Confused about company car... Please help!

Lightsonnoonehome

Hi there, I'd really appreciate some advice as I'm totally confused.

I've been offered a company car, or a cash allowance for my own car instead, with the offer of a fuel card. The allowance will tip me over into high rate tax bracket. How are these treated in terms of tax, and as I wouldn't be doing much in the way of business mileage how would the fuel card affect me?

Is there some sort of idiots guide worth me reading as I know literally nothing about cars/allowances?! Thanks in advance.

Dazed_and_confused

Although a company car isn't "cash" the car is a "benefit in kind" and that is treated as part of your taxable income so you pay extra tax by having a company car just like you would the car allowance.

The first thing you need to establish is what the car benefit will be. Two key things in calculating this are the list price of the car, not what your employer paid for it, and the c02 emissions figure.

There is a second benefit charged for the free fuel. This is calculated differently but the emissions play a part I think.

You could try the Low Income Tax Reform Group (LITRG) website, they often have good guides for different tax subjects.

getmore4less

You can up your pension contributions to offset tax liability.

Some car allowance policies preclude running a cheap banger which can influence the decision as depreciation can be a significant factor.