company car vs cash allowance

bp1234

Hope this is on the right section, posted it earlier on a different section. Anyway, here goes. . . . . .

i am trying to decide between a company car and cash allowance. currently on cash at £4750, company car offered has BIK value of £2833.

I am on a base salary of £36k, with bonus forecast of £8650 plus medical BIK of £750, plus either car or cash as above.

how do i work out what is the best from a tax point of view. Another thing is that my personal circumstances mean that the car would stay at work all week so i would not really get any benefit from private use.

I am also conscious that i am close to 40% tax bracket bonus and do not want to lose child benefit in 2013 if possible so really want to make the right decision in terms of tax.

Help please!!!

Thanks in advance.

bp

zorber

Easy
If the car is going to stay at work then take the cash.

the tax on a company car depends on certain factors, car value, co2 emmisions and finally if you are a basic tax payer or higher band.

But ultimately if the car will stay at work and you wont get personal benifit from it then the taxation isnt worth it.

Also worth noting that with child benefit they add the benefit in kind value of the car to your salary (if you have a company car) when working out your entitlement to tax credits, almost like being taxed twice. Anyway this pushed me past the post so we lost our child benefit.

bp1234

Thanks, i think your answer was probably the answer i expected however my only worry is that we would now have to fork out about £9K for a suitable car and would need to borrow this money so doesn't feel like we're much better off really, although would be getting the allowance each month.

tax credits etc. stopped for us last year unfortunately. i do worry about losing child benefit though in 2013 as won't be far off the cut off threshold but will deal with that when it comes round. was just wondering what would be best taxwise really, don't pay anything into my pension at the moment so will need to look into this as priority, this will help the tax situation as well as my pension!

thanks

krima2003

" Another thing is that my personal circumstances mean that the car would stay at work all week so i would not really get any benefit from private use."

If the car stays at work permanently it is not far off qualifying as a pool car, which allows you to have the car offered but with no benefit in kind.

If at least one other person can be "allowed" to use the car then it qualifies...

May be a few other minor rules but those are the main catches.

Thats the best option but requires a willing employer.....