeforcat. Additionally if you change jobs the new company may not give you a choice and provide you with a car. And, if you loose your job (sorry) you end up with a car and no income.

My husband does a lot of miles so we take the fuel card and when I can, i use his car for the free petrol. We worked it out that as a family using his car outweighs the tax penalty on the fuel card. Any long journeys that I need to make I arrange when he's working at home so I can use his car. His is a Mondeo. When I purchased my car we bought a Focus (my old one was a Megane). For me I would have had a smaller one but we bought an mid size family car just in case we ended up without a company car- he tends to move jobs and has been made redundant 3 times. (Hospitality industry- i'm keeping my fingers crossed.)

shaf00uk

Hi all,

I had the same option but for me in made more sense to get a company car. I am male, under 25, live in a high risk area so my insurance bill would have been ridiculous!

The trend a few years ago was to opt out but now the trend is returning back to using company cars as some people realised that it can work out the same but you get all the hassle. The main benefit or motivation was that the car and end of work service life was yours and you could sell it and make a profit and then then take out a new car and start over. You need to really on-the-ball then it may be worth it.

However, some people failed to understand that if something goes wrong with a new car they will have to take the time out, foot bills, and ensure it is roadworthy. The costs soon add up and eat into the future profit when you come to sell the car. Some people I know have had bad experiences!

It also depends on what type of car (make, model, size) and CO2 it produces that affects the amount of tax you have to pay. My annual tax bill for the company car is less than my insurance (checked on price comparision sites).

With the company car it is the company's responsibilty to manage the car so they pay for servicing, tyres, damage etc and give you another car if required at no cost to you.

You need to weigh up all your options and costs involved. Plan for the worse and hope for the best. Hope reading this was useful.

cosyc

When looking at fuel benefit against no fuel, ask what restrictions there the compnay have with private fuel.

My last company said all private mileage was ok - so plenty of weekends away around england for us and a yearly family holiday in France. The directors did the same so couldn't really argue but don't suppose all compnaies are so generous!