What would STW do?

New job starting soon which comes with a company car allowance (£5k pa). Not sure whether to take the allowance or take a car. I’ll in the lower tax bracket.

Current situation – I don’t actually have a car. I’m currently running a ten year old transit connect as my daily transport / bike wagon. Obviously its not suitable for running as a CC, a stipulation is that it must have 4 seats. A shame though, as there’s nothing wrong with it!

The commute will be 60 miles round trip which is 95% motorway. I can’t see business milage being huge, but overall yearly mileage will be around 20k+

Another thing – me and the missus will be buying a house early next year, first time buyers. Can’t afford to buy a newish car outright as all savings are being held for the house.

I was tempted at getting a hybrid company car (Golf GTE) due to the low BIK payments, but the company uses fuel cards of which personal milage is paid back by me at AFR’s. So essentially I’d be paying them for my electric miles! Also I really want an automatic for the easy life.

Initially I thought cash would be best (and probably better for the mortgage application), but I’m thinking it may just be easier for me to take a car instead?

Company car = hassle free motoring. The engine falls out, you need four new tyres or some clown drives into you, who cares.

Cash allowance = potentially more cost effective. You could buy something, pay it off and then pocket the cash, or go down the PCP / personal hire route.

I’ve just been agonising over this (for about two years) as I’m no longer eligible for the company car policy and had to move to an allowance. TL;DR I’m now hiring an Octavia for two years. It was considerably cheaper than anything else I found on hire / PCP, and the alternative for the same money was buying a 7-year old Focus. http://www.simpsonsskoda.co.uk/pch-offers/

Depends entirely on what cars they offer, what the alternative allowance is, and how much you care about cars I suppose.

After tax that’s just over £300 a month, I reckon you’ll be doing well to lease a decent car and run/insure it for that. Then you’ve got the headache of having it if there’s a change in job circumstances.

Company car without fuel is going to be £60-80 a month or so in tax, and a lot easier.

Cash won’t affect your mortgage application, as you’ll be paying for a car with it so it will just cancel itself out. Company car for me in your position. Fixed cost which you’ll benefit from when your skint with a new mortgage next year.

I take the cash. But I don’t mind running a 14 year old 5 series estate with over 230k on the clock. I make sure I save a proportion so there’s a fund for when I replace the car.

I’ve done the car allowance and it wasn’t good when the head gasket went…

Got a Passat GTE company car on order, I think all the VW GTEs are DSG autos.

I’m planning on claiming all company mileage as petrol as I can obtain receipts to cover and they haven’t got anything in place to recoup charging costs. Wouldn’t work for you though, worth talking to them?

I’d still take the GTE

When fuel was part of the car package I took the company car, but the last 18 years I’ve taken the money, bought a nearly new demonstrator for px/cash and kept it for 5 years. I rarely need to drive on business these days – take the train / plane and pick up a hire car at the other end.

After tax that’s just over £300 a month, I reckon you’ll be doing well to lease a decent car and run/insure it for that.

That’s (a little) more than I get. The Octavia is costing me 5K over two years, insurance is about the same, so my running costs for that are within the OP’s allowance budget.

Caaaash, buy a 4 seater cheap thing like a Fiesta. Your not bothered about the image (which is good) and you can get your bike in the back of the hatchback..

I took the cash, effectively the company I worked for bought me a car.

Sold it for £1500, mine all mine. Mondeo, did well, 145,000 miles, nothing ever went wrong. Not even the clutch or the sub frame.

I then went and got another. Etc.

Company car for me in your position. Fixed cost which you’ll benefit from when your skint with a new mortgage next year.

Actually I didn’t think of it like that – you’re right. Savings will be minimal at best for a while after buying. If something catastrophic did go wrong with a cash runner then I’d be struggling.

I did have a mooch at some PCH deals but after adding on excess mileage charges and maintenance it didn’t seem great.

Still keeping the van though 😀

If I needed a new car then I’d probably have taken the car. I didn’t so I took the cash.

I hear Ling do decent lease deals 8)

I used to opt out & take the cash…. New cars, older cars.

Then I went back in, took a car & haven’t looked back…. tyres at £200/corner replaced for having a nail in them…. a couple of windscreens… no interest in insurance costs etc – anyone can drive the car.

I’m a bit gutted that I’m handing it back next week when I leave the company, but then I’ve not got the nause of having to sell the thing or trade it in either.

Opt in – certainly with the miles you’re doing. With a fuel card I’d be looking for a ‘normal’ car to get the better value from the electric miles – so a 150bhp 1.4TSI DSG in a Golf? Should just about hit your target mpg for AFR purposes.

Same situation. I took the car and it’s been hassle free. All I have to do is put fuel in it.

Go for a hybrid to save the BIK tax sting

Plus. You get a nice new car. And if you’re going to be sitting in it a lot it does make a difference

Keep the van for personal/biking duties.

Take the company car for convenience & “WGAS if it goes wrong” freedom from worry . Hybrid if poss. Some company car policies stipulate manual gearbox and a minimum 4 doors/4 seats so watch out for that

I don’t get a choice but a £6k car allowance.

Current deciding whether to buy my PCP 120d 36k miles for £9k or give it back and get an Octavia estate for £5k over two years in lease.

@20K miles per annum definitely take the company car. You will be covered for tyres, insurance (which can go up with mileage) and servicing which with that mileage will be high. Lease cost on 20k PA car will be sky high.

