Car allowance

comeandgo

Your £400 is taxed and NI'd so it is less than £300 if you are 20% tax or £200 if 40%. Again be sure that there are no restrictions on the sort of car you can use - many employers are insisting that the vehicle is less than 5 years old, less than 100k mileage, this is due to strict employers liability if you are injured and it is due to defunct work items.
Are you claiming any benefits that are income related? I know one of our employees lost child tax or other benefits as with the car allowance his salary was over the limit.
If you were to take the mileage for your own car at 45p as soon as you go over 10,000 miles you are in effect due the tax man more money.

AdrianC

SLITHER99 wrote: »

Sorry, think you may have misread. If I take the car allowance, there are conditions upon which the car needs to tick certain boxes, such as <3yo, warranty, business insurance. If I use my own car, there are no restrictions (will need to double-check).

Umm, there is no alternative BUT to use your own car. The only difference is in how they recompense you for the use of your car.

And business insurance is a _legal_ requirement, nothing to do with your employer.

This is why I think you've misunderstood. Either way, you need to provide a car. The only difference is whether they pay you...
- £400/mo+13p/mile
- £0/mo+45p/mile

It strikes me this really is a maths question alone. The break-even point is whether the mileage difference is going to put more money in your pocket than the £400. It's not _quite_ as simple as 1,212 miles @ 33p = £400, since there's various tax implications to take into account.

Prothet_of_Doom

Do the sums. You'd be mad to take the car allowance.

Lets assume that your £400 allowance can get you a car, and that your £1800 car lasts 2 years

If you did 1000 business miles, in a year you'd be 130 in profit with the lease hire, and -450 out of pocket with your own.
Move to 2000 business miles. 260 vs Break even
At 3000 you are now well ahead at £390 vs £450
At 10000 miles, you have claimed £1300 fuel on the lease, but have claimed £4500 (minus £900 because we said the car would only last 2 years), so that's £3600.

At 20K its 2600 vs 6100.

Now lets just say you can get a car that only costs £0.13 a mile in fuel (my 2.2 Desiel honda costs about 16p) you have just broken even.

But at 5000 miles in your own car you have made 700 profit, at 10K 2300 profit, at 15K £2900 profit and at 20K £3500 profit.

Call it 10K and £2300 profit, take away some servicing say £2K profit ? Tax free, that's worth £4K in salary after NIC and tax taken off.

There are risks in using your own car. You have to repair it.
There are risks leasing a car, using salary. You are committed to it.

Personally, I go for using my own car, but I know some people who would go for the security of never having to pay for repairs and impressing the neighbours.

OddballJamie

OP - do you have any no claims?

Just wondering about the insurance aspect as some lease deals can incorporate insurance into the deal, such as Peugeots 'Just add fuel'.

Also VED too, another item that may be included in a lease but would come out of your own pocket otherwise.

Possibly servicing and tyres too.

SLITHER99

I have 12 years no claims. I did some salary calculators and I'll have £233 after tax in real money.

Business insurance doesn't add all that much, £15 or so depending on provider.

A lot of the lease deals I'm seeing (fiestas, etc) seem to be quite over my budget.

OddballJamie

SLITHER99 wrote: »

I have 12 years no claims. I did some salary calculators and I'll have £233 after tax in real money.

Business insurance doesn't add all that much, £15 or so depending on provider.

A lot of the lease deals I'm seeing (fiestas, etc) seem to be quite over my budget.

Try Ling Cars, just turn your speakers off.

catwoman73

Leasing costs more because you are looking at new cars. Financially, your best bet would be to buy a car that is about 3-5 years old and run it for a few years at least. If you do a few thousand miles a year or more, you should cover all the cost of running a car from the 45 ppm.

OddballJamie

catwoman73 wrote: »

Leasing costs more because you are looking at new cars. Financially, your best bet would be to buy a car that is about 3-5 years old and run it for a few years at least. If you do a few thousand miles a year or more, you should cover all the cost of running a car from the 45 ppm.

Problem with that is OP has a £2k budget and doesn't seem to want to get into finance due to possible re-mortgage complications. Completely understandable.

Any

As an accountant:

The lease will show on your credit report as full amount of loan, decresing as the time goes by.

You will get 13ppm from the company, but you can claim the difference to 45p as a tax relief from HMRC.

At the end of the day you are taxed on the car allowance, so for them it is like you are driving your own car and the extra money is part of your pay cheque.

mattyprice4004

Crikey, I'd love this. I have a Rover 75 diesel which does around 45MPG, is auto so ideal for mega miles and costs pennies to own. I'd make a fair old whack at 45ppm.

Maybe time to widen the job search..