Company Car Allowance - High Milage

Skilldeft

Hi,

I am starting a new job next week and have been given a company car allowance of £5200 per year. The only issue is that I will be doing around 25,000 miles a year so I'm unsure what route to go with buying/pcp/phc/hire purchase.

Are any of these a better option for high mileage?

Lastly I get a fuel card from my new job but will pay back my private mileage at the end of each month. Am I entitled to claim anything additional to this?

Many thanks

bigadaj

The cheap deals on new finance cars tend to be in very low mileages, so on your mileage then a new pcp or similar will be quite expensive.

Many people report doing trouble free high mileage motoring on older cars but it's a risk, have your employers stated any restrictions in terms of age, style etc?

Buying a one year old car can lose a lot of the depreciation, some might recommend three year old but that's higher mileage and approaching the end of warranty.

In terms. Of claiming running costs then you will be taxed in your car allowance, so you can claim the tax back on the difference between your employers fuel rate and Hmrc approved rates, at your marginal tax rate. So 20% or 40% of 45p per mile minus your fuel costs up to 10000 miles, then the same but 25p per lmile minus fuel.

Skilldeft

Thanks for that. I don't think they have restrictions but I personally want to get something new or nearly new.

The mileage part is still confusing to me. My basic is £32k so even with my benefit I should still be in the 20% bracket. If they give me a fuel card and I pay for my private mileage (say 20k work, 5k private) what will I claim back and when?

Again, thanks for the help. Much appreciated.

marlot

Skilldeft wrote: »

...a company car allowance of £5200 per year...

If you're new to this, then you may not be aware that the allowance is taxed.

loskie

for the mileage you are talking about I would buy something a year or two old with 20000m on. Take out a cheap personal loan if possible.
The car is yours so if the job does not work out you can then get rid of the car.
With lease and PCP you will be stuck with the car for the full term.
If your current car is serviceable I would keep that and bank the allowance until it dies and you are settled into the job.
My lease car has gone and I am currently running my 52 plate Subaru Forester for work so it can be done. I am just putting £250 a month into a savings account for the time I need a replacement.
The Subaru may only do 32mpg but there's no deprecation which is the biggest and often most ignored cost.
Don't rush into buying a car for a new job.

Ebe_Scrooge

Sound advice from Loskie. Run your own car, bank your allowance, buy another car with your savings further on down the line. For that sort of mileage, any PCP type of plan is going to be very costly - you're much better off buying a car outright.

facade

As above, either keep your own & bank the money, or if you must, get something cheap &12 months old. Why on Earth would you consider buying a new car to wear out for your employers convenience, for £5200 a year (before tax)?
You have to buy your own tyres, pay for servicing & consumables out of that money too.

If your car keeps going you could be saving £3000 or so towards a new car for yourself when you are fed up of driving 500 miles a week

Zero_Gravitas

If you need a car to do your job and you're doing that sort of mileage I'd expect to be getting a company car, and not just an allowance.

k3lvc

I too am with Loksie - I've been in same situation for the last few years. I've made some 'interesting' decisions (Alfa Spider Personal Lease @ £399pcm for 18k miles inc servicing) but have now settled into a routine for the last few cars

Negotiate hard with main dealer on suitable car offered with free serving/warranty as part of finance package. Take out personal loan (or loan via employer if available - mine's @ BOE base rate + 1%) and pay off finance. I've been taking loans over 4yrs and getting rid of car after 2yrs

As an example my current Jag bought at under £16k with 70k miles on 2yrs ago, last 2 services (c.18k intervals) included and it'll fetch £10k vs the £7.5k owed - I've even just (at £1k+) extended the Jaguar warranty to keep it for another year as it's not going to depreciate that much

scaredofdebt

Factor in how secure the job is, bit of a pain having a 5 year finance deal if you leave the job after a year or so.

Some lease (and possibly other) deals will allow you to hand the car back if you are made redundant etc but you are paying a premium for what is in effect insurance against such events.

00ec25

Skilldeft wrote: »

Lastly I get a fuel card from my new job but will pay back my private mileage at the end of each month. Am I entitled to claim anything additional to this?

you will keep a log recording the business miles you do

your company will pay the entire fuel bill on the card: total cost £A

you will repay to the company a cost of the private mileage you did using at whatever rate they require you to use: Cost £B

£A - £B = £C the amount of money you have received for the business miles (only) that you did

in contrast, if you did not have the fuel car you would instead claim your business miles at the 45ppm rate or the 25ppm rate as applicable. Obviously miles x £0.45(or £0.25) = £D. The amount you would have claimed without a fuel card

if £D - £C is a positive number (£E) , ie you would have had a higher total on the mileage method then you can claim that cost (£E) and so have a claim. If it isn't then you don't, as you have been paid all you are entitled to receive.

note carefully, you do not get paid £E, you claim it as a cost and you will receive tax relief on it. You say you are a basic rate taxpayer so you'd get £E x20%
How you claim £E depends on whether is is more than £2,500, if it is you must complete a tax return. If it isn't, you can write to HMRC and ask then what to do (often they will say complete a P87 claim form)