Could someone please explain Car allowances??

TechJinx

I initially posted this on the "benefits" board before realising it wasn't referring this type of "Benefit" so apologies for cross posting.

I've been offered a new position that is a lower salary but includes a £6.5k car allowance that means overall I’m be about £1.5k better off (plus its a more interesting job which is actually the main point!) - it's is a 12 month FTC position

my question is what is the difference between having the full amount as salary vs. having this bit at the top that is classed as "car allowance"

am I entitled to claim miles done on the car? for commuting as well? what is the tax/NI/pension situation

I wont be buying a new car as I already have a from new 60 plate Kuga and I'll probably remain commuting on my motorbike as life is too short for traffic . Can I pretend the car allowance is in fact a motorbike allowance???

lots of questions - I've tried searching around but most of what I have found is from people who get paid a fixed monthly amount rather than a quoted annual figure.

At the end of the day I'm obviously looking to get more in my back pocket by any (legal :cool: ) means.. I'm a higher rate tax payer if that makes any difference

any help appreciated
Andy

terriandaaron

If you get a car allowance, the whole car allowance is classed as taxable income, but you can claim milage up to 40p per mile for cars...think it is lesser for bikes...would need to check, my hubbys company let him claim 2o odd p in the mile rest he gets from the tax man as a yearly rebate.

BUT my hubbys copmpany say he has to keep a car 4 years old or less....as a rule for his car allowance.

His is paid monthly with his salary, i presume your would be the same.

Caz3121

whether you have a company car or use your personal car you cannot claim for commuting to and from your place of work. You would however be able to claim miles for business mileage - often companies have a different rate for those that have a company car or allowance and those that receive no allowance but use their own car

GRM

As far as tax/NI goes it's treated just the same as your salary. Bear in mind that salary increases/bonuses/pension contributions are usually calculated on your salary amount that excludes the allowance.

GRM

Caz3121 wrote: »

whether you have a company car or use your personal car you cannot claim for commuting to and from your place of work.

Not quite. If your employer allows you to claim for commuting then the value of the benefit is taxable.

TechJinx

GRM wrote: »

As far as tax/NI goes it's treated just the same as your salary. Bear in mind that salary increases/bonuses/pension contributions are usually calculated on your salary amount that excludes the allowance.

That should explain why they do it then. I was having trouble thinking what the point was - why not just advertise the higher salary.

But why do that for a 1 year fixed term contract when there wont be any increases or bonuses??

GRM

Could be structured that way to ensure the salary is under a departmental budget limit. The FTC might lead to a permanent position, ensures salaries are kept in line.

InkZ

I get car allowance but don't even need a car. I think it's just a way of getting out of paying higher pension etc.