Company Car Vs Cash Allowance?

gypsyemz

Hello

I have no idea what to do.

I have moved into another job within my company and am now out on the road. In the near future, I will have to decide what I am doing with a car.

My options are

1) take a company car - £13000 allowance to purchase a car of my choice with tax paid on it monthly and fuel paid back at 15p per mile.

2) take a cash allowance of £4500 (£375 per month) which is before tax and ni. I would get business miles back at 25p per mile. I currently am in the lower tax bracket.

My business miles will be somewhere in the region of 10,000 with private miles at a similar rate.

I have searched through message boards and for calculators to see what i can find but am loosing the will to live!

i Dont know how it would work in either scenario.

I am looking at a 2nd hand ford fiesta - possible the 1.6 econetic - maybe 2 or 3 years old.

if there is anyone that can give me any advice i would really appreciate it.

thanks
Emma

getmore4less

Are there any restriction on the car if you provide your own?
eg. will you have to provide a car say less than a certain age.

can you afordthe car or will you be taking on debt.

consider the down side if you lose your job.

Company car, no job, no car.
own car, if paid for by debt no job, debt.

Start with a tyical company car choice, and work out the cost.
look at the net return from the allowance.

Can you fund a car doing 20k miles a year with the difference.

The right car well maintained will be good for 5 years+ but you might want to work on a shorter time scale say the same as a company car lease.


are you sure you will be doing 10k personal milege thats a lot(200 ish) a week on top of a full time job.

Emmzi

I always take the cash.

1. you own the car even if you lose your job/ change job
2. I don't care about flash cars so once the company has paid it off via monthly allowance it's all money for me

Mrs_Arcanum

The staff at work get similar to the second option & either use this to make car payments each month or salt it away to buy a new car as and when.

gypsyemz

job looks secure for the next couple of years (but we all know how that can change). I would have to take out a car loan at a cost of about £240 a month over 4 years to buy the car i would like (Ford Fiesta, 1.6 Econetic - bluetooth, leather steering wheel etc, all important when your car is your office!) but not too flashy as the type of work i do is client facing so a relativley simple car but with extras that make it easier for me whilst i am out and about.

All work ask is that the car is correctly maintained and roadworthy, taxed, insured for business use etc.

i understand that the govt make up the 25p per mile to 40p but someone mentioned that you can only claim 20% of that back? i am so confused with all the details that i just dont know what to do.

a company car would be easier - its taxed, moted maintained and paid for by work. but then you are taxed on it (fair enough). or do i take the cash allowance, pay the loan of 240 a month and save the other £40 which i think is what would be left after tax and NI have been taken off the £375 allowance?

a dealer that i spoke to at Ford said that the only way you can make this work is if you dont account for the expenses paid back to you, count your fuel into your normal monthly bills and then put the expenses away, that way there is a pot of money building up to cover running costs etc.

its a difficult decision - the type of work i do, if i was to change jobs, i would still need a car, if i was to loose my job, having my own car would be a major major factor in finding another job.

thanks
Emma

[Deleted User]

If you are looking to get a mortgage in the future, you would probably be better getting the cash, as it would increase the amount you can borrow (your income would appear higher)