Furlough (Car Allowance)

HarryAinslie

Hey, 

I've seen some mixed reports online but can't find anything official from HMRC so hoping MSE can help. 

Scenario:
Employee Mrs Z has a salary of £35,000 per year and receives a car allowance of £9,000 per year. 

Question
Can her employer claim for Car Allowance based on the above?


Thanks in Advance

Jeremy535897

If she is contractually entitled to cash of £9,000, yes. It is part of her reference salary. It won't make a lot of difference on those numbers, though, as she is near the £2,500 a month maximum on her salary.

HarryAinslie

Jeremy535897 said:

If she is contractually entitled to cash of £9,000, yes. It is part of her reference salary. It won't make a lot of difference on those numbers, though, as she is near the £2,500 a month maximum on her salary.

Thanks for your reply Jeremy.

Both £35,000 & £9,000 are in her contract. Because the £35,000 is over the Govt maximum of £2,500 per month. Does this mean her employer can't claim the car allowance back?

sharpe106

She can't claim anything it is her employer. As it is over the max amount the employer can not claim any more. If the employer has to pay her the allowance or not will depend on her contract.

LilElvis

£2,500 per month equates to a contractual salary of £37,500 - £37,500 / 12 x 80% = £2,500.
So a contractual car allowance should be included in the furlough payment, but will be largely reduced due to the monthly cap of £2,500.

HarryAinslie

sharpe106 said:

If the employer has to pay her the allowance or not will depend on her contract.

Thanks for your reply, based on the contract below, how do you see it? 

8. CAR ALLOWANCE
8.1. Provided that the Employee holds a current driving licence, the Employee shall receive a car allowance of £750 per calendar month
8.2. Mileage costs will be paid at 45p per mile for the first 10,000 miles (per annum) and 25p thereafter

LilElvis

She should receive £2,500 per month if her employer chooses to place her on furlough.

Jeremy535897

Yes, she is contractually entitled to it (assuming she holds a driving licence).

HarryAinslie

Jeremy535897 said:

Yes, she is contractually entitled to it (assuming she holds a driving licence).

Is that on top of the £2,500 Salary payment?

HarryAinslie

LilElvis said:

She should receive £2,500 per month if her employer chooses to place her on furlough.

So the Car Allowance won't be in addition to the £2,500 Salary payment?

poppy12345

If they employer pays it yes but the government will only pay a maximum of £2,500.