car allowance

hunt85

Hi everyone apologies if this has been covered before

I have been offered a job with a £4000 a year car allowance. I have never had a company car or car allowance and I really don't understand it please can someone explain? Thanks

Stroller133

The allowance will more than likely paid as earnings, so subject to tax and NI. Requirements will vary between employers, but in return you will likely be expected to provide a taxed, MOT'd, insured car and will be responsible for all your own maintenance, breakdown cover, depreciation etc. Some employers may stipulate the car must be a certain age or below a set mileage or even have 4 doors etc.
Hopefully you will still be paid a mileage rate for your car, probably 10p a mile is standard for a 1.6 diesel.

As the authorised mileage rate for a private vehicle is 45p, you can claim tax relief on any under payments. For example!e if your employer pay 10p per mile towards fuel and you 10000 miles in a year, you could have had £4500 tax free but only received £1000 ( remember the allowance is probably subjected to tax and NI). You can therefore claim tax relief on £3500. So £700 for a 20% taxpayer.