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I am looking to start with a company that doesn't supply a company car but pays a car allowance.
I have never had a car allowance before always a company supplied vehicle what are the benefits/pitfalls of such a scheme please?
need to clarify with the company what vehicles are allowed as it may allow me to have something different to the usual rep mobiles.
so in that case what car should I look at thinking estate versions of A6/5 Series/Skoda Superb/Chrysler 300
Allowances are taxed as though they are normal income, you should though be getting the full 45ppm (25ppm after 10k pa) tax-free for business miles.
So treat it as cash and spend as little as you can.
Passat estate. There's a reason why more and more taxi firms are using the B6s and B7s.
"Advi[b]c[/b]e"
Tut.
As it's a lease you could get an Alfa, no one would buy one with their own money would they 😉
What are the rules on Co2 etc? When I see car adverts they are often targeting company car drivers with low Co2 claims.
Do clarify the rules, as they can (and often do) set limits on age, "suitability" and even maximum CO2 levels.
As said, allowance is taxed as income so may not be as generous as you might think. Unlike what b r says, they can reimburse at whatever rate they like - usual thinking is that car allowance is to cover car payment & insurance, etc so mileage payment can then be fuel and something towards maintenance. You can get a bit of tax back if your company pays less than HMRC rates though.
Benefits - you can run what you like within reason, no silly restrictions on fitting towbars, etc. If you're not fussed about being in a new 3-series every few years then you can often run something for less than you're being paid and spend the excess on bikes.
Pitfalls - you insure it (and suffer the increased premiums if someone breaks into it while it's in a hotel carpark somewhere), you maintain it, should you be sacked or made redundant the car is still yours and you keep paying for it.
Another one. Why do people struggle with advise and advice?
I was in the same position at the start of the year, with the choice of company car or taking the allowance. Having done some sums I worked out that I could be saving a considerable amount by taking the allowance instead of the car and buying something 2nd hand.
Needed to be less than 160g CO2/km, 4 doors, less than 5 years old and sensible.
Bought a slightly scruffy but mechanically sound 2 year old TDi Passat estate for ~£6.5k and it fits the bill nicely.
Cheers, Rich
[quote=globalti ]Passat estate. There's a reason why more and more taxi firms are using the B6s and B7s.
cheap and readily available?
[i]Unlike what b r says, they can reimburse at whatever rate they like[/i]
Which is why I said [i]you should though be getting the full 45ppm (25ppm after 10k pa) tax-free for business miles[/i]; it's a 'target' to aim for.
With a company car, you will be taxed off your tax code, so it will always cost you something.
Car allowance is taxed as part of your gross pay, for example a £4k allowance approximately returns about £3k on basic tax rate.
I run my own car and do about 30k business miles a year and it generally pays for a £6k car in less than 2 years, including insurance, servicing and general maintenance.
OK thanks for the replies so far
apologies for the typo in my title 🙁
Yes I need to clarify what car and age etc I can get tomorrow at the third interview
I’m lucky in that my work pay no attention to what car I buy and what I do with it, my boss’s words were ‘you can buy a jalopy if you want’.
Most have rules along the lines of less than 5 years old etc. This makes bangernomics difficult.
My old company’s car policy if you went cash for cars was so strict (car had to be <3 years old, <70000 miles, 4 doors, must be serviced by dealer etc etc) it pretty much forced your hand to take the company car. I used to have to do loads of business miles, so it was generally worth the BIK burden.
Place I’m at now is far more relaxed. Coupled with the fact that I’m not doing many business miles means I could buy what I liked.
That said, having to buy/insure/look after/sort out any problems did come as a bit of a shock after 10+ years with company car.
Remember to add business on to your insurance policy.
There are several ways to deal with the tax, my company's car allowance scheme works very well and as long as I do enough business miles a month then the allowance is almost all tax free. The company pays for the car insurance, so I do pay tax on that as a benefit in kind. I do have the option of a normal company car policy, but it costs me a lot more in tax, albeit with slightly less risk as I wouldn't own the car.
I use the allowance to run a decent fairly new car, with minimal cost to myself. If I wanted to I could own a much cheaper car and save some money.
Every company's scheme will be different. We have certain requirements on CO2, mpg, mileage and age.