What to do? Job offer + bonus and company car

giggsy07

I am currently in full time employment and have been with my current firm for nearly 5 years having joined as a graduate.

My boss has recently left to go to another firm and they have also approached me about joining the same team.

My current salary is £32,500 and I receive a car allowance of £4,250 per annum. My tax code is 812L. I also benefit from a discretionary performance related bonus at year end which for the past 2 years has been £13,000 (2010) and £8,000 (2011). This year has been good in terms of fees so far and so there is potential for a healthy bonus again, however our team structure has altered from a national pot to a regional office pot and so there is risk involved in whether this will be at the same levels as previous. Pension = 4% auto from firm and then a choice of 1,2,3 or 4% which is matched by firm, i.e. max 12% if I contribute 4% which I do.

My offer from the new co is £34,500 basic salary with either a company car (up to a rental of £300/month) or a car allowance of £4,000. They have also offered a signing on bonus of £12,000 to be paid in first month. This offer has been negotiated up from an initial offer of £34,000 basic and a £3k sign on bonus. Pension is a mandatory 5% contribution which is matched.

I have never had a company car so not sure whether to accept this or go for the allowance. Obviously accepting the company car offer will reduce my take home to a level below what I am currently at but remove the outgoing of HP payments, insurance, car tax, maintenance, etc.

Also, if I get the £12k bonus, will this push me into the 40% tax bracket and mean I have to pay the higher tax on salary and company car tax?

I am aware it is a nice problem to have but just wondered if anyone could help me with working this out financially and then I can discuss the overall move with my other half.

Many thanks in advance.
Giggsy07

twig1_2

You can earn £42,490 before you pay tax at 40% so whether you take the car allowance or the company car with a £12,000 bonus you will be paying at the higher rate. The car allowance versus company car is the virtually the same for you as you will be paying tax on either £3600 or £4000. I suppose the question on the allowance is whether your costs to run a car is greater or less than the allowance and whether you can get the same car you presently finance through the allowance scheme with your present employer.
Will you still be with your present employer when the bonuses are paid out as if not the £12000 bonus from new employer is only covering the bonus you will lose but maybe that is why you have negotiated it up.
Will your new employer have a bonus scheme?
You are losing out on the difference between 5% and 12% the previous employer contributed towards your pension scheme though that could have a impact on the pension you get at the end unless it is a final salary scheme.

Idiophreak

Are we to assume you've decided you're taking the new job? I'm not convinced I'd move...Couple of k per year, a decent sign on bonus, but slightly worse car allowance, slightly worse pension and a step into the unknown...I'd generally expect at least a 10% raise to cover the risk of moving...

giggsy07

Thanks twig1.

I will not be with current employer when bonus is paid and yes, it is in essence to replace the bonus I would have got had I stayed to year end. Yes, they will still have a bonus scheme in place which I could potentially benefit from if I can get enough fees in before the year end.

Pension - current split is 4% me and 8% employer. New will be 5% me and 5% employer so losing out on 3% employer contribution essentially and 2% overall.

giggsy07

Idiophreak - not sure yet. I have worked through figures and the difference isn't all that great is it?!

Main selling point to move would be to work with my boss again and the chance to help to grow a business line, however the risk of obviously greater, i.e. job security, etc.

10% increase on salary would be just under £36k. I haven't committed to anything yet so I could still push for further negotiation I suppose. There is also the possibility that current employer could try and match or keep me.

Idiophreak

giggsy07 wrote: »

10% increase on salary would be just under £36k. I haven't committed to anything yet so I could still push for further negotiation I suppose. There is also the possibility that current employer could try and match or keep me.

Trouble is, your current employer is pretty much matching their offer, financially, as it is.

Again, if the new place offers you 10% more, when you hand in your notice and your boss says "why are you leaving?" you can say "Oh, I just need the money..." and then they might try and match or beat it.

At the moment, you'd be saying "to work with XXX again and to have the chance to grow a business line"...given those reasons, they're much less likely to turn around and offer you more money, as money's not your motivator for leaving...

SueC_2

All sorts of financial considerations, but on a practical note:

I once had to make a 250 mile journey home, having just been made redundant and having had to hand back the keys to the company car. Since then I've always taken the view that if worse comes to worst again and my job were to come to an unforeseen end again for any reason, the last thing I want to be worrying about is how I'm going to get home or to interviews for my next job!

cainkapow

the main thing that would concern me is that if you have been with the current company for 5 years then you have all the rights basically, and some sort of reputation amoung the other staff. So basically you have job security, and if for some reason the company decided they didnt need you, you would recieve a redundancy pay out.

However, starting again means earning those rights again.

Like others have said, your current company is basically matching what the other is offering and actually bettering it in some places.

I say go speak with your manager and see what can be offered, even if its a pay increase of a few grand, it will show that you want to stay but your also considering the money offered.

Play this to your advantage, but its good to see that your not just diving in.

getmore4less

You need to look at your car useage and if they are giving a fuel card.

If low mileage why are you leasing/HP a car, buy something cheap and pocket the cash.


you need to look at te BIK costs of car and fuel to decide which is best.

Also look at other pension options to increase contributions

colino

How about trying to take over your old bosses job where you are now? He obviously values you and wants you to make him look good where he has moved to.