Company Car or Car Allowance

Mike-Graham

I know this has been asked many a time, and I'm pretty sure in myself, that for me, the car allowance is the best option, but just want to check.

Basically I do virtually no personal miles, company miles are my main, sometimes around 20k a year.

I'm planning to buy my current lease company car for £7500 outright (no finance), and take the car allowance.

Company offer £400 a month (£4800 a year) and 15p a mile for fuel. I've worked out that the car allowance and the less tax i'll pay will give me £343 in my pocket each month (and i'll put this in another account specifically for car purposes), which makes the option seem very good.

My workings are below, they are quite crude, don't take into account tyres, servicing, insurance etc, but gives me a rough idea of what I stand to gain. I've done it at various fuel prices, and even less pence per mile for fuel just incase the worst happens, and prices go up. Car does average 63MPG but I've worked out based on 55MPG again for worst case scenario.

13p a mile 15p a mile 15p a mile
£1.36 diesel per litre £1.30 diesel per litre £1.16 diesel per litre
1 gallon = 4.55 litre
£6.19 per gallon £5.92 per gallon £5.28 per gallon
47.62MPG 39.47MPG 35.2MPG
10.7p @ 58MPG [EMAIL="9.6p@55MPG"]9.6p@55MPG[/EMAIL]
9.52p @ 65MPG [EMAIL="8.8p@60MPG"]8.8p@60MPG[/EMAIL]
12.14p @ 51MPG
£3000 based on 20,000 miles per year @ 55MPG - Fuel cost @ 55MPG = £1920 - £1080 profit + £1200 (Higher Rate 10K) + £600 (Lower Rate 10K) = £2880 per year after tax back
£343 in actual money extra a month, £4116 per year after tax
£6996 a year money back @ 20,000 miles - £1920 cost in fuel
£5076 a year profit
If car is £7500 it will take 1.48 years to recoup the initial cost with no additional costs incurred.

Hope this reads well, the tabs have disappeared. I'm due to buy this next month, I'm sold on the idea personally, and speaking with colleagues who have done the same thing, they are experiencing the same as above.

Mike

OddballJamie

To get a true figure you need to include the ongoing costs of running a car.
Tax, servicing, consumables, repairs, breakdown cover and insurance.

Regarding insurance, do you have any no claims discount from another vehicle or policy you can use as the first year with 20k business mileage limit could be a lot. My Dad had company cars for 30 years, when he gave up the last one and bought his own, the insurance was three times what I pay.

Another thing to consider is any terms in the company policy for using your own vehicle, some companies put an age limit on, which would limit the benefits.

Mike-Graham

Yeah, I've got 8 years NCB, and my insurance is coming in at £444 a year, which I don't think is too bad.

Concerning costs, this car has literally had nothing spent on it in the 3 years I've owned it, bar servicing.

Checked everything company side, we have no age limit on personal cars, and no other limits, so all good there.

Tax is nil, as its a low emissions car.

Breakdown cover, £28.50 a year.

Servicing, not sure, but wouldn't take it to a main dealer, know a local garage, so maybe about £100-£150 a go.

Car has also got a years warranty included in its price, so the first year shouldn't have any repairs. We know people in the motor trade, so even after that, it shouldn't be full price.