Company car v car allowance

onthecase

My company have announced that they are terminating the company cars - mine was due for replacement in June. My car currently costs the company around £320 per month on lease.

They are saying that we have to buy our own cars and they will give us £200 per month as an allowance and we will save about £100 on the company car tax we pay at the moment.

The company is not doing too well, in fact I do wonder if we are going to survive the next six months. I have thought of looking around for another job but 1) there are not many jobs in my area, the jobs advertised are very low pay and, of course, it would be last in first out presuming I could actually get a job. 2) I've worked for the company for 20 years and although I probably wouldn't get redundancy as the company has no money and it would probably go into administration, I would qualify for the Government redundancy which would be circa. £6k, which would at least pay off my credit card bill and give a little help to pay the mortgage for a while. The £6k wouldn't be enough to pay my credit cards and the loan though.

We have already had a 20% salary reduction because the company is doing so badly.

My big worry is that if I take out a loan to buy a car ie, £8-10K for a car capable of travelling the country and the company folds, I still have a huge loan to pay over the next 3/4 years, but no job. Secondly, if they just took the car off me and gave me no allowance that would be equivalent to a further £4-5K salary cut as the car is part of my salary and job.

The £200 per month would probably not cover the car loan, tax, insurance, running repairs, breakdown cover etc regardless of the fact that the debt would be purely mine.

I'm starting to stress about this as I don't know what to do - hubby says no way are we taking on a bank loan now as we have an uncertain future.

What options do you think I have please?

beaker141

Get a beaten up car cheap and get good breakdown cover ! I assume the company can't dictate, for reasons of company image, the type, age, condition of car you get ?

Ive got a skoda octavia estate 02 reg with 58k miles on, body work is beaten so it is probably worth less than 2k but is mechanically sound and would be happy cruising up and down Britain for a while.

JonathanA

Can you negotiate on the £200 per month? Yes, you will save on the company car tax that you pay, but you will have to pay tax and national insurance on the additional £200 per month, so you won't have £200 per month to spend on running a car.

Is purchasing your old company car from the leasing company an option? You know where it has been and how it has been treated (assuming here that you might want it and it isn't in too bad condition).

Presumably this is also a change to your terms and conditions of employment, should there be a consultation period on that - I'm not sure but someone on the employment board may know?

Hintza

JonathanA wrote: »

Presumably this is also a change to your terms and conditions of employment, should there be a consultation period on that - I'm not sure but someone on the employment board may know?

I imagine from what the OP says the answer will be if you don't like it lump it.

onthecase

Thanks for the replies.

I've been told (not by the company) that under Health & Safety Regulations a car provided by an employer (which includes cars bought with a car allowance) have to be under 4 years old, which means buying a beaten up car is out of the question!

Regarding the car I have now, I inherited it from a Senior Manager that left just as my old one was due for replacement and it is far above my grade, but I had to take it as it was on 3 year lease. It's a sportsish sort of car and is always breaking down, is absolutely rubbish on petrol and I'm scared of getting car jacked so I wouldn't want to take it on - plus I wouldn't be able to afford it, it's still worth around £15k!

I was thinking maybe a corsa/focus/fiesta - but are these around £8k for a new one or a couple of years old? - that'll still be about £250 per month just on the loan without insurance, tax RAC etc! And £60 per week job seekers wouldn't pay that!!!

beaker141

onthecase - thanks - thats something I have learnt today !

http://www.cipd.co.uk/subjects/pay/empbnfts/ccarpolicy.htm
Health and safety


Health and safety is a major consideration with both company cars and employee-owned cars, particularly the corporate manslaughter issue. There is a common misconception that this does not affect employees who take cash. In reality, an employer's responsibilities are the same. In an attempt to reduce this risk, some employers are moving back to providing a company car. However, there is no reason that effective driver safety polices cannot apply to employee-owned cars. This is now being recognised by a number of health and safety advisers who offer driver training and vehicle inspection training services that apply for both company cars and employee owned cars.