[Closed] Company car?

Cash, probably extra salary and taxed as such, don't expect the car allowance to go up in line with any salary increases though. Car allowance does not equal a company car.

Companies normally offer a cash car allowance that you can chose to spend (or not) on a car. Basically it's just extra salary that doesn't count towards pension calculations (most of the time).

Some companies may have a rule that you need to have a car that is X years younger if you take the cash - mine doesn't and I pocket it and run a banger.

Often they will also have a company car scheme which generally offers a car via salary sacrifice. This means that you save tax and NI on any car you get, which is normally offset by the cost of the car scheme in the first place but once you take it into account they are competitive with leases.

Without seeing the job description a car allowance is not the same as a company car.

For a company car (your company providing you with a car) your tax free allowance and all subsequent tax thresholds are reduced by the car value*BIK% (benefit in kind)

Car allowance is normally an additional payment on top of salary (allows separation for say pension contribution calculations etc.). This is income the same as any income and subject to tax, NIC, student loan contributions etc.

Which is better for you probably depends on what cars are available to you (company car hybrids - dependant on emission free range - and electric cars can offer very attractive BIK%). As car allowance is taxed and company car affects your tax thresholds, where your pay sits in the tax brackets can massive effect things.

It also depends on how and who covers fuel for personal and business mileage. It also depends if you are traveling to a permanent place of work or to temporary place of work as that opens the opportunity to claim back the tax on the difference between any company mileage payment and the government figure of 45p (it's the tax on the difference not the total difference as people often mis-describe it!)

There are also company car salary sacrifice schemes as mentioned by Ewan, often used by companies to offset the increased cost of electric cars for the company and offload the cost onto the employee. Normally by effectively sharing the tax savings you'd otherwise get due to the low BIK% and handing it back to the company.

As others have said- a monthly amount to fund a car that is taxed. So a £500 allowance will give you £300-£350 to cover financing, taxing, insurance, servicing.
As well as pension, bonus will not be based on that addition to salary.

The nature of the job will dictate if you push for a co car. If it involves lots of business miles I’d not want to do all that and run the risk of hefty servicing on my own car. Also if there’s a problem on the way to a client/job it’s the company’s problem to get you mobile.

My last job had a car as a perk- fuel was paid for but I had a long commute so what I paid in additional tax was more than offset by the saving in fuel.

Thanks for that, wasn't aware this was even a thing! Been NHS for 20+ years. I've a lot of details to find out, the job is WFH with some travel, but exactly how much i don't currently know.

I'm sort of going through this at the moment, had a company car for around 18years, then took allowance at the current role around three years ago and took a loan and bought my own car.

A new list came out with hybrids which alters the considerations quite a bit as they are very low on Benefit in Kind. (The daft offer from WBAC also changes things)

You just need to consider the two extremes, what is your take home pay with the allowance, and what is your take home pay with a CC, remembering that not only do you not get the allowance, you also get taxed. If you can happily run a fully fund a car yourself on the difference, then start mulling it over at that point. But, bearing in mind, anything goes wrong with the car you run, even a puncture, the maths can soon look very different.

Something else to bear in mind, if you have to take out finance or a pcp/lease to get a car with the allowance, you'll still have a large debt if you decide to leave or get made redundant etc.

I had a very stable job with Co. Car, but changed to a very generous car allowance. Great at the time, but things went south and I ended up leaving a couple of years later but still had £400+ a month PCP payments to make. Couldn't wait to get rid of it after that! If I'd kept the co. car I could've just handed the keys back and walked away...

The flip side to that is you leave having had a company car you have nothing to show for it, it's dead money, a car allowance allows you to buy something, probably not as flashy as a company car but something you could own outright after 3 or 4 years and then have the asset. It all depends on your circumstances. I went back to car allowance in a new job at the start of the pandemic after previously having company cars, saved a fortune, didn't actually buy a new car until 12 months later as didn't need a second one with WFH, even now the second car is a little Fiat 500, the one I drive is fully paid for and eight years old, should get another few years out of it, not as flash as the Audi i had but way more economically sensible.

