Car allowance help please......!!

simonkarios

Hi,
I am currently emloyed at a wage of 32K. There is a possibilty of a car allowance which would be £450 per month.
I currently use my own car and the milaege is payed at 40p per mile. I probably would do around 10000 miles per annum business.
With the car allowance, this would drop to 12p per mile.
Please could some kind person, spell this out to me in good clear figures hehe, ie tax implications, what this 450 per month actually equatws to etc and any other helpful advice.If i take car allowance, can i claim back at end of tax year the difference between the 12p and 40 p??

Many thanks for any help offered!!
Kiundest regards,
Simon

maninthestreet

The £450 per month allowance will be taxed at your marginal rate, and will almost certainly take you into the 40% bracket, plus there will probably be an additonal 1% NI to pay. So the £450 per month equates to £265.50 per month, net. On top of that you will receive another £100 per month (12 pence X 10,000/12), giving a total of £365.50 per month.
Currently, you are receiving £4000 per year (40pence X 10,000), which equates to £333.33 per month, so you are about £32 per month better with the car allowance +12p per mile arrangement.

simonkarios

Excellent, many thanks....