I’ve been in fully expensed company cars for the past 9 years and loosing my job/car this Friday. I’ve just been to a job interview where they don’t give out a car or allowance but pay 40p mile. Now doing some research you can only claim 40p per mile for the first 10,000 then 25p mile after that. They are expecting to run and buy a car on that. Is it doable? Obviously depends on mileage and I’m expecting the mileage to be >30,000 although still need to get all the details which I will hopefully have tomorrow as I’ve been asked to attend the 2nd interview.
I’m not counting chickens etc but would like to know what’s what in case the interview gets to the stage where this is talked about.

Thanks

if you buy anything new you’ll be losing 40p per mile in depreciation.

is the 30,000 all work miles – they won’t pay for anythign you do privately?

The tax allowance is 40p for the first 10,000 but then drops to 25p, (well it was for last year) but it doesn’t stop the company paying you 40p for all miles. Just meand you need to pay tax on the extra 15p – unless your actual costs are more.

Get a 2 yr old Mondeo Estate and you’ll be quids in.

Looking at the job description etc I think the 30,000 would be business ‘paid’ mileage and on the allowance this would generate £9k per year.
Can you buy/run/insure/tax a car and do in excess of 30,000 for that?

Dont think you pay tax at all IIRC

You will simply get 40p per mile for 30000 miles.

If you get less than that the taxman will pay you the difference between what you receive less than 40p so if you get 25p from your employer they will reimburse you (tax allowance) for 15p up to 10000 miles then nothing more.

I reckon my 05 plate Deisel Octavia will cost me 27p per mile over the next 4 years

What was the setup at your previous company? Did they supply you with a pool car when it was needed, or did you have your own company car? If the latter, I assume you were taxed on the car and fuel, so the chances are you’ll be saving quite a lot on tax there. A lot of people where I work have given up the company cars because it’s cheaper to buy a car and claim mileage.

Currently got my own Octavia VRS costing me about £130 a month in tax. I got everything paid for out of that so £130 saving will be spent towards new car and personal fuel. Possible new company only pay fuel and nothing else so need to make it pay for itself. 2 year old car same as mine now is between £8-12K insurance about £400 then mine does 40-50mpg on average. Just need to do some sums.

they are inland revenue rates set by the government they have been at this rate for at least the last 5 years. If you pay above the 40p as said above the extra after 10,000 miles is taxed as a benefit a sthis 40 p is the “cost” of using your car in their eyes.
PS you get 20 p per mile on a bike under the same rules I use mine for work loads .. takes me twice as long to get anywhere (dont want to get there sweaty now do I and the head of HR has not got a clue how fast a bike goes) and I am gettting paid and an extra 20 p every mile lovely.

The 40p for 10,000 miles then 25p after is the limits of what you can claim before you get taxed. The company can pay you 40p a mile regardless, but you’ll get taxed on 15p of every mile beyond.

Hence 30k business miles at 40p a mile – (.4 x 10000 + .25 x 20000) = £9k tax-free, then (.15x 20000) a further £3000 which you’ll get taxed on. Assuming higher rate tax, that becomes £1800, so you get £10800 in your pocket per year to buy and run a car.

A fairly economical diesel will cost 10p a mile in fuel alone which is £3k gone straight away, insurance £500 at least, probably £1000 in servicing/tyres a year at that mileage – still gives you £6300pa to run something. Of course, this is all dependant on the mileage staying high, as if it dropped then factors like the depreciation still exist even if the car’s sat there. Doesn’t seem like too bad a deal though, especially if you’re home-based so all mileage counts as business.

Bear in mind if they paid you car allowance that *will* get taxed, so you actually need quite a lot to get the same amount to spend.

I was on exactly that mileage allowence for 2 years until recently, doing 15k a year.

I worked out that our car cost us about 17p a mile to run including fuel, servicing, repairs, insurance, tax and MoT. We’ve just sold the car and we lost £2900 on it in 3 years 3 months after 61000 miles, which is just under 5p a mile in depreciation, so that’s a grand total of 22p a mile.

So 15k work miles cost £3300 and I claimed £5250, giving a £1950 profit per year.

So yes, it’s easily possible.

But in actual fact, the car was bought and paid for, we’d have had to pay the same tax and insurance, and nearly as much servicing anyway, so the actual profit was a lot higher than that, more like £3300 a year

surfer… if you get paid less than 40p a mile, the tax man doesn’t give you back the difference, he gives you tax relief on the difference.

So, if you only get paid 20p a mile and do 10,000 miles, you don’t get £2000 back from the tax man, you get the tax back that you would have paid on that amount… so at basic rate you’d get 20% back… or £400. Obviously nowhere near as good as getting the whole 40p, but better than a kick in the teeth.

sheldona… I’d say as PP points out, it’s easy enough to do on 40p a mile if you make a sensible car choice.

