Car Allowance Query

sawful1

Hi Guys,

Nice to virtually meet you all. I'm hoping you may be able to help/advise - so I earn a base salary of £37,500 per year. 

I feel I should have a car allowance as I’m not expected per se to use my vehical for work but I have had to quite a few times for work related tasks. I’ve recently taken on more responsibilities and some of them involve bits of travel to customer meetings, a Data Centre we work with, We have a 2nd office location (a few miles away but still), I drove to a 3rd office location we previously owned 200 miles away AND I’ve been with the company 10 years, I’m also in management so in theory, should have a bit of ‘pull’. 

My number 2, so the assistant to my managerial position used to require a company car for his role, he became my number 2 3 years ago and was allowed to keep the car. He is now office based and I've gone out on various visits more than he has in the past 3 years. 

Now a lot of this is more in the realm of internal politics, the reason I'm here though is I’m going to request a car allowance, at our firm we pay £350 per month car allowance, I’d like to know if I do this…I assume my monthly wage will go higher? I’ve read conflicting reports that people with a Salary + CA actually come out with less people that have the same salary without the CA. 

Yet I have staff on my team who require a car for their day to day work who earn a salary + car allowance and always opt for the CA over a company car as in their eyes (and sometimes their words) 'it's like getting more money/having more money in my pocket'. 

Hope that makes sense. I would really appreciate some advice on this. 

Thanks

poppy12345

This is the welfare benefits section of the forum so not related to your question. I don't know which part if more suitable but try the motoring section.

p00hsticks

poppy12345 said:

This is the welfare benefits section of the forum so not related to your question. I don't know which part if more suitable but try the motoring section.

Other possibilities (but I'm not sure which would be best) would be 
Cutting tax — MoneySavingExpert Forum
Employment, jobseeking & training — MoneySavingExpert Forum

poppy12345

p00hsticks said:

poppy12345 said:

This is the welfare benefits section of the forum so not related to your question. I don't know which part if more suitable but try the motoring section.

Other possibilities (but I'm not sure which would be best) would be 
Cutting tax — MoneySavingExpert Forum
Employment, jobseeking & training — MoneySavingExpert Forum

Thanks. I looked at both but none didn't really seem relevant but no harm in trying.

Grumpy_chap

sawful1 said:

Hi Guys,

Nice to virtually meet you all. I'm hoping you may be able to help/advise - so I earn a base salary of £37,500 per year. 

I feel I should have a car allowance as I’m not expected per se to use my vehical for work but I have had to quite a few times for work related tasks. I’ve recently taken on more responsibilities and some of them involve bits of travel to customer meetings, a Data Centre we work with, We have a 2nd office location (a few miles away but still), I drove to a 3rd office location we previously owned 200 miles away AND I’ve been with the company 10 years, I’m also in management so in theory, should have a bit of ‘pull’. 

My number 2, so the assistant to my managerial position used to require a company car for his role, he became my number 2 3 years ago and was allowed to keep the car. He is now office based and I've gone out on various visits more than he has in the past 3 years. 

Now a lot of this is more in the realm of internal politics, the reason I'm here though is I’m going to request a car allowance, at our firm we pay £350 per month car allowance, I’d like to know if I do this…I assume my monthly wage will go higher? I’ve read conflicting reports that people with a Salary + CA actually come out with less people that have the same salary without the CA. 

Yet I have staff on my team who require a car for their day to day work who earn a salary + car allowance and always opt for the CA over a company car as in their eyes (and sometimes their words) 'it's like getting more money/having more money in my pocket'. 

Hope that makes sense. I would really appreciate some advice on this. 

Thanks

This is really in the incorrect board and better suited to the "Employment, jobseeking and training" board - I realise it can be hard when new to know where things should sit.  This board is more related to benefits in the Government sense - UC / PIP / JSA etc.
Hopefully a moderator will be able to rehome the thread.

To try to answer the OP's question, the likelihood of the car allowance will be what the policy and rules are on this for the company.  If that is related to amount of miles done, the OP may need to prepare a more formal record to support the justification.

What income does the OP receive for business mileage at present?  Is there are mileage rate paid?

As for the "car allowance" - this would be treated by HMRC as an extra #350 per month salary so subject to income tax and NI in the normal way.  The employer may treat it differently (particularly with regard to pension contributions).  Normally, the extra monthly payment would mean more take home pay - the scenario where that might not be the case would be if the mileage currently claimed (and within tax-exempt amounts) is forfeited and the taxed monthly payment then means less take home.  However, if a car allowance is paid, some lower mileage is often still paid by the employer (petrol costs) and the difference between the amount paid and HMRC tax-free amounts can be claimed (tax allowance only, not the full amount) via tax return.

