Company Car vs Allowance

bhayani

Hi all

I have been looking at various websites regarding Company Car vs Allowance and am no wiser.
Can anyone help me please?

I have the option of a company car or £315/month .

Under both circumstances they will pay me 12p/mile ( for a diesel ).

I expect to do 15000 business miles and 7000 private miles.

As I understand it ( may be wrong)

Company car ( Skoda Octavia)
I don't pay NI contributions

Allowance
I do pay contributions.

I do not need to get a new or top end car so will probably buy a used car for £2000, and will assume that the running cost ( not fuel) will be £1000/yr.

this would only be worth doing if the savings were worth the hassle.

anyone have an idea how to calculate this?
thanks
bhayani

chrismac1

Do you know the list price and CO2 emmissions of the Octavia? Company car tax became 10 times more complex under Labour than it ever was before.

missile

A company car is great but no way I would want to drive a Skoda.

opinions4u

With an allowance you would be able to claim mileage relief up to 40p a mile. This will be worth a fair amount each year.

With a company car check out the increase in tax from April 2012.

withabix

opinions4u wrote: »

With an allowance you would be able to claim mileage relief up to 40p a mile. This will be worth a fair amount each year.

With a company car check out the increase in tax from April 2012.

You don't get 40p[25p], you get the tax back on 40p [25p], after deducting the 12p/mile that you get reimbursed.

ie

(40p-12p) x your tax rate = tax rebate for first 10,000 business miles.

or

(25p-12p) x your tax rate = tax rebate for the rest.

Don't forget that you also pay tax on your car allowance.

Will your company allow you to buy an old car? Most don't.

julie2710

Most companies won't let you have a car that is older than 3 or 4 years even if you buy your own.

£315 per month doesn't sound that much to be honest.

Assuming you aren't a higher rate tax payer you will lose nearly 30% of that in PAYE & NI so that takes it down to about £220!!!

So £2,640 per year! You will have to provide out of that your insurance - business use which will be higher than regular insurance, servicing, road tax, general maintenance, tyres etc etc.

I looked up the Skoda Octavia hatch 2.0TDi and the CO2 emissions are 150 which is quite good!

Although the tax on company cars is a pain, in terms of where you will be better off financially this would seem the better option. In terms of hassle, if you breakdown, have an accident, need new tyres, a service company cars are also a good option. I was offered £7K per year for an allowance and still went for the company car as it's still more economical for me!

jimmo

When I went on the road for the then Inland Revenue, about 35 years ago, I got the equivalent of today's 40 pence per mile /25 pence per mile using an old banger in two tone red and rust. It wasn't an old banger when I originally bought it and I had been doing my own servicing and repairs for a few years.
I made serious tax free money from doing that but nobody was concerned about image as long as I turned up where required and when required.
One day the clutch started slipping and I picked up a new clutch assembly from a motor factor, fitted it that evening after work and was back on the road the following day. No loss of working time and no loss of wages or expenses.
On today's cars I seriously doubt that a DIYer could do that. and, quite frankly, £2,000 only buys an old banger nowadays.
Given the choice, 35 years ago, I would have opted for a company car. I was not given the option but I got away with what I did.
Unless you are prepared to get your hands dirty on a regular basis I really think you should opt for the company car.

Froggitt

The calc is also dependent on your income, ie if you are under the NI threshold you will pay much higher percentage additinoal NI than if you are already over the threshold.

Mary_Hartnell

missile wrote: »

A company car is great but no way I would want to drive a Skoda.

Why?

Worried about being mistaken for a taxi driver of a reliable good value "German" car?

Seriously, it is shallow but we are all judged by initial impressions; you can disguise the age of of a diesel car (good for 200K miles?) by getting a cherished number plate.

david69_2

missile wrote: »

A company car is great but no way I would want to drive a Skoda.

All the skoda's are vw's with a different badge
I'd have one no problem too many people are just badge snobs and thats coming from someone who's had bmw's etc in the past

Chriswt

jimmo wrote: »

On today's cars I seriously doubt that a DIYer could do that. and, quite frankly, £2,000 only buys an old banger nowadays.

If its a half decent diesel then £2000 you'd be hard pressed to get anything worth owning and might be a money pit but it is still possible.

If you have £2000 to spend on a petrol car then that would get you in a decent Ford Mondeo with a tonne of life left in it and cheap to run.

My father-in-laws car has done well over 220k miles and still going strong.