Viewing 32 posts - 1 through 32 (of 32 total)
  • Sorry – Car allowance – good rate?
  • leftyboy
    Free Member

    I’m looking at a job with a car allowance of £5,600 per annum. I’m new to car allowances as it’s over 20 years since I had a company car.

    So is this ~£466 per month a decent rate and what will it cost me in tax as a higher rate earner? Or is it emissions based now?

    Thanks for any info.

    If I get the job I’ll head back for advice on which car to buy and probably end up with an Octavia! 🙂

    Markie
    Full Member

    Are they paying you the allowance in your salary, or giving you a company lease car to this value, and if it is a lease car is the allowance inclusive or exclusive of maintenance?

    If it’s an allowance in salary, you’ll be taxed at your basic rate, 40 or 45.

    I know nothing of any of this, but Mrs Markie does and has dictated this answer!

    As to whether it’s decent, we don’t have enough information to assess, apparently. What mileage does it cover?

    beej
    Full Member

    My £600 per month is taxed as if it was extra salary.

    wallop
    Full Member

    Taxed at your prevailing rate and seems a fairly average level.

    db
    Full Member

    if you are getting allowance would you not just get taxed on that?

    Money wise its ok. If I opted for cash over a car I think I would get about £550 before tax. (middle manager in big global company)

    edit – far too slow

    leftyboy
    Free Member

    Would be paid with salary so info above helps. Seems likely to be only OKish, mileage would be around 50 miles daily as travel aspect of job is non-UK.

    captain-slow
    Free Member

    As others have said you will be taxed at your marginal rate. Other things to consider are whether you actually need a new car or whether you can just bank the cash – I have seen several people actually end up worse off having taken a job with a car allowance.

    The other thing to remember is that the car allowance is actually a cheap way of your employer giving you extra salary as they will not pay pension contributions on this amount. The same can apply to any bonus payments which are expressed as a percentage of salary. Probably not an issue, but worth being aware of.

    Markie
    Full Member

    It’s okay then, because you’re on low mileage. But verdict here is as you reached above, only okayish…

    paulwf
    Free Member

    Mine is pretty low £340 a month and it is taxed as normal salary.
    I don’t do that many work miles and the only rule is that it has to be suitable for business travel with 4 seats – no age limits or engine type/size.

    Edit – I reckon my company give it as a pay rise that doesn’t raise the too high % increase flag

    tom200
    Free Member

    It’s about what I get, but I don’t quite pay 40% tax so means I can run a decent car at no extra cost. Were I to be on high rate tax I would ask for more or run an older car. If you do high mileage probably better off with a company car, if it’s just a perk then it’s OK.

    Gary_M
    Free Member

    That’s pretty close to the allowance I get. But I only do about 500 business miles a year.

    As it’s a allowance you’ll be taxed on it and it’s taxed as part of your salary so nothing to do with emissions.

    stumpyjon
    Full Member

    Car allowance is reallyy just extra salary and if you’re higher rate you’ll lose half of it. As for a lease car its not bad, Audi A5 S line 177hp 17500 miles including tax and maintenance for that money.

    simon_g
    Full Member

    What’s key is what you get paid for mileage and what restrictions they put on the car you can have.

    Plenty limit you to something “sensible” and put limits on age and/or miles. Lots that want to look green will limit g/km of CO2 as well, which can be tricky if you want a big MPV for example.

    When I got car allowance the mileage rate was barely above my cost of fuel (and needed adjusting a few times as fuel prices fluctuated) and that was in a fairly efficient diesel hatchback.

    br
    Free Member

    Just because they’re giving you a car allowance doesn’t mean that they shouldn’t be paying you any less than 45ppm (25ppm after 10k miles pa) for any business miles.

    What’s more important is any restrictions that they place on the car you’ll own – I know that many do, whereas in the past I’ve had the allowance without restrictions (so took V6’s, V8’s and motorbikes) and other colleagues who lived in London didn’t actually own a car.

    simon_g
    Full Member

    Employers can pay you whatever they like, many that pay car allowance consider that to cover the cost of lease/finance, servicing, tax, insurance – so the mileage rate can be for fuel. The 45p rate is supposed to be a “all costs factored in” rate.

    You can claim tax relief on the difference but it’s not a lot really.

    eskay
    Full Member

    If you take the cash alternative at our company they make you insure your own car for business use and require annual proof of this.

    br
    Free Member

    Employers can pay you whatever they like, many that pay car allowance consider that to cover the cost of lease/finance, servicing, tax, insurance – so the mileage rate can be for fuel. The 45p rate is supposed to be a “all costs factored in” rate.
    You can claim tax relief on the difference but it’s not a lot really.

    True, but they can’t force you to use you car – where I’ve worked and they’ve tried stuff like this, I’ve used the train etc.

    Tax relief could easily be 0.45-0.10=0.35*40%=0.135 so 23.5ppm all in. Better than nothing, but the rat they pay needs factoring to your package.

    If you take the cash alternative at our company they make you insure your own car for business use and require annual proof of this.

