Car Allowance

bodmil

Can anyone tell me anything about car allowances? I'm going for an interview with a company, where the agent said 'they often bump up the salaries with a £2k car allowance'. I've already got an offer on the table from another company so want to make sure I fully understand the implications to my pocket of any offer they may put forward.

Help?!

SLSKKJ

car allowance is how the HRMS calculate the tax on your income, basically deduct this from your tax free amount and hey presto... if it takes you over the tax free threshold then simply work out the income tax on it and add it to your tax bill. To work out the income tax treat is as additional income to your salary.

the HRMC have quite a good website to calculate the damage to your pocket - I cant post weblinks so google HRMC company car benefit calculator, you will need to know the make and model of the car in order to calculate the CO2 emissions (its in the manufacturers web info pages).


in my old job a car was valued @ £3,250 of benefit which cost me £80 per month on tax, this is also based on the CO2 emissions the vehicle produces.

you need to watch out as any personal fuel used that is paid for by the company will come back to haunt you the following tax year.

hope this helps.

OllysMum_2

Not sure I understand your post, SLSKKJ...

A car allowance is simply a sum added to your salary in place of a company car. Some companies will stipulate that you must have a vehicle, others are happy you spend the money however you please. It is taxed as if it was normal salary. It is usual that the amount covers all car expenses - car purchase, maintenance, repairs, road tax etc. Mileage is claimed separately.

If this is offered to you as part of your package, then ask what the conditions are. £2k isn't really enough to cover the cost of buying and running a decent car so it may just be used as a top up for pay grades.

SLSKKJ

I had assumed that £2k was the taxable value of the car not the value added to £2k. As you state this would not be enough to buy and maintain a decent car.

bodmil

.........................

Any

bodmil wrote: »

Thanks both, so it's just an irrelevant number really and I just need to think of the salary as the total?

Yes, with the view that you then must have a car to be able to attend company business at different location. You cannot get a car allowance and then say you need them to hire you a car when they send you somewhere.
But other then that, is is just like normal salary.

bodmil

..........

InsideInsurance

Any wrote: »

Yes, with the view that you then must have a car to be able to attend company business at different location. You cannot get a car allowance and then say you need them to hire you a car when they send you somewhere.
But other then that, is is just like normal salary.

You cant demand they hire you a car to go elsewhere but it doesnt mean you have to either have a car or go by car.

As you have an allowance rather than a company car you can claim 45p per mile (first 10,000) and this will often be much more than the cost of a train ticket + taxi at the other end if it is pre-planned. EG London to Leeds return is 200 miles so £90 for car or £29 by train plus say another £20 for taxis?

Basically you can consider it another £2k salary however because it isnt part of your basic salary it isnt normally considered for any percentage based benefits like bonuses or pensions

getmore4less

InsideInsurance wrote: »

You cant demand they hire you a car to go elsewhere but it doesnt mean you have to either have a car or go by car.

As you have an allowance rather than a company car you can claim 45p per mile (first 10,000) and this will often be much more than the cost of a train ticket + taxi at the other end if it is pre-planned. EG London to Leeds return is 200 miles so £90 for car or £29 by train plus say another £20 for taxis?

Basically you can consider it another £2k salary however because it isnt part of your basic salary it isnt normally considered for any percentage based benefits like bonuses or pensions

You can't claim 45p you can claim tax relief on upto 45p

the company may pay less than the maximum allowed tax free.

OP :

check what conditions come with any car allowance.

remeber it may no be pensionable.

somethingcorporate

£29 between Leeds and London?

You've evidently never traveled at peak times!

It's often £160 return between York and London advance tickets at peak times and often over £200 at short notice.

Pretty comparable to what you'd get if you drove at 40p per mile.

bodmil

.............