@stumpyjon, yes that's true. After many years of having the most frugal diesel co. cars to save on BIK, my man maths led me to get a 3l v6 as at the time it was a scratch I wanted to itch and with the company paying the monthlies I convinced myself it was a good idea! If I was in the same position now I would make a sensible choice and get the cheapest and most economical car I could and pocket the difference. In fact as soon as I could chop in the PCP Audi, I handed it back and bought a 1.5 skoda...

Except for right now, I've had company cars for my entire career.

When you are doing your cost calculations, remember to include depreciation of whatever car you buy.

Is there a policy which states (if you take the money) what your car can/can't be? Last place I worked said it had to be <5 years old, which meant that the depreciation alone would make taking the company car the sensible option.

Also consider expected milage - both personal and business. Obviously ( ? ) the higher your expected milage the better-off you will be getting the company car.

Also, don't underestimate the convenience of having somebody else sort your insurance/tax/servicing/repairs/breakdown/tyres out for you. A super-savy mobile Kwik-Fit bloke would come to our office car park every month or so and go around the car park and check peoples tyres. You'd just a a phone call saying "you need 2 / 4 new tyres, if you leave your keys at reception I'll do them today". Didn't even sign-anything - just picked by keys up on the way out the door in the evening and drove home with 600 quids worth of new tyres on.

Been on both side if the fence. As pointed out above, the car allowance will result in an asset after 3 years and should you change job, voluntarily or otherwise, then you are not left without a car. This can be a pretty big consideration especially if you leave through redundancy.

On the flip side, when it comes to the mundane day-to-day it is very hard to argue against a company car. Sure you won't own it but isn't PCP all the range these days? You have zero maintenance costs, no worry over VED or insurance, and if some melon crashes into you then everything is sorted for you. The BIK penalty for this still doesn't really count as a massive negative.

If you *need* a decent car or don't have a car to start with then having a vehicle provided for you is difficult to argue against.

Same as a lot of people here, been on both sides of this. But was pushed finally over the line from company car to car allowance when my tax got royaly screwed up somehow and was over paying for the next year and a half. They offered the cash that they paid for the lease plus insurance etc, and I bought my own, for around half the monthlies that they had been paying. I gradually crept up to having a pretty expensive new car on a PCP. Then Covid happened and it sat on the drive for a year and a half. Wasn't a problem because work was unaffected, but annoying cos what was a useful (and very nice) tool was just sat there growing moss. Until BMW emailed me asking if they could buy it back (with the obvious angle of putting me in another PCP), and there was a cash option. I took it - it paid of the PCP loan and left me with cash in hand, with which I bought a bashed up old 4wd for getting about here, and the very few times i've needed to travel for work recently, i've hired a car or got a train. For me, the simplicity of more money in your pay packet vs the company car is still winning out. But not everyone's circumstances are the same of course. Some people mentioned the pension implications - but companies only 'need' to contribute on earnings between 10k and 50k - so if you're earning above 50k, there could be no effect at all, depending on your company pension scheme.

I get a car allowance. Also a stipulation that it must be less than 4 years old and under 100k miles. If I was buying/leasing a car on just the allowance, I'd be stuck with a Daiwoo Matiz or something. However I just use it to subsidise what I'd pay for the car I want/need. So say I'm paying £400 month for a car, either loan or PCP, then the car allowance covers £300 of that cost and I'm only paying £100.

If you do a lot of miles it's not great, as your car will depreciate massively.

Also one of my colleagues got a new VW Softroader on lease and the company said they were looking to alter car allowance to reflect the mileage people were doing. Which was crazy as it fluctuates month on month. Fortunately for him it got put on hold due to COVID, but he was suddenly looking at having to pay more for the lease out of his own pocket.

As it stands I'm getting paid for the car allowance and I've not driven to a customer's site for nearly 2 years now, but the car is all paid off, so it's extra cash in the bank.

Like I say, it's all new to me. I've been NHS all my working life, so none of this stuff. Been doing private leases for a long time and been happy to with that. I guess if I'm offered this new job and accept, then I can just take whatever allowance they give and see it as a bonus on top of the salary which will pay for my quest existing lease?