Company Car allowance in these WFH times?
Discussion
Hi Guys -
apolos that this has probably been done to death, but its a looong time since i last looked into this, so wouldn't mind a view from the PH massive.
Mrs BERGS has just got a new job with a large corporate (previously with a small start up) and now has a car allowance.
IIