Company Car Tax

I'm coming to the end of a company car cycle, and so its time to start looking again at the cash vs car debate. The allowance is circa £5,500, which doesn't seem enough to do much with at first glance. I fall into the 40% tax band, so my crude math was to just take that off the allowance, which would slash it to £3,300, aka £275 per month....

However, is it sound rationale for me to consider the tax I currently pay on the car? So my car list price + emissions mean that per year I am paying tax on a benefit in kind value of £5930 (checked this on my P11D). So 40% of that is £2372, aka £197 per month in tax going out.

So my question is really, is the above logic right? If I run that through, I think what I am saying is that the jump between me owning the current company car (-£197 in tax per month), and taking the cash allowance (an addition of £275 per month after tax) would mean that I am £472 per month better off if I take the allowance..

This would mean I have £472 per month to find a car with, and that would be "breaking even".....right?




  • NYM
    NYM Posts: 4,066 Forumite
    First Anniversary Photogenic Combo Breaker First Post
    You might get some response if you post this on the ---> Cutting Tax part of the forum

  • bolton12
    No I don't own the car, so at the end of the term it just goes back to the leasing company. I pay for my fuel too. Yes you're right though the cost I haven't included in my calculation is the on going costs of owning a car (tax, servicing, insurance, maintenance etc). The company car just gets fixed and serviced as and when it needs it, at no cost. I think over the course of the 4 years I had very little problem really. It had 1 MOT this last year, and maybe over the time I've replaced all of the tyres once I think. Still, it definitely needs to be considered. With the company car, its a known amount each month, no suprises etc.
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