Car Allowance vs Company Car

surbitonian

If you need a car for work - lots of miles etc - then company car can work out best as they bear all the service/insurance/wear & tear etc costs. However if you are office based and the car is just a perk, then take the car allowance if you have the choice and run your own car to suit yourself.

HWKT

Hi

I could really do with some help on this...I've been offered a job paying £70k + £5k car allowance or being given a ford mondo zetec 1600 (114 emissions ) with a fuel card. I'm trying to figure out the cost comparison to identify how much this car PM will cost me v taking the allowance and getting my own car.

Would really appreciate any help from the folk on this forum

Thanks v much

Dazed_and_confused

You'd have to work the taxable benefit figure for the car to then work out the tax but the car allowance is easier as there isn't any such thing really yfor tax purposes, it's just extra salary.

Unless you have a lot of other income you will pay 40% tax on the £5kand maybe some national insurance. There may also be pension tax relief implications but this depends on how your employer treats the £5k and what your pension arrangements are with the company

Farcasting

HWKT wrote: »

Hi

I could really do with some help on this...I've been offered a job paying £70k + £5k car allowance or being given a ford mondo zetec 1600 (114 emissions ) with a fuel card. I'm trying to figure out the cost comparison to identify how much this car PM will cost me v taking the allowance and getting my own car.

Would really appreciate any help from the folk on this forum

Thanks v much

ask your employer for the figures, if the P11D cash equivalent is less than £5000 you'd be better off taking it as a Benefit in Kind BIK if the cash equivilant is higher than £5000 you'd better better taking the car allowance.

basically you'll either pay tax on the extra 5k car allowance at 40% or tax on any BIK at 40%. so just pick the lowest number

Darksparkle

Use the gov site calculator to calculate the BIK.

https://www.gov.uk/tax-company-benefits/tax-on-company-cars

You'll need to factor in that with a company car the company pays insurance, road tax, repairs etc.

If you take the car allowance you pay for that yourself plus consider how fuel will be dealt with.

nat810211

I have just been offered a role and wanted to weigh up if the car allowance is worth it...


I have been offered £35k plus £5k car allowance.

My business mileage will actually be very low, max 500 miles p/a - personal mileage about 5k p/a

any thoughts would be greatly appreciated!

booksurr

nat810211 wrote: »

I have just been offered a role and wanted to weigh up if the car allowance is worth it...


I have been offered £35k plus £5k car allowance.

My business mileage will actually be very low, max 500 miles p/a - personal mileage about 5k p/a

any thoughts would be greatly appreciated!

surely you have read the posts above yours?

5k "car" allowance is simply extra salary so on a gross of 40K you would remain a basic rate taxpayer: 5k x 20% = ???

since you give no ideas about the alternative of a company car, read the previous posts about how to use the HMRC company car calculator...