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company car or cash option?

15 posts & 10 voices | Started 1 year ago by BigEaredBiker | Latest reply from Stuey01

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BigEaredBiker - Member

If you were offered a job and you had the choice between a company car or having 3.5k added to your salary to contribute to 'car costs' which would you take?

My current car is a 2.5 litre gas guzzler with an expensive service due this year (say almost £1k). Keeping it to commute in doesn't really sound sensible. By changing job and driving I would 'save' the £215 monthly train fair I currently spend so that plus the extra (£3.5k/12 minus tax) would need to cover new car cost and monthly petrol if I took that option.

STW over to you....cycling to work everyday is out the weekly commute would be around 275miles.

Posted 1 year ago #
molgrips - Member

I had/have the option of a permie job, and one of the other guys gets something daft like 450 quid/month car allowance. Now for that kind of money I'd rather pocket the cash and pay 200/mo finance on a still nice car.

Posted 1 year ago #
wallop - Member

Depending on what tax bracket you are in, £3.5k won't go very far.

If you're doing a lot of miles then it may be worth going the company car route, as you don't have to cover the depreciation on your motor.

What's the fuel situation? Will you get your commuting miles paid (less tax)?

Posted 1 year ago #
BigEaredBiker - Member

I've no idea about commuting miles. I've basically had the interview and that went well so expecting an offer and only managed to ask a few questions about it the other benefits.

As the salary is about the same as my current one having a contribution to a car is an incentive. The the other plus is that on a good day it'll mean leaving home later and getting back earlier.

Posted 1 year ago #
iain1775 - Member

£3.5k sounds a bit low for funding your own car when you reduce that by the tax you will pay, you looking at £250max maybe less a month factor in any rules on car being under a certain age the company may have (may not but all Ive worked for before do)
Fully comp business milage insurance needed etc
Mind you you save train fare and your tax code will be less than the company car option
whats the fuel situation, would you get business milage allowance as well etc?

Posted 1 year ago #
wallop - Member

If you haven't been given much information yet, you should opt for the cash allowance first when you start, then it'll be easy to go onto the company car option after a few weeks once you have made your mind up.

A bit of advice if you have never had a company car:

IT IS YOUR RESPONSIBILITY TO TELL THE TAX OFFICE THAT YOU HAVE A COMPANY CAR - as soon as you get it. Same goes for fuel cards.

Don't for one minute think you can get away with not telling them, becuase next time they receive your P11D it'll be listed on there, and you do not want to end up paying back extra income tax the following year. Double income tax on a K code is proper pants.

Posted 1 year ago #
BigEaredBiker - Member

Thanks for the feedback, you are right I've never had one before.

I've just got to wait and hear if I'll actually get the job now.

Posted 1 year ago #
BigJohn - Member

Not the original question but fuel consumption is not usually a reason to get rid of a car. But it is a major consideration when choosing a new one.

Changing a car is an expensive business and you would need to cover a lot of miles to make that cost back.

Posted 1 year ago #
Scamper - Member

As said £250 after tax won't get you something more than a decent supermini/hatch privately, possibly a Golf 1.6 tdi over 3 yrs and 30k. Really depends how much mileage you are doing for the depreciation and hence contract hire costs. Obviously if you buy an old banger £250 a month is different.

The chances are your company will provide a diesel car with CO2 of 120g or less. On something like a Passat Estate 140 tdi top of the range this will only cost you something like £80 a month in tax as a 20% tax payer a golf £60. A less expensive car car will be less.

Posted 1 year ago #
clubber - Member

3.5k is very low for a cash allowance ime. Most are 2+ times more than that.

Posted 1 year ago #
wallop - Member

Essentially if you are a higher rate taxpayer then a company car costs double what it would if you were paying basic rate.

Posted 1 year ago #
steveh - Member

It also depends if they set any criteria for your car to meet if you go the private route. For example some will say that is can be no more than 5 years old or 100k etc. If the criteria applied are very tight it might be difficult to run a car that meets them for the money. If there are no conditions however you should easily be able to do it.

If you have a high commuting mileage (as opposed to business mileage) this may tip the balance toward a company car as might a fuel card. Post back up when you get the offer and details and it will be easier to provide more detailed advice.

Posted 1 year ago #
5lab - Member

I get £300/month, or a car. its not that low - you can easily lease a car for it, but you get a better car under the scheme. from my experiance, it boils down to

Do you want a newish car, and if so, is it relatively economical

you answer yes to that, get the CC. It'll depend on your scheme though, ours makes you keep cars for 4 years. Doing man maths..

Cost to run a banger - £1200/year (tax, insurance, depreciation, mot, tyres, repairs, etc)
£300 take home at 40% tax - £260
not paying company car tax - £60
Total 'extra' money - £200

I don't ever have to drive for work, and only do limited miles, so the banger route works well for me. Guy sitting next to me does 30,000 miles a year. after 4 years a brand new car is worth almost nothing (lets say 2 grand) - so he gets the scheme.

Posted 1 year ago #
Stuey01 - Member

3.5k is very low for a cash allowance ime. Most are 2+ times more than that.

£3.5k is a pretty typical entry level car allowance. Higher management grades obviously get more.

Posted 1 year ago #
Stuey01 - Member

To the OP, it depends on a number of things:
1) Are you expected to provide a certain quality/age of car (for client meetings for example)?
2) Mileage, commuting and business miles.
3) Are you happy with a mid level diesel hatchback? cos that's all your getting for that allowance, unless you top it up.

I'm fortunate in that I get an allowance but am not expected to use my own car for business trips, so I get trains, planes, taxis everywhere. I also commute by bike or public transport. As i only do personal miles I bought a second hand quick car for cash, and trouser the allowance each month.

In your situation, with significant commuting mileage and a reliance on car commuting I'd be getting the company car, for the convenience factor alone.

Posted 1 year ago #

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