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Company car vs Car allowance?

Hey all,

Hoping some people may be able to give me some guidance on this as to what may be better in the long run.

I currently have a company vehicle which comes with personal use (currently have to pay fuel on any personal miles used...but it's at a cheaper rate than pump prices per tank)

I may be starting a new role which has the option of a company car at a monthly salary deduction and a limited selection of cars (all electric I believe, and would have to pay for a charging point at home) - deduction would be anywhere from £350-£700 a month depending on choice of vehicle,not including cost of charging, although any repairs/tyres will be covered in this at no cost to me.

Or I have the option of up to £8000 a year car allowance,paid monthly, to which I would be liable for any repairs, MOT etc, but a wider choice of vehicles.

Anyone had any experience between the two as to which would be better in the long run?

Thank you

Comments

  • Marcon
    Marcon Posts: 12,963 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper Combo Breaker
    StevenB12 said:
    Hey all,

    Hoping some people may be able to give me some guidance on this as to what may be better in the long run.

    I currently have a company vehicle which comes with personal use (currently have to pay fuel on any personal miles used...but it's at a cheaper rate than pump prices per tank)

    I may be starting a new role which has the option of a company car at a monthly salary deduction and a limited selection of cars (all electric I believe, and would have to pay for a charging point at home) - deduction would be anywhere from £350-£700 a month depending on choice of vehicle,not including cost of charging, although any repairs/tyres will be covered in this at no cost to me.

    Or I have the option of up to £8000 a year car allowance,paid monthly, to which I would be liable for any repairs, MOT etc, but a wider choice of vehicles.

    Anyone had any experience between the two as to which would be better in the long run?

    Thank you
    Plenty of general guidance on the internet if you google eg https://www.nationwidevehiclecontracts.co.uk/business-leasing/guides/company-car-vs-company-car-allowance
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • Grumpy_chap
    Grumpy_chap Posts: 17,036 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper Combo Breaker
    The £8k allowance will be subject to income tax and NI in the normal way.

    The EV company car will be subject to a (currently) low rate of BIK.
  • Hi

    it does depend on personal circumstances, I was in a similar position where I had a car but company cancelled the scheme and I was “forced” to take the cash opt out.

    the plus sides were once bought I actually had an asset rather than a rental car so if I move jobs I would not lose the car but as above the 8k is subject to tax be that 20% or more likely 40% so you won’t see much of it.

    You say with your current scheme you get business miles, I assume to and from work are private and you pay for these, if so there would likely be no impact on you from that but check the mileage as that makes a big difference. i.E. all my 16k miles a year are now paid for so from opt out it is a big part of that.

    repairs are also a big potential cost, a fully funded car is a security blanket, maybe you pay more but if you buy a car and you need a repair of 2-3 k then that is a big impact.

    finally the car you buy with the opt out will depreciate so the value is to be taken from the opt out so funding for a new car is to be considered.

    it’s about 2 years since my change and I prefer the car and certainty over the cash opt out.
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