If there is a choice between company car or car allowance, that adds further complexity in assessing which is the best way to go.

Wonka_2

sawful1 said:

Now a lot of this is more in the realm of internal politics, the reason I'm here though is I’m going to request a car allowance, at our firm we pay £350 per month car allowance, I’d like to know if I do this…I assume my monthly wage will go higher? I’ve read conflicting reports that people with a Salary + CA actually come out with less people that have the same salary without the CA. 

Yet I have staff on my team who require a car for their day to day work who earn a salary + car allowance and always opt for the CA over a company car as in their eyes (and sometimes their words) 'it's like getting more money/having more money in my pocket'. 

Hope that makes sense. I would really appreciate some advice on this. 

Thanks

Some clarity is probably needed on the '£350 per month' that you're quoting 

Is this £350 net or gross - assuming gross then at the salary you're quoting then you probably need to half that for tax/NI (but there should be no way that it drops below someone on the same base salary)

You then need to understand the mileage/expense implications from your company - if they pay 10p per mile to those that have a car allowance and 40p per mile to those that use their own vehicle there'll be a balancing point where it's better to use your own car

And finally are there any stipulations on what the car should be - i.e. 4dr/4seat/less than 5yrs old etc - based on your above numbers your £175 net isn't going to get you a lot 

sawful1

Grumpy_chap said:

sawful1 said:

Hi Guys,

Nice to virtually meet you all. I'm hoping you may be able to help/advise - so I earn a base salary of £37,500 per year. 

I feel I should have a car allowance as I’m not expected per se to use my vehical for work but I have had to quite a few times for work related tasks. I’ve recently taken on more responsibilities and some of them involve bits of travel to customer meetings, a Data Centre we work with, We have a 2nd office location (a few miles away but still), I drove to a 3rd office location we previously owned 200 miles away AND I’ve been with the company 10 years, I’m also in management so in theory, should have a bit of ‘pull’. 

My number 2, so the assistant to my managerial position used to require a company car for his role, he became my number 2 3 years ago and was allowed to keep the car. He is now office based and I've gone out on various visits more than he has in the past 3 years. 

Now a lot of this is more in the realm of internal politics, the reason I'm here though is I’m going to request a car allowance, at our firm we pay £350 per month car allowance, I’d like to know if I do this…I assume my monthly wage will go higher? I’ve read conflicting reports that people with a Salary + CA actually come out with less people that have the same salary without the CA. 

Yet I have staff on my team who require a car for their day to day work who earn a salary + car allowance and always opt for the CA over a company car as in their eyes (and sometimes their words) 'it's like getting more money/having more money in my pocket'. 

Hope that makes sense. I would really appreciate some advice on this. 

Thanks

This is really in the incorrect board and better suited to the "Employment, jobseeking and training" board - I realise it can be hard when new to know where things should sit.  This board is more related to benefits in the Government sense - UC / PIP / JSA etc.
Hopefully a moderator will be able to rehome the thread.

To try to answer the OP's question, the likelihood of the car allowance will be what the policy and rules are on this for the company.  If that is related to amount of miles done, the OP may need to prepare a more formal record to support the justification.

What income does the OP receive for business mileage at present?  Is there are mileage rate paid?

As for the "car allowance" - this would be treated by HMRC as an extra #350 per month salary so subject to income tax and NI in the normal way.  The employer may treat it differently (particularly with regard to pension contributions).  Normally, the extra monthly payment would mean more take home pay - the scenario where that might not be the case would be if the mileage currently claimed (and within tax-exempt amounts) is forfeited and the taxed monthly payment then means less take home.  However, if a car allowance is paid, some lower mileage is often still paid by the employer (petrol costs) and the difference between the amount paid and HMRC tax-free amounts can be claimed (tax allowance only, not the full amount) via tax return.

If there is a choice between company car or car allowance, that adds further complexity in assessing which is the best way to go.

Hello,

Thanks for the detailed response.

We pay £0.45p a mile when claiming back mileage. 

Salary before tax is £3125
Tax Code: 1257L
Tax: £415.20
NI: £249.24
AE Pension: £104.20
Net Pay: £2356.36

So in theory with a car allowance of an extra £350 a month, that would go 'on top' of my salary and I'd just be taxed a bit more basically? 

born_again

Not forgetting you need to check your car insurance will cover you for this work based usage. As it will not be classed as commuting to a single place of work.