How is car allowance paid?

Chemic

Hello
I am currently earning £32k base salary and am considering a roll with £30k base salary plus £5k car allowance. Can anyone tell me how this is paid? I’ve put it into a salary calculator online but I’m unclear on whether the base salary will be £35000 / 12 minus tax or £30000 / 12 the £5000 / 12 then both taxed. Does it even matter? When I put the £5k in as a taxable benefit I seem to come out with a worse take home than I have now so I’m just totally baffled. Tax and maths in general is REALLY not my strong point so please be kind

comeandgo

Your car allowance is paid as part of your salary and is taxed and NI'd.  A work mate of mine was going to loose a lot in benefits with the increased salary due to car allowance that he chose a company car instead.

comeandgo

How is fuel costs paid.  Do you get a mileage rate?  There can be good income there if your car is very fuel efficient or an electric car.

Grumpy_chap

The new role will be paid and taxed as £35k.
May be slight difference if the pension is not offered on car allowance.

bigadaj

comeandgo said:

Your car allowance is paid as part of your salary and is taxed and NI'd.  A work mate of mine was going to loose a lot in benefits with the increased salary due to car allowance that he chose a company car instead.

It can vary  but car benefit will now generally be higher than the cash equivalent payment, so your mate is unusual if it's cheaper to go for the car option.

Grumpy_chap

I read the original post that the friend would lose benefit like UC if taking cash option.  I don't know how a company car is assessed for UC.

Maybe a clarification required from the OP.

Mickey666

Grumpy_chap said:

The new role will be paid and taxed as £35k.
May be slight difference if the pension is not offered on car allowance.

I'd be surprised if it is.  That's the whole point of defining a basic salary; it's the basis on which things like pension contributions and redundancy payements etc are calculated.  Otherwise, why bother to defined the employment contract as £30k basic + £5k car allowance instead of just £35k salary?

But to answer the OP's question, I don't see how a £30k + £5k package could result in a lower take-home pay that the current £32k.  As stated above, the new package will be paid as £35k instead of the current £32k so even with the same % tax and Ni deductions it must result in more money taken-home each month.

Chemic

Thanks everyone. I've consulted with a family friend who had a car allowance too and they said it would be £35k / 12 minus my tax etc so should still be more than my current take home.