Company Car or Allowance?

Rover1_2

My Organisation is intending to close its company car lease scheme and proposes to give all employees a car user allowance plus a business mileage allowance.

At present a company car is leased to employees for 3 years. A Vauxhall Astra Elite 1.7 CDTi with an annual tax bill to a 22% taxpayer of £696 per annum would be a vehicle within the organisation’s budget. Business fuel use is reimbursed to the employee at 12p per mile. I typically cover 16,000 business miles per year.

I am offered in lieu of the lease car a User Allowance of £1,278 per annum (subject to tax and NI which leave me with £895 per annum) plus business mileage is reimbursed at 40p per mile up to 10,000 miles then 25p per mile after 10,000 miles each tax year (non taxable). I will get in my pocket £6,395 per annum to run my car

Would I, from a financial point of view, be any worse off if I bought the same Vauxhall Astra vehicle from new, ran it for 3 years (covering 20,000 per year, 16,000 business, 4,000 private) and renewed it every three years, than if I retained a company car?

If I would be worse off how much should I ask for in lieu of the company car? Does anyone have a spreadsheet that allows you to compare a company car benefit against providing your own vehicle where you can vary business and private mileages as a cost comparison?