Company Car Vs Car Allowance

JezCooke

It was touched on by an earlier poster but don't forget the difference in tax relief on mileage for your own car rather than a company car. I would guess that the employer would pay you the same rate per mile regardless of the option you chose (as from their point of view they've funded the car either way). But as a company car (2 litre diesel as you've specified) you can only have 11p per mile tax free, with your own car you can have 40p/mile for 10k then 25p/mile for the rest.

So if you do 20k miles per year then you will get tax relief on £0.40 * 10000 + £0.25 * 10000 = £6500. In a company car you would only get relief on £0.11 * 20000 = £2200 a difference of £4300. As a higher rate tax payer using your own car would save you 40% of this i.e. £1720 p/a (equivalent of £143 take home per month although you would need to claim this back from HMRC). Definitely worth including in the equation I think!

theodissey

Hi,
i am having the same dilemma as ian21 here between company car and cash allowance and really cannot find a solution. I know this is a topic that has been discussed million times but i need your help:):beer:

My figures are slightly different :
Salary £38k
Car allowance 6k (alternatively cars offered are Bmw 116d 2.0 ES, Audi A3 1.6 10)
Business miles 9k /yearly
Private miles 1k / yearly
In case i go for allowance company will reimburse 14p per mile (diesel)
So according to my calculations :

1. Wage with company car £2340 - tax on co car (roughly £67) = £2273

2. Wage with car allowance £ 2689

If i go with cash i can claim back difference from HRMC:
Bus miles x 40 p - 14p x 22%. That would return me a figure of roughly of £514.8 end of year? Total wage would increase to £2731:T

Am i right saying that there is practically no difference between the 2 options? The whole idea was getting allowance to get a nice (320d coupe) new lease or contract purchase car costing up to £450 with maintanence and insurance. I might as well get a car i can choose instead of one of the cars offered...

Looking forward to hearing your precious advise:):A