Car Allowance

Loui523

Having read prior posts on this subject I am no clearer.

I have an amount each month given by my employer call car allowance and is taxed as per my wage.

my partner keeps telling me to buy a car and I can claim some tax relief for this.

but I keep trying to find how and I cannot.

perhaps my partner is wrong. 

Can anyone provide a clear answer?

my car allowance is just money, there are no options with my employer to take a car or refuse the money, it is just given.

TIA

Dazed_and_C0nfused

Would you be using the car for business travel.

Loui523

Yes, but not solely 

Grumpy_chap

Loui523 said:

Having read prior posts on this subject I am no clearer.

I have an amount each month given by my employer call car allowance and is taxed as per my wage.

my partner keeps telling me to buy a car and I can claim some tax relief for this.

but I keep trying to find how and I cannot.

perhaps my partner is wrong. 

Can anyone provide a clear answer?

my car allowance is just money, there are no options with my employer to take a car or refuse the money, it is just given.

TIA

You receive the car allowance and this is subject to NI and income tax as though it was simply increased salary.

There is no direct tax relief if you buy a car.

If you do business mileage, you can then claim the AMAP rates (45 pence per mile up to 10 k miles then 25 pence per mile) against tax for the mileage covered.  Different figures apply if some of the business mileage is already reimbursed by the employer - for example if the employer paid 12 pence per mile for petrol, this would reduce the 45 pence and 25 pence figures accordingly.

pjread

Some employers might offer salary sacrifice (e.g. removing this allowance) in exchange for a lease on a vehicle.  That then does lead to a taxable benefit, depending on the vehicle itself, which might be lower than the tax you pay on the allowance. 

But that only really helps you if the employer offers it, you want a new car on a lease basis, and you want something that's got a relatively low BIK tax (e.g. an electric car.  You can't just go buy a Tesla from a garage and offset the cost against income unfortunately.