Job offer and car allowance - advice please!

andylong42

Hi

I have been offered a new job with better pay and a car allowance. My current job provides a car and fuel as a benefit with a private mileage allowance. When I offered my resignation, my current employer has come back with an improved package which he claims is comparable. I don't know where to start to confirm this!

The offers are:-

new job -

£28k basic + commission
£450 car allowance

existing job new offer-

£24k basic + commission
company car + fuel allowance (value 20k emissions 160g)

let's presume the commission works out the same, do you think the company car would make up the difference as opposed to taking the cash allowance? The way I see it, my basic salary for the new job is actually £33400 Inc car allowance so I can't see how the two packages can be equivelant?

Please help withthis big decision!

jamminca69

Hi Andy

Just to clarify reading your post, the new job is it £450 a month car allowance?
Some questions to be able to compare the two -

- last year what was your mileage for the year?
- in your current role do they cover insurance etc for the company car? (sorry not clued up on company car details)
- do you own your own car as well as the current company one?

As i think you need to work out how many miles you will do in the company car and work out how much fuel is covered by the existing job fuel allowance. Only then can you compare the costs of running the company car to the £450 a month new job car allowance.

andylong42

Hi

yes my current employer covers all running costs ie insurance, maintenance, tyres etc. The only thing I pay additional is if I go over 500 personal miles in a month. My annual mileage is between 20 and 25k typically, but a lot of those miles are to the office which is currently about 35 mile round trip. The new job would be only 10 miles round.

andylong42

Oh and I don't own another car!

BillTrac

Andy, I look it the same way you are. Add the car allowance onto your salary.

I changed jobs in dec 07. From a company who paid a salary and a company car. The new job was a salary and a car allowance of £500 per month( since increased to £585).

The tax on the company car comes out of your salary so you are "earning" possibly a few thousand less per year.

I look on my earnings as being my salary + £7k, and my old earnings as salary -£BIK costs. Plus I choose the car I get, and when I want to change it. OK, there may be times when I wish I had a company car (when it comes to replacing tyres etc) but my lifestyle has certainly improved in the last 2 and a half years even allowing for my increased salary. And I do over 30k miles per year.

Also, you can claim tax relief on the difference between the mileage allowance you receive and 40p per miles (business use)

There are some sites where you can calculate whether or not you would be better off with a company car or not. I will try and look for the links, unless someone else posts them first.

andylong42

Thanks that would be very useful.

Judas

Roughly your company car will give rise to a tax on a benefit of 5k (car) and 4450 (Fuel) so at 20% your probably looking at paying tax of about 5k a year so take home 19k; car; fuel; 80% commission in current job

New job would be circa 27k plus 80% commission

Now this means if your car and fuel cost less than 8k per year you are better off.

I do think your employer is about right that overall it will be about the same