Car allowance query

Britnall7700

Hi all,

I have just been offered a new job that comes with a car allowance.

It was originally put to me as a single figure, call it Car Allowance X, when I went through the application/interview process but the job offer now has it down as Car Allowance Y and Car Insurance Z. Both Y and Z add up to X but I haven't been given a straight answer as to why it is split. Afterall, it's up to me what I do with that money and my annual insurance has never been close to the value of Z.

Has anyone else seen such an offer before?

Thanks in advance.

Sandtree

The one place I worked where you got a definitive car allowance, which they later scrapped for a broader flexible benefits model, the amount you got depended on your seniority. 

Purely as a guess, maybe they separate the two so when you get promoted to senior management or whatever they can bump the car element but leave the insurance static... it would be a lot of faff to do rather than just saying the car allowance goes up £3k when you become an SM1 grade but could have been someone's bright idea at one point. Can't think of any other plausible (or semi-plausible) reason. 

Britnall7700

Thanks - out of interest when that employer scrapped the car allowance did you lose out?

It just seems strange to me that it is even split. I'm responsible for whatever I do what that money, and if I choose to use it for a Car  I'd be responsible for paying the appropriate insurance. What I mean is, it all comes from the same pot, why split it?

I'll continue to ask the company. Google hasn't turned up any results of other people with such an offer yet.

Grumpy_chap

Britnall7700 said:

Hi all,

I have just been offered a new job that comes with a car allowance.

It was originally put to me as a single figure, call it Car Allowance X, when I went through the application/interview process but the job offer now has it down as Car Allowance Y and Car Insurance Z. Both Y and Z add up to X but I haven't been given a straight answer as to why it is split. Afterall, it's up to me what I do with that money and my annual insurance has never been close to the value of Z.

Has anyone else seen such an offer before?

Thanks in advance.

I have never heard of a car allowance being split into CAR + INSURANCE, but I wouldn't unduly worry about it either.

There could be some historical reason within the business, such as a negotiation by the Union that the "car allowance" was insufficient and the company added the "insurance" element so they could increase the value but save face...

There could be a split for some tax reason, though I am sure if that was the case then this would be more common.

Usually car allowance is not included for pensionable pay.  Maybe the insurance part is split as they do make pension contributions on this?  Or, a split for the rules in case of needing to calculate severance?

No doubt, some weird quirk or another, but all you need to know is the total amount you will get.

Sandtree

Britnall7700 said:

Thanks - out of interest when that employer scrapped the car allowance did you lose out?

It just seems strange to me that it is even split. I'm responsible for whatever I do what that money, and if I choose to use it for a Car  I'd be responsible for paying the appropriate insurance. What I mean is, it all comes from the same pot, why split it?

I'll continue to ask the company. Google hasn't turned up any results of other people with such an offer yet.

I didn't because I wasn't entitled to the car allowance at the time it was a separate thing and I believe no one did as things were adjusted to be neutral but the concept was straight forward in that rather than getting all these benefits like PMI, car allowance/company car, health cash plans etc they instead said everyone had a % flexible benefits and could choose to use it for these things or just take it as cash... infact if you were an office junior so only a 2% pot you could use some of your salary too if you wanted to max out on childcare vouchers or something. 

So in reality everyone's salary was 2%-20% higher but the extra salary wasn't factored in for bonuses etc. 

Where there was detriment is when the pension scheme was changed as it used to be a matched contribution up to X% plus an age based extra amount however they changed that and increased everyone's flexible benefits by 5% (or about that)  so you could make your pension contributions using that but those who were older or had been making large contributions got the 5% same as those making minimum contributions and a spring chicken... this was before the rules on workplace pensions changed.