Company Car V Car Allowance

colc01

Hi

I need some help i've just been offered a new job, with a salary of £45K i have been offered a company car or allowance never had an allowance before always had company cars
Company Car is a Vauxhall Vextra 1.9 CDTI value 19k Co emmissions 168 which i believe will cost me on my tax about £1800 per annum. private & business mileage paid (fuel card)
Car allowance is £6K per annum with private and business mileage paid at rate of £0.25pence first 10'000 miles £0.45 pence there after
I will be covering about 20'000 business miles & 4'000 personal miles per annum.
(i believe the car allowance scheme would be better) accept i have to pay 20% of my net income to the CSA for my 2 children
I need to know is the car allowance a taxble income and if so how much %
as i could be worst off.

TighterThanTwoCoatsOfPain

cant help directly on your question, but have a feeling you have the pence per mileage backwards?

eg shouldnt it be £0.45p for the first 10k, and £0.25 thereafter? or have i made that up?

colc01

yes your right

standupguy

The car allowance will show in your monthly salary and you will be taxed on this at your higher rate ie 40%?

This will increase your income.

The allowance at 6k is a bit mean

May be best to go with staff car.

You have the option of paying for your own private mileage to reduce your tax liability on the fuel card

guy999

Would be suprised if private mileage would be paid for using your own car if you opted out, as could easily go on holiday touring and get free holiday and more!

Personally if your doing nearly 25k miles, i would keep company car, due to insurance/service costs etc. Also have you got cash to buy a decent car, which would be worthless after a few years with your mileage

cloud_dog

Can t comment directly on the OP's finacial position but...........

Have been driving a cmpany car for over 15 years, on average doing about 30k miles pa (20k business / 10k personal) but recently changed roles where mt business miles remained similar but my personal miles droped to about 5k pa.

Have now opted for the cash payment and run my own car, and am quids in. My company pays 12ppm, which is pretty tight but then I claim the tax benefit bac kfro the IR (difference betwen 12ppm and the IR max rate for the first 10k and the lower rate thereafter).

You need to put all the details in to get a better picture. If you google "cash or car company" you will find a number of websites that will identify if you are better or worse of.

cloud_dog

Gatser

Another thought...

You could "Salary Sacrifice" your car allowance and have this paid into your pension fund. (Ask your employer to enhance this with the 12.8% NIC's they will be saving) That way, you will save 40% (?) tax AND get an extra 12.8% all into your pension fund.

BAD NEWS: You cannot get your hands on the money until you take retirement income, but you will have a happier retirement.

At least you should consider all options.
Good Luck!

longforgotten

Do you have to have a 'car allowance' ?

Why can't you keep records of your business mileage and they re-imburse you. This would not be taxable as it is a re-imbursement. However if your company pay you 45p per mile that is 5p over the odds ( last I heard, unless its been increased ) and you would have to pay tax on the extra 5p per mile

Best to put pen to paper and calculate the best option for you if you chose to buy your own car, pay tax, insurance etc. also fuel costs sooooooooo high

goodheavens

My new job comes with either a cash benefit of £178.00 per month or using the money to be an essential car user and get mileage of up to 40p per mile. I would probably do no more than 2500 to 3000 miles p/a.. I have a motability car for which I hand over the DLA direct, so the only motoring cost is the petrol oil and screenwash.

Will it be better to take the £178.00 as a lump sum each month?

Torby

goodheavens wrote: »

My new job comes with either a cash benefit of £178.00 per month or using the money to be an essential car user and get mileage of up to 40p per mile. I would probably do no more than 2500 to 3000 miles p/a.. I have a motability car for which I hand over the DLA direct, so the only motoring cost is the petrol oil and screenwash.

Will it be better to take the £178.00 as a lump sum each month?

you might get a better response starting a new thread...this one is nearly 3 months old