Company car

northan77

Hi all. 

After 10 years at my company I have been promoted to a new position which requires me to visit customers. 

As part of my package, they have offered me 6k per annum for a car allowance. 

They have stated that I can get a lease through the company, a private lease or can take the allowance to use as I wish. If I take the allowance I have to pay for everything including insurance and fuel. If I get a company lease, I’m offered mileage for business use. Not sure if insurance is included. 

I can just about achieve an EV on a private lease, but I’m concerned this has limited mileage included and there are admin cost and first month included which I would have to pay. 

My company is new to this and have recently been burnt by a previous employee, so they are super cautious about committing to a long term lease. 

I know little about BIK other than EV and hybrid may reduce this. 

I’m on the 40% tax band also

Im super green on this. So looking for advice for the best tax situation and ensuring I’m not going to be out of pocket. 

Marcon

northan77 said:

Hi all. 

After 10 years at my company I have been promoted to a new position which requires me to visit customers. 

As part of my package, they have offered me 6k per annum for a car allowance. 

They have stated that I can get a lease through the company, a private lease or can take the allowance to use as I wish. If I take the allowance I have to pay for everything including insurance and fuel. If I get a company lease, I’m offered mileage for business use. Not sure if insurance is included. 

I can just about achieve an EV on a private lease, but I’m concerned this has limited mileage included and there are admin cost and first month included which I would have to pay. 

My company is new to this and have recently been burnt by a previous employee, so they are super cautious about committing to a long term lease. 

I know little about BIK other than EV and hybrid may reduce this. 

I’m on the 40% tax band also

Im super green on this. So looking for advice for the best tax situation and ensuring I’m not going to be out of pocket. 

Establishing all relevant facts would be the best starting point - so find out. It could be a major factor.

stuartp2000

As Per Macron
Establish the facts, whats included in company lease, is it salary sacrifice, is maintenance included etc.

Do you currently have a car? the £6k as I see it is generally just an incentive for position rather than a pay rise (pay will increase overtime but allowance will stay fixed) but it will also be subject to Tax & NI so the £6k is nowhere near that so whatever route you take you will be out of pocket.
Unless you do have a current car then the allowance will cover wear and tear and Depreciation on excess miles for work, just make sure you change your insurance to include business travel.

Exodi

Car allowance is taxed so is rarely the best option unless you already have a car you use and want to keep.

If you decide to get an EV (which I'd suggest you do, you can save £200+ in your pocket every month in tax) you will have a seperate issue regarding fuel (e.g. do you charge at the office or at home).

If you charge at home (and take advantage of very cheap EV tariffs - double win), the company reimburses you for business mileage at the AER (advisory electric rate, not annual equivalency rate!) but as you're liable for all energy, long trips where you have to pay a fortune to charge at motorway service stations (potentially multiple times) come out your pocket. Obviously charging at the business isn't anywhere near as practical as charging at home.

Don't underestimate how expensive public charge-points are. Let's say you have a cheap business EV with a 60kWh battery.

To charge it from 0 to 100 (a very unlikely and bad idea, but for the purpose of illustration):

Home on a normal tariff (based on current price cap)
24.5p/kWh = £14.70

Home overnight on an EV tariff (based on Eon Next)
6.9p/kWh = £4.14

At retail outlet/restaraunt:
59.9p/kWh = £35.94

At average services:
79.9p/kWh = £47.94

So if you compare charging at a service station to home with an EV tariff, you're paying over 10x the price... so you want to be careful you're not doing this too often (but as a 60kWh battery will have a range of about 180ish miles, or more depending on various factors, you might not have a choice if you need to drive to Leeds from London for a customer visit...).

Also another thing to consider if you pick an EV - where ever it's decided you will charge, someone will be buying an EV charger. If you choose to have it at your house (as I did), it's probably reasonable to expect you'd have to pay for the EV charger (as it's not realistic to have it removed if you leave the business). This could set you back £1k - £1.5k.

Grumpy_chap

northan77 said:

If I take the allowance I have to pay for everything including insurance and fuel. If I get a company lease, I’m offered mileage for business use. Not sure if insurance is included. 

That seems to be a big inconsistency and not a cost that you can predict with accuracy.

What is more common is that the employer offers a car or a car allowance.  This element, either choice, would cover providing the car, servicing, breakdown cover, insurance - all the fixed costs.
The cost of petrol is then typically reimbursed in the same way for either option.

You might wish to check with the company what the fuel rate is for company car and what the fuel rate is for car allowance.