Company car vs car allowance – HELP !!

jonesy103

I currently drive a three-year-old Citroen C4 Picasso THP 155 company car (petrol) with all expenses paid (private mileage included) and I pay tax at 40%. I’m trying to work out if I would be better off by asking for a company car allowance rather than take the car.

How much does my current vehicle actually cost me in tax, is it 40% of the sum of the car benefit (£4118) and fuel benefit (£5876) currently shown on my latest tax return ?

If I were to opt for a car allowance in place of the vehicle what would be a good figure to start with when negotiating the allowance assuming that the car is replaced every four years ? There has been no negotiation yet regarding the type/style/age or size of the car.

What’s your advice on claiming fuel for business mileage and how do I insure a vehicle that isn’t used just for S,D&P but includes an element of business use ?

Our company has traditionally purchased vehicles outright but there now seems to be a leaning towards leasing. Is there any benefit to me either way or is this purely a financial issue for the company ?

Citroen C4 Picasso THP 155 with all private and business expenses paid (petrol etc.)

List price of car £16,995 (when purchased)
C02 Emissions figures 139g/km
Engine capacity 1598cc

2017-2018 tax figures – my current tax code is 169T
Car benefit - £4418
Fuel benefit - £5876

2016 – 2017 P111D Value - £16,995
Cash equivalent of car - £4078
Cash equivalent of fuel - £5328

Estimated business mileage per year – no more than 10k max. (probably a lot less)

IamNotAllowedToUseMyName

I'm not sure of the answer, but I do know it is not even as simple as the matters you raise.

There is the official car tax calculator here:

http://cccfcalculator.hmrc.gov.uk/CCF0.aspx

Not an easy calculation, but if you don't know any of these numbers, your payroll people should be able to help you.

Leasing is about cash flow for a company, and also about managing the fleet. For health and safety reasons, larger companies may feel compelled to have professional fleet management.

Privately, if you can buy privately the car you want, then that will probably work out cheapest with proper negotiation rather than leasing. However, trying to work out the cost/benefit is not straight forward when there are dealer incentives around, especially as some can get you to take out finance which you can then terminate to get the incentive.

sheramber

You need to insure your car for social, domestic and pleasure, commuting and business use.

A car allowance is added to your salary and chargeable to tax and NIC.

You can claim tax relief on business mileage, which does not include to and from work to home.

You do not claim the amount, you claim tax relief on the amount.

So if you do 5000 business miles you get relief on 5000 x 0.45 = 2250 x40% = 900

If your employer pays a mileage allowance of less than 0.45p you need to deduct that amount from your claim.

If your employer pays more than 0.45p then you need to pay tax on the amount over.

Remember you will also have to pay your own running costs and repairs.

knightstyle

Go for car allowance even if it seems slightly dearer, then when you are made redundant you will not be car less like I was.

wymondham

Get a company car if you have the option. It'll be cheaper than an allowance plus the wear and maintenance headache is on their car, not yours. If you get made redundant then simply to go and buy a car without the high mileage!

jonesy103

knightstyle wrote: »

Go for car allowance even if it seems slightly dearer, then when you are made redundant you will not be car less like I was.

Fortunately redundancy isn't on the cards (I have been there before though so understand your pain)

gingerdad

whenever i've looked at it. its been better for me to have the company car, though we now pay our own fuel and claim it back as works out better for me, wasn't doing enough personal miles to justify the cost.

i've got a 30k car which costs me 100 quid a month, can't really beat it.

interms of leasing i have an amount to spend and it doesn't matter on the p11d value of the car. so we always go for the deals which usually means you get a much better value car for the money - my list included

Skoda superb sportline
VW Golf GTD
Volvo XC60
BMW 3 series
Mazda 3
Mazda CX5

was nuts cheapest car was 22k most expensive 35k but all the same monthly rental. always look for the deals.

Jeffmo65

new position with same company due to illness . £25000 + company car or £25000+ £5000 car allowance . We currently have a car on a pcp deal which costs us £212 per month , this is due to end . Because I've been off work my wife uses our car for work and she needs a car . So my question would be take out a new pcp or refinance our existing and get a smaller car for her to use for work . Or take the company car and either refinance old car or smaller car for her . I know there are calculators out there to use but just can't seem to understand them . Business fuel claimed back regardless on my part . No free personal use offered

jimjames

knightstyle wrote: »

Go for car allowance even if it seems slightly dearer, then when you are made redundant you will not be car less like I was.

I'd say the opposite. If you have a company car then you can buy one if you're made redundant. Take out a 3 year lease or PCP then you're still committed to paying that even if your job and circumstances change.

wymondham wrote: »

Get a company car if you have the option. It'll be cheaper than an allowance plus the wear and maintenance headache is on their car, not yours. If you get made redundant then simply to go and buy a car without the high mileage!

Exactly. Requirements may change if your job changes and otherwise you could be tied into a car you don't need.

Unless the company has no rules on what the allowance can be used for then it's likely that the company car will be far better from a financial perspective.

Remember if you do take the allowance you can claim on your tax return for the difference between company rate and the HMRC mileage rate which can be a useful sum too