Viewing 14 posts - 1 through 14 (of 14 total)
  • car allowance/company car decision
  • yetidave
    Free Member

    I have a Job offer which has the above option. Not sure of car just now, prob a hilux, against best part of £5k allowance, which includes fuel etc.

    Do I take the easy option of their vehicle, or do I get my chequebook out? Not sure of tax implications and whats the best way to play it, cheap car, pocket the difference take risk of reliability, or brand new?

    coolhandluke
    Free Member

    Are you sure it includes fuel? Seems a bit strange.

    I think I’d be taking their car if that was the case, unless you hardly do any business mileage, plus, if you need a Hilux to do the job won’t the car you buy need to be capable of similar duties? Thirsty things you know. 20-25mpg if you are lucky.

    Being in a similar situation a number of years ago, I got a one year old Mondeo with 10,000 miles on the clock for £10k. Drove it to 154,000 with no issues other than the usual consumables.

    Second hand is a good option if you choose wisely.

    somouk
    Free Member

    Depends a lot on the mileage and any stipulations they put in place as to age of vehicle if you have their allowance.

    I chose to take the company car as after tax the allowance doesn’t normally cover the insurance, tax, MOT and cost of a decent motor.

    Fresh Goods Friday 696: The Middling Edition

    Fresh Goods Friday 696: The Middlin...
    Latest Singletrack Videos
    yetidave
    Free Member

    Ideal stw answers. One from each side of discussion! 😉

    Thanks for your thoughts though. I’m still asking more questions just now. Not too many though – don’t want to put them off!

    Nick
    Full Member

    Remember you will get stung for quite a lot of tax for having the company vehicle.

    Also the fuel thing is worth considering, as that can make a big difference to which option is best, the higher the rate the bigger difference it could make.

    I just ran my company car (Passat Estate) through this tool

    http://www.mysaleshelp.com/index.php/car-calculator

    It recons I’m 250 worse off with the company car, clearly I could be several thousands better off if I bought a cheap car and ran it into the ground.

    But there would be hassle, I would need to sort out all the crap myself instead of it just being done for me.

    I might change to a car allowance and buy a van in two years time, I also change my mind before then 🙂

    skids
    Free Member

    It depends how much out of the £5k you need for fuel every year approximately, if it is not a lot then you could get a really nice car and vice versa

    batfink
    Free Member

    There are lots of things to consider, all just IMO of course:

    What would be the cost of buying a car yourself? As Somouk says above, lots of companies now only give you the allowance if you have a certain type of car (5 doors, at least 1.6 etc etc), within a certain age (5-7 years usually). This means that: not only is the capital outlay more, but you also get higher depreciation (as it’s a newer car) which you need to factor into your yearly running cost.

    If you get a fuel card (ie: ALL your fuel is paid for) you will pay more in tax….. a lot more. But your personal fuel bill will be covered – so you need to balance those. Generally speaking, unless you are doing relatively high personal mileage, a fuel card will end up costing you more.

    What can make a huge difference to your company car tax is emissions. If you go for an “eco” variant, it potentially can save you a huge amount. It was significantly cheaper for me to get a BMW 320ED (“efficient dynamics”) than a much cheaper (list price) golf. However, the rates change each year, so check what they are going to be for the period that you’ll have the car – as it may slip above the tax threshold 6 months after you get it. As Nick says, there are lots of calculators online.

    My personal opinion: don’t underestimate the benefit of driving a car that belongs to somebody else 🙂 If it gets keyed, nicked, crashed into, brakes down etc etc…. it’s somebody elses problem.

    andyl
    Free Member

    Remember you will get stung for quite a lot of tax for having the company vehicle.

    I thought there was no BIK for a pickups?

    If you need a 4×4/pickup for your job then I’d probably take the one on offer as fuel, repairs etc can be costly, especially if what you do needs you to use the benefits of a 4×4.

    somouk
    Free Member

    It recons I’m 250 worse off with the company car, clearly I could be several thousands better off if I bought a cheap car and ran it into the ground.

    Not sure what Passat you ran through but any modern vehicles are cheap as chips really unless you are in the higher tax bracket. My 13 plate Golf only costs me £55 a month in company car tax.

    There is no way anyone could buy, insure and tax a car for that.

    andyl
    Free Member

    There is no way anyone could buy, insure and tax a car for that.

    I can doing for over £20k a year (I only do 10k though) 🙂

    But yes, I agree it isn’t possible for the standard of car you should be getting with an allowance and you shouldnt be self servicing etc.

    craigxxl
    Free Member

    Vans and pickups available for private use have benefit in kind of £3000. If fuel is provided too then an additional £564 BIK. Probably still cheaper than running your own car even as a higher rate tax payer.

    If you take the £5k allowance then you get either depending on your earnings £3k or £4k to buy and run the car on assuming you can’t claim back mileage.

    andyl
    Free Member

    Didn’t know about the private bit.

    I guess that includes commuting mileage to work too if you have a regular place of work?

    clubber
    Free Member

    There is no way anyone could buy, insure and tax a car for that.

    No but then you’re not really comparing like for like.

    If your current (no car or allowance) take home pay is X and you take a company car, your take home pay will be X minus whatever company car tax you pay – eg you will take home less than you do at present.

    If your salary is X and you take the £5k allowance, your take home pay is X plus whatever the 5k works out to per month take home (at 20% tax, 11% NI, that’s approx £250-£300 extra per month. eg you take home more money each month (from which you have to pay for the car, insurance, repairs, petrol, everything).

    So the difference isn’t say £55, it’s £55 plus £275ish = £330ish or whatever the numbers are.

    For £330 a month, you may well be better off with your own car, depending on mileage, whether petrol is included, what sort of car you buy and so on.

    Because I don’t do big miles, I know that I’m much better off taking the allowance though I do have to do all the admin, etc myself of course.

    hooli
    Full Member

    I did the maths on it a while back, if you want a brand new car or do massive miles, you are better off going for the company car and having less hassle.

    If you don’t mind running something 3 or 4 years old and don’t mind sorting your own servicing and repairs then it pays to take the money.

Viewing 14 posts - 1 through 14 (of 14 total)

The topic ‘car allowance/company car decision’ is closed to new replies.