How does Car Allowance work?

LiveOnce

Hi guys,

I have an offer for a job which pays £7k in car allowance.

How does the car allowance work? Will I get taxed on it? I am quite new to this so if anyone can help me understand it would be great please

nomunnofun

You will pay tax and NIC on it in exactly the same manner as if you were given a salary increase of £7000.

zygurat789

LiveOnce wrote: »

Hi guys,

I have an offer for a job which pays £7k in car allowance.

How does the car allowance work? Will I get taxed on it? I am quite new to this so if anyone can help me understand it would be great please

The car will be yours, you will have to pay all the expenses and if you leave this job the car is yours to take with you.
If your employer pays you expenses for business miles of less than 45p per mile for the first 10,000 miles and 25p thereafter you will be able, by submitting a claim, to reduce your taxable income. Any payment in excess of these figures will, of course, be taxable.

LiveOnce

zygurat789 wrote: »

The car will be yours, you will have to pay all the expenses and if you leave this job the car is yours to take with you.
If your employer pays you expenses for business miles of less than 45p per mile for the first 10,000 miles and 25p thereafter you will be able, by submitting a claim, to reduce your taxable income. Any payment in excess of these figures will, of course, be taxable.

Do employers typically pay mileage after giving car allowance? My current company pays no car allowance but I can claim mileage.

zygurat789

LiveOnce wrote: »

Do employers typically pay mileage after giving car allowance? My current company pays no car allowance but I can claim mileage.

For the life of me I cannot see why employers give a car allowance, why not just say it is all salary, it amounts to the same thing.
If you own your own car and do mileage on behalf of your employer, of course they should pay a mileage allowance. Some may do others may not.
Everything is down to personal preference of the employer

AIFOP

There are numerous benefits for employers to keep it seperate:
* There may be several employees on the same salary, but some may have a company car, others may have opted out and have chosen a car allowance.
* Salaries may be linked to RPI, some other agreed scale or subject to performance or an annual review.
* Car allowances may be calculated differently and may be a fixed rate over a 3 or 4 year period. Thus making it easily comparable with the cost of providing a company car.
* To reduce the cost of premiums for Death in Service benefits.
* As not to increase employer pension contributions.
* There may be a situation when the employee is no longer entilted to a company car (or allowance), if it is seperate, it is easier to take it away.

zygurat789

AIFOP wrote: »

There are numerous benefits for employers to keep it seperate:
* There may be several employees on the same salary, but some may have a company car, others may have opted out and have chosen a car allowance.
* Salaries may be linked to RPI, some other agreed scale or subject to performance or an annual review.
* Car allowances may be calculated differently and may be a fixed rate over a 3 or 4 year period. Thus making it easily comparable with the cost of providing a company car.
* To reduce the cost of premiums for Death in Service benefits.
* As not to increase employer pension contributions.
* There may be a situation when the employee is no longer entilted to a company car (or allowance), if it is seperate, it is easier to take it away.

Bad news for employees then