Car Allowance?? Best Way to Use it?

opinions4u

Petrol allowance is 14p per mile however I only get it for every mile above and beyond the distance bettween my home and the office.

But you can claim tax relief on any journey that is not between home and office.

Assuming you are a basic rate taxpayer, for the first 60 miles each day you get paid nothing by your employer. HMRC believe that they should pay you 40p a mile. Tax relief at the rate of 40p a mile will be worth 8p a mile - so there's £4.80 a day for the first 60 miles when you aren't travelling to your main place of work.

Once you go over 60 miles your employer will pay you 14p. Tax relief at (40p-14p) = 26p a mile x 20% tax rate will be worth 5.2p a mile on top of the 14p your employer will be paying you. In other words you will be paid 19.2p a mile for each mile over the 60.

While it will need you to maintain records and make a claim to HMRC, you could get yourself a nice little earner out of this with a bit of economical driving.

JonathanA

Well done on securing the job first of all! You could look into the option of renting a car in the short term, until you are through your probationary period etc. Lots of the car rental companies offer longer term rental at quite competitive rates - £300 per month would put you into a very decent car.

Ultimately, I suspect it would be more cost effective to borrow the money to buy a 3/4 years old car (assuming you can get finance at a reasonable rate), but if you don't want to take on that commitment until things are more settled, then renting may give you an option.

getmore4less

So essentially i'll get it for any journey's beyond that, I know my first contract which i'll be placed at is just 14 miles from home and i'll be there for 3 months while they train me in thier procedures etc.

So for the first 3 months at least there is no petrol allowance and i'll be expected to cover the costs.

Thats 3 months allowance money in the bank before you need to change.
Also time to source a good cheap car

As long as you don't go to other sites on business thats just a normal commute to a tempory location so no need to change anything, also gets you past the is the job for me stage. Alos adding businss to yours should not be too much

Basicaly you can run any car till they tell you they are not happy with it, the 5 year thing is just a finger in the air by them, there are plenty of 6 year old cars in as good condition as 2 year old ones.

If you don't need a small diesel with low tax and insurance will be the first one to look out for

rev_henry

getmore4less wrote: »

Thats 3 months allowance money in the bank before you need to change.
Also time to source a good cheap car

As long as you don't go to other sites on business thats just a normal commute to a tempory location so no need to change anything, also gets you past the is the job for me stage. Alos adding businss to yours should not be too much

Basicaly you can run any car till they tell you they are not happy with it, the 5 year thing is just a finger in the air by them, there are plenty of 6 year old cars in as good condition as 2 year old ones.

If you don't need a small diesel with low tax and insurance will be the first one to look out for

I quite agree. You could always even just give your car a polish and put a private plate on it. With a bit of tlc any car can be made to look brand new.

esmerobbo

On the insurance side are you getting quotes for business use?

EllieA_3

esmerobbo wrote: »

On the insurance side are you getting quotes for business use?

Yeah I think the huge jump in price is a combination of things not just the car it's self, I've had to quote for increased Milage and Business Use as well as the different car I was just really shocked by the price.

Inactive

JQ. wrote: »

Wow you really are doom and gloom.

Not at all, I am a realist.

The OP has stated that she has had financial problems before, so she knows what is involved in getting in to debt.

If some cheapskate company is bothered about their perceived image, then let them supply a decent car to her, at their expense.

Sambucus_Nigra

Inactive wrote: »

Not at all, I am a realist.

The OP has stated that she has had financial problems before, so she knows what is involved in getting in to debt.

If some cheapskate company is bothered about their perceived image, then let them supply a decent car to her, at their expense.

But that's a taxable benefit and alot of people would rather have the allowance - I know I would.

Inactive

Sambucus_Nigra wrote: »

But that's a taxable benefit and alot of people would rather have the allowance - I know I would.

It isn't taxable if the job doesn't work out.

Sambucus_Nigra

Inactive wrote: »

It isn't taxable if the job doesn't work out.

Well, I have no response to that nugget of information.

Very informative. Thanks.