Car Allowance vs Company Car

sedgeman

Morning


I'm sure many people have asked this question but I'd really appreciate some support with making a choice between choosing a company car or car allowance?


Currently I have a company car but am weighing up whether to take a car allowance instead.


Car allowance would be £5700 - I understand that is taxable. I will pay for my private mileage but will have business mileage paid for via a fuel card (private mileage is deducted from my salary each month)


What would people suggest? Does anyone have a calculator that I could use that compares tax etc.?


Thanks


Steve

Darksparkle

Post figures here? Or use the salary calculator?

http://m.thesalarycalculator.co.uk

Remember to factor in the extra costs you'd have with a car allowance, insurance, repairs, MOT etc

sedgeman

thanks for the quick reply. I'll have a look but its not easier to calculate because I currently have a company car which I am taxed BiK on


I was hoping for suggestions or feedback based on peoples personal experience?

djwood1

I'm in the process of deciding too. Very simliar car allowance, mine's £5400 which on a £40k salary nets down to £200 p/m. WHen you add the saving of no having BIK on a company car it left me with circa £360 p/m.

How many miles would you do? Any restrictions on the car you can use? Is there any option to get a fixed pence per mile rather than a fuel card?

I already have my own car so I can just about run it until I settle in and then I'll look at the company car options.

Buying, insuring and maintaining a car for business use is costly.

Darksparkle

sedgeman wrote: »

thanks for the quick reply. I'll have a look but its not easier to calculate because I currently have a company car which I am taxed BiK on


I was hoping for suggestions or feedback based on peoples personal experience?

Sorry, you asked for a calculator that's why I posted it. The calculator allows you to put in benefits in kind. So you could on one calculation with the car benefit and the other with the car allowance (by removing the car benefit and adding the allowance to your salary).

The car allowance is £5700, you'd pay tax and NIC on that. How much would depend on your total taxable income.

Is the car benefit more than £5700? You only pay tax on a car benefit, no NIC so you need to factor that in.

How do you deal with fuel for the company car? Do you have a fuel benefit as well?

sedgeman

djwood1 wrote: »

I'm in the process of deciding too. Very simliar car allowance, mine's £5400 which on a £40k salary nets down to £200 p/m. WHen you add the saving of no having BIK on a company car it left me with circa £360 p/m.

How many miles would you do? Any restrictions on the car you can use? Is there any option to get a fixed pence per mile rather than a fuel card?

I already have my own car so I can just about run it until I settle in and then I'll look at the company car options.

Buying, insuring and maintaining a car for business use is costly.

Hi


Salary is similar.


I will not be doing many personal miles in the car as we have a separate car we use. In terms of mileage I will be given a company fuel card for my vehicle - personal mileage is deducted from my salary each month so I don't pay any BiK tax on fuel.


Probably do 12 - 14k miles a per year - 80 -90% would be business use.


I'm really not sure which is the best option. Would really appreciate anyone elses advice

sedgeman

Just been on HMRC and think I've calculated the BIK which for 2015/16 would be £3636. No tax to be paid on fuel as I pay for private fuel.


What does that mean in terms of weighing up the choice between company car or allowance (£5700)


Thanks

Darksparkle

You need to look at the overall picture.

Say your salary is £40,000 (I can't give an accurate calculation without knowing total income, benefits, pension, student loan etc)

If company car your take home pay is £2442.

From that all you need to pay is your private fuel.

If you have a car allowance your take home pay is £2819.

So with a car allowance you get an extra £377 per month.

But out of that you need to pay for the car, private fuel, insurance, MOT, repairs etc.

Can you pay all that for less than £377 per month?

ps124

Hi...Sorry in advance OP for jumping in on your forum post.

DarkSparkle and All, I am also in a similar position where I have been offered a company car or a car allowance. I'm not sure which one to take.

In your example below DarkSparkle, unless you have an old car on its last legs, its almost certain that you could cover the costs of insurance, MOTs and repairs because £377 per month is approx £4.5k per year. Am I misunderstanding this - because insurance lets say £1000 (worst worst case), MOT is like £200, Tax £180, Service £200, any standard repairs you would probabl spend about £2k on the car so you would make a saving. Is that not correct?

So maybe other factors come into play...I'm in my early 30's so the devil in me says I want a brand new, nice car as I've never had one and when compared to the amount of tax I would have to pay, it's worth it.

But then again, I don't know any better and the sensible voice in me says maybe you won't drive it around much so is it better to take the allowance.

My job is currently based in Central London so not much travelling at the moment but there maybe a chance that I have to travel in future etc.

My allowance is £5,000 and I am in the 40% tax bracket. any advice?

I just dont know :-(

BillTrac

I went from company car to car allowance about 8 years ago and wouldn't want to go back. In fact when I took on the job I have now they tried to get me to have a company car and I persuaded them to give me car allowance.

I get to choose the car that I want (within certain restrictions)
If I leave I still have the car
I get car allowance on top of my earnings so my income is higher. Ok I get taxed on this, but otherwise I would get my salary and have tax taken from that for company car BIK.
I buy cars that are at most 6 months old so better value and as reliable as a new car can be

I just feel better off.

But that could just be me

themull1

My husband had a company car for a few years, then went onto his own car where the employer gives him a car allowance - he prefers his own car and car allowance.