company car

crism

Hi everyone,
My new job comes with a perk: a company car.
I am wondering, considering tax implication, whether it will be better to: get a company car (owned by the company), get a rental car ( covered by the company) or buy a car using an allowance available instead?
Any advice would be greatly appreciated!!

bigadaj

Presume your second option is lease rather than rental.

Options 1 & 2 are effectively the same, so it depends on how the finances work and your personal preference.

Normally the higher the business mileage you do then the more likely you would to go for the comoany supplied car.

If you are a petrol head then the comoany might restrict the car choice, though they may also do so for a car allowance. Similarly if they are paying you money to run a car then they may require four doors, like more than x years old etc

You need details from your company really, at my last place it was like pulling teeth trying to explain to HR that I needed to see what was available as well as teh cash allowance before I could make a decision.

MEM62

That cannot be answered without knowing all the circumstances.

What is your annual mileage? How much will be business and how much personal? Is the car fully funded? What tax band do you fall into?

Generally (and particularly if you fall into the 40% tax bracket) if your annual mileage is low a car allowance could work out to be most cost effective. If you mileage is high a company car can work out best financially.

You'll have to run each scenario and decide for yourself.

maddogb

there are other factors to take into account such as what personal mileage you will do.
When I had a comp car I was doing that much driving it was the last thing I wanted to do in my own time so ended up doing very little personal mileage and could not justify the amount I lost off my tax allowance at the time.
Think it was costing me about £3000 each year in real money to have access, a lot of cash as my wife also had a car which could be used if I needed it.

crism

thanks for all your replies, really appreciate that.
Yes, my personal mileage will be high as I'll be driving back home every weekend. The car will be fully funded if provided by the company. And then I still fall into basic tax bracket of 20%.
It seems to me therefore that going for car allowance would be the best option..

marlot

Fully funded means that you also pay tax on the fuel. If you do enough personal miles it can still be a good deal.

MEM62

I reckon if you remain in the 20% tax bracket and you have high personal mileage then it should be a no-brainer that the company car is the best option.

rs65

crism wrote: »

Yes, my personal mileage will be high as I'll be driving back home every weekend. The car will be fully funded if provided by the company. And then I still fall into basic tax bracket of 20%.
It seems to me therefore that going for car allowance would be the best option..

Why put high mileage onto your own car when you can be doing it in a company car.

I think the big difference between company car and allowance is certainty of cost. If you run your own car, you pay all costs. If you run a company car then the company pays all costs - the cost to you is a known tax amount.