Cheers Guys, that was my only concern about the possible job! I’ve done som sums etc but things tend to be different in the real world!

I worked out that our car cost us about 17p a mile to run including fuel, servicing, repairs, insurance, tax and MoT. We’ve just sold the car and we lost £2900 on it in 3 years 3 months after 61000 miles, which is just under 5p a mile in depreciation, so that’s a grand total of 22p a mile.

I worked out that our Fiesta will costs us about 60p a mile all in. It only does 4000 miles a year though.

Not worth owning a car then unless you do lots of miles? You could probably get a taxi / hire one for less Mike

Based on the 20,000 miles a year we did for the last 3 years –

Vauxhall Vectra 2.0DTi Estate, bought just over 4 years old for £3700, sold yesterday for £800 in good nick to Solamanda off here!
Average 45mpg (I can proove that. It’s a real figure I worked out myself over 48,000 miles…geek alert!) at an average of £1.10/l for fuel = 11.1p a mile

Plus (Per year)-
Insurance £350
Tax £145
1 full set Michelin tyres £200
2 oil changes £100
Other general servicing and repairs £450 (I don’t use main dealers, EVER)

Total – £1245 = 6.2p per mile

Total = 17.3p per mile.

Depreciation already worked out above at 4.8p per mile = 22.1p per mile

Yeah, it’s not a flash car, but it was reliable, comfy and you are REALLY gonna struggle to beat that for running costs!

😀

Not worth owning a car then unless you do lots of miles? You could probably get a taxi / hire one for less Mike

Next time you’re in the area, would you like to come round and explain that to my wife? 😉

Oh God Solamanda will have that full of chip fat and running like a tank in less than a week!

I had company cars for 20 years up until 7 years ago whereupon i took my own car. I managed to slash my mileage because up until this date everyone was hammered if they did less than 18k a year. The new rules regarding fuel cards meant paying far too much in tax. Many employers then were not very concerned about minimising their employees tax liability, yet the company car was overwhelmingly a tool for their benefit! The polluter wasn’t paying, we were!

I worked out that if you buy your own car new, funded by a fixed allowance, 30k a year is the point where the private car becomes a bit questionable because of the depreciation and wear and tear.

For a company paying you 40p a mile, i would be looking at 3yr old diesel cars on average mileage with a view to changing each year. The good news ia that there has never been a better time to buy a new or secondhand car. 40p a mile will not fund a very big car if you want something new so secondhand is the best route.

The benefits of buying your own car for work is that you pay much less income tax. Useful if you are close to the threshold for higher rate tax and have savings. You can claim relief, choose when to change the car, choose what car you buy, keep the car when you leave the company. You can also be creative about your business mileage reporting to offset some of the wear an tear brought about by the benefit you are bringing to your employer.

It doesn’t work well if the company expect you to do 30k a year. In practice it is often possible to cut this significantly.

The ideal scenario for running your own car is a monthly allowance and a job with a lot less driving.

Having a job at the moment is a bonus, so this unattractive mileage offer is not hugely significant in the grand scheme of things.

There are the downsides of running your own car, but you have no choice right now.

You can always look for another job which does provide a car if you get offered this one.

Good luck!

Thanks for the replys and I love the tag 🙂 Yeah I’ve had it easy for nearly 9 years but looking forward to a 5 day week and something to do 🙂

Spongebob… what tax relief can you get for buying and using your own car for work? I’m not aware that you can unless you are self employed…

The only tax relief I am aware of if you are employed and using your own car is on fuel payments if you get less than the Inland Revenue tax free limits.

PMSL whoever put that tag on there 😉

Sheldon, what’s the job mate?

That was SSSTu no doubt!! Its basically what I’m doing now but a lot more of it! Its only an interview but need to know what’s what with fuel allowances etc, just in case they bring it up. I’ve had the heads up that this is the policy.

That was SSSTu no doubt!!

That’s where my money went too, you 2 having another lover’s tiff? 😛

Tax relief – If you get a fixed monthly car allowance and also a nominal sum to cover fuel, you can claim relief on the difference between the amoumt the employer pays for mileage and the tax allowable amount. e.g. Compamy pays you 8p a mile and your vehicle is qualifies for 40p, you can claim tax relief on the diffence.

I worked out that our Fiesta will costs us about 60p a mile all in. It only does 4000 miles a year though

I don’t want to add up what my wife’s Hyundai Getz will cost per mile – she does around 1200 miles per year

Spongebob… okay, so just the fuel allowance, just wanted to check.

Oh, and that tax relief has nothing to do with whether you get a car allowance or not.