Only thing to be careful on is to check NCD as you don’t always earn this while on a company policy.

Take the car an keep the van? Seems like the easy one unless you need to get rid of one, no hassle about having your messy bike kit in the car or needin something with 4 seats for a day out then but still have all the good bits of a van that you can make more bikey.

I opted out. but in my case the company car isn’t free, we have to pay to lease it via salary sacrifice, and then also pay BIK on top of that. So unless you choose something very basic and low emission, it costs a fortune. The net cost to me for personally buying a new 3l supercharged petrol car is the same per month as my previous 2l diesel company car. Despite the car actually costing 50% more.

Ultimately you just got to do the sums. Cost out the company car in terms of BIK etc and compare it to funding the exact same car personally from the car allowance. That’s the only way to compare apples with apples.

Also as far as a mortgage app is concerned, having the co car may be better. Not all mortgage companies take into account a car allowance when calculating your borrowing ability, although mine, HSBC, do. And if you find a lease or HP using your car allowance then it’s a debt you need to declare for the affordability calculations.

Keep the cash here.
I rarely travel for work, & the mileage allowance I get doesn’t 100% cover my costs when I do. But company has never specified how old / type of car it must be. Car is a 13yr old Galaxy, old but she does everything thing I ask of her & when I do trawl dealerships to weigh up newer cars I quickly lose the will to live. I have had some funny looks rocking up for meetings though. Plus, the bike hides nicely in the back for impromptu rides on the way home.

I used to take the car because it was priced on an annual mileage of 12K miles and I was driving at least 33K. The difference come handback time was met by the company, so they were effectively subsidising the running costs and depreciation associated with about 20K miles per annum. When we moved much closer to work, the car sat on the drive for two years whilst I cycled to work, and I eventually gave it back and did not replace it. Now have a small city car for taking bike to races and teaching the kids to drive.

SO about 20K per annum, take the car provided there is no excess mileage penalty.

After many years of CC’s I went the cash route as tax was high as business milage was close to zero and I wanted a nicer car than allowance would buy and I was happy to keep car longer than 3 years.

In your situation OP I would take the cash until you have the house sorted and you feel comfortable. Then you can (I assume) opt into having a company car if you want. House much more important than car.

So much of it depends on the scheme rules for the car you can run for cash. If it lets you run older cars or you want a higher CO2 car, it can be worth it. If you have to keep a sub 4 year old car, possibly not.

I get to design our car scheme so have tried to make it work for both co car and cash users. Crudely, those that want lower BIK cars have gone for the car whilst those wanting higher BIK vehicles have gone for the cash.

When doing your own maths, don’t just look at the cash you have in hand from the cash allowance. You also have to look at the cash you’d pay out in tax on a co car. So if you’d pay £100 / month in tax on a co car, as long as you can run your own car for no more than £100 / month more than the cash allowance gives you, you’re no worse off.

I’ve not read all the posts but make sure that the Car Allowance is also included in any salary increases.

Costs for running your car will go up over time and you don’t want to be stuck on a 5 year old Car allowance rate.

Some of the external conversations I’ve had tie up with the attitudes here; treat the car as a commodity so take the cash an buy the car that suits you best. Don’t treat it as a perk, or don’t accept the <insert business name here> defecto standard vehicle.

Leyton is right in that way.

Check out the changes in the budget yesterday though, could mean even more favourable terms for hybrids / full electric

@20K miles per annum definitely take the company car. You will be covered for tyres, insurance (which can go up with mileage) and servicing which with that mileage will be high. Lease cost on 20k PA car will be sky high.

This.

A personal lease car will be very expensive. A personal privately owned car will have to be decent (therefore more ££) to be reliable over 20k a year unless you want to take chances.

I have a company car and do 20k a year, I pay nothing towards it and just put diesel in it. New tyres? Drive into an ATS and with a signature I’ve got a full new set if I need them. Servicing? Dealer picks it up from my work and sorts it. New gearbox (happened in my last works car)? gets picked up and a shiny Avensis estate given to me for 3 weeks while they spend £3k putting a new 6sp gearbox in it, no charge to me.

Its a major blessing to have and it means I was able to buy a 2nd car which I have for fun and it only does 3k a year so I don’t have to worry about servicing or breakdowns as I have my works car.

I do similar mileage to you and reckon a company car is just about better. Most of my 23k per year is personal / commuting so I wouldn’t get much cash back from the tax man if I ran my own car (chap I work with does loads and it equates to £130 a month which is a hell of a top up).

The big thing for me is that it fixes my motoring costs and I never really see the money leave my bank because it’s not there in the first place. I don’t worry about tyres, servicing etc. I pay a £10 a month damage waiver so I don’t get billed at the end of the lease for any damage.

My only concern is that the mood seems to be changing against diesels so it’s starting to cost a fair bit in BIK. If the Golf GTE is still on our list when mine is due, I’ll take one of them because it’s a shit load cheap in BIK. Again, a chap I work with has ordered one and over the leaves it’s nearly £4K cheaper than the diesels he was looking at. That’s a hell of a saving.

From a mortgage point of view, a company car shouldn’t impact on approvals etc because it comes off your gross salary so doesn’t seem to be viewed as a debt. A PCP etc will be classed as a debt and taken into consideration for affordability calculations etc. Plus a lease of PCP with high miles will most likely be expensive- they certainly were for the cars I looked at.