To take car allowance or not...

lolaleigh2018

Hi


I wonder if you can help me.


I have started a new job on £45k with £450 a month car allowance/or company car


At the moment I have the car as I don't have a car that meets the car allowance criteria such as 4 years old etc.


If I take the car allowance what would it actually mean in terms of take home?
and would it take me over £50k annual earnings?


Does any one have any advice on what they would do in this situation - buy a car with the car allowance or continue to take the company car.


Many thanks

System

lolaleigh2018 wrote: »

Hi


I wonder if you can help me.


I have started a new job on £45k with £450 a month car allowance/or company car


At the moment I have the car as I don't have a car that meets the car allowance criteria such as 4 years old etc.


If I take the car allowance what would it actually mean in terms of take home?
and would it take me over £50k annual earnings?


Does any one have any advice on what they would do in this situation - buy a car with the car allowance or continue to take the company car.


Many thanks

Hi - it's entirely up to you. Any car you look at as a company car will have a P11d rate, which is the amount of tax you pay as a benefit in kind.



For example, if the P11d is £3000, it's classed as earning £3000 on top of your salary, so that's 48k you'll be earning theoretically. That means that you'll pay around £250 per month for a car with that P11d rating.



P11d's are calculated on the price of the car new and things like emissions, whether it's diesel or petrol, auto or manual etc. etc.


It's also worth noting that the P11d is different for those on 20% tax or 40%, like you. There's no sliding scale.



Benefits of the company car - it's all in. Servicing, tires, maintenance, tax, insurance etc. You don't have to worry about anything.



You can take the allowance, which is just classed as a pay rise really - you have to use your own transport, but you are paid more. Yes - you'll now be earning 50k

Comms69

andydownes123 wrote: »

Hi - it's entirely up to you. Any car you look at as a company car will have a P11d rate, which is the amount of tax you pay as a benefit in kind.



For example, if the P11d is £3000, it's classed as earning £3000 on top of your salary, so that's 48k you'll be earning theoretically. That means that you'll pay around £250 per month for a car with that P11d rating. - Whilst im totally not up to date on this, surely if the rating is £3,000 then the tax would be proportionate to that? Genuine question



P11d's are calculated on the price of the car new and things like emissions, whether it's diesel or petrol, auto or manual etc. etc.


It's also worth noting that the P11d is different for those on 20% tax or 40%, like you. There's no sliding scale.



Benefits of the company car - it's all in. Servicing, tires, maintenance, tax, insurance etc. You don't have to worry about anything.



You can take the allowance, which is just classed as a pay rise really - you have to use your own transport, but you are paid more. Yes - you'll now be earning 50k

The car allowance is something I'm not familiar with.

System

Comms69 wrote: »

The car allowance is something I'm not familiar with.

£250 per month is £3000 per year.


Car allowance is instead of taking a company car. It mean that OP is given £450 per month pay rise to use their own car if needs be.

AlexMac

Now that final salary pensions are a thing of the past, this comment may be irrelevant; but as I had (and now enjoy one) an unexpected benefit was that the car lease equivalent was taken into account in the exit salaray calc, thus boosting my pension for as long as I live.

My wife was even more canny; passed her test to get a company car (a perk of rank, not really needed as she preferred to train or fly in her national role rather than burn out on the Motorway) - then turned it in when the organisation policies got "greenwashed" for a boost to her salary; which in turn boosted her pension . Never even really drove it; hates driving (I love it- so she thinks, "why keep a dog and bark yesself?").

Those were the days, eh?