To Company Car or not to Company Car

kjones1105

Hello,

My current workplace offers a company car or cash alternative scheme and since starting 14 months ago I've taken the cash (£5080pa / £423pm GROSS)

My current car is nearing the end of its lease agreement so I'm weighing up the costs differences between the two.

My base salary is £43,350.

I've been looking at some of the cars that I can get from work and some of them offer the trade down.

Example is VW Polo 1.0 SE (£16,210.00 / 104 g/km) with a trade down of £ -124.05.

I'm a bit lost on what the actual NET changes are to my monthly wage by opting for the company car instead of the cash allowance.

Can someone who's had experience on this break this down for me?

Thank you!

DoaM

Comcar ... check out that site to get an idea of the impact a company car will have on your salary.

A car is based on the list price (P11D value), emissions (to give a percentage rating - e.g. 23%) and that value is your BIK (Benefit In Kind). You then pay income tax on the BIK at your marginal rate - in your case some of it will be at 40%.


Example:
P11D = £25,000
Rate = 23%
BIK = £5,750 = £479.17 per month
Tax at 40% = £161.67


Does the £43,350 include or exclude the cash allowance?

kjones1105

Thanks, I'll take a look at their website.

The £43,350 is without cash allowance.

foxy-stoat

I would just get yourself a loan and good secondhand car that meets your needs...unless you must have a brand new car.

chrisw

On the flip side, I found a company car wasn't the cheapest option but it was hassle free.

I didn't really appreciate the value of that until I left the company scheme.

Clive_Woody

How many miles do you drive a year on average and do you think this will be a long term job (i.e. would you be looking to move on in the next couple of years)?

I've always taken the cash allowance and used this to buy myself a car. I do 10,000s miles a year, but these are sat on a plane and not behind a steering wheel. I work from home and do relatively limited UK mileage. I've also switched jobs a number of times so get to hang onto the car rather than handing back a company car each time. Once my car is paid off then my allowance is cash in the bank and I only look to change my car every 8-10yrs depending on any issues or if I fancy a change.