    They should obtain proof, but tbh it costs pretty much nothing on premiums,

    5lab
    Full Member

    where I work its £300/£450 depending on your rank. There’s no requirement to have an actual car though, so I share a banganomics runabout with the wife

    freeagent
    Free Member

    I think that figure is about what I’d get if I opted out of the company car scheme.

    Company car works for me as I do approx. 20k personal miles + 4-5k business miles per year.

    Ewan
    Free Member

    It’s just extra cash taxed at your marginal rate. I get 625 i think (middle management in telecoms), but it’s just extra salary from my point of view and I run a seemingly reliable dented but comfy 10 year old mondeo. Don’t see the point of having a nice car and destroying it on a commute.

    joebristol
    Full Member

    All these rates sound brilliant to me. I guess I’m a lower managerial grade for a bank (although on a salary that really should be in a grade above from what I can make out), and I get a £300pm contribution towards a company car. You can’t take the cash – it literally goes straight towards a lease via a leasing company in place.

    So for me company car tax is a big consideration – ordered the lowest co2 rated Jaguar XE which I’m currently waiting for. Think with the PUC in making it’ll still be about £180pm tax first year. Going up year on year with the various tax raises predicted.

    Think I then claim back 11p per mile in the company car. Until that car arrives I’m currently claiming 45p a mile driving my current personal car.

    BoardinBob
    Full Member

    £7,500 a year for me as a car allowance

    Gary_M
    Free Member

    There’s no requirement to have an actual car though, so I share a banganomics runabout with the wife

    Yeh same here. Although you do need a car of some sort so you can put the registration number of the expenses form. I just see it as extra salary as I do very few work miles a year.

    fathomer
    Full Member

    I’m pretty low level and the opt out is £325pm, plus there are rules in age and number of seats etc. I’m currently in the process of deciding weather to take the opt out and get a Berlingo 😀

    br
    Free Member

    All these rates sound brilliant to me. I guess I’m a lower managerial grade for a bank (although on a salary that really should be in a grade above from what I can make out), and I get a £300pm contribution towards a company car. You can’t take the cash – it literally goes straight towards a lease via a leasing company in place.[/I]

    That’ll be through the leasing company owned by the bank? 😉

    captainsasquatch
    Free Member

    Lucky in that I get £520ish and can top it up for pretty much anything I want. Limited by emissions though, which is no bad thing.

    joebristol
    Full Member

    B r – the leasing company is not owned by the bank – believe they got out of fleet leasing / financing before I started there. Will end up being £450 a month total cost (me paying £150 PUC) for the Jag plus company car tax. So for the money I pay on my current near 5 year old car on loan, plus insurance I get a brand new Jag fully insured / maintained etc. It’s an Rsport spec with the 163ps engine, auto gearbox and the only option is split folding rear seats as I need the practicality that gives. This is a 4 year lease / 17,500 miles pa.

    Would have liked it in caesium blue paint with the 180ps engine and the 18″ wheels that comes with, but couldn’t get that on my grade at work. Had to go with a free colour and standard 17″ wheels.

    Think they put me a grade lower than some other people in the same job to reflect the difference in experience – but because they head hunted me from another bank they had to give me a decent salary. Hoping to get up a grade within a couple of years!

    br
    Free Member

    joebristol

    If they fire you and/or you move or lose your job are you still responsible for paying the lease?

    This for me is why I like cash/HP/loans, as you can just sell the car if you have to.

    joebristol
    Full Member

    B r – I think think if you choose to leave it is up to a maximum of one months wages you have to pay to exit the lease. If you move job internally to one with no job car there’s no cost. Not sure on the firing aspect I have to admit. Hoping not to get fired….

    I tend to take a long term approach to jobs / employers – was with my last employer for over 15 years – intend to at least see out 4 years min with this one. If I didnt take a car I’d lose the £300 allowance, and think I’d only still be able to take 11p per mile on my own car as my choice to go down that route.

    The car scheme would be more attractive if I wasn’t a higher rate tax payer, but it’s still attractive enough from the figures I worked out. Plus the novelty of having a brand new car which I’ve never had helps.

    ScottChegg
    Free Member

    I had company cars for many years, and with the erosion in the benefit of the car took the option of cash instead.

    I still do lots of miles, which excludes most of the really attractive lease deals. I have found that the best method is to buy a car a couple of years old with low mileage, keep it for a couple of years and move along.

    I have free choice, and mileage is paid at AMAP rates. Any less and it wouldn’t be worth it. It’s not just fuel, tyres and servicing don’t half add up when you are paying. But, judging by the comments above, my allowance must be on the generous side.

    I’ve only lost out once when my gearbox went bung a couple of years ago. That was nearly £3k in the negative column. Other than that I’ve been better off, with free choice of what I drive.

    leftyboy
    Free Member

    All good stuff thanks for all the info.

    Not got the details yet but have a few things to look for now, our current cars are an 11 plate C-Max which my wife uses to get to and from school (she’s a teacher) involving ~25 mile round trip with 50% motorway miles in that. I run a tatty 53 plate Focus.

    I suspect, looking at the carpark and the slot for the role I’m looking at that I’ll need something less tatty!

Viewing 32 posts - 1 through 32 (of 32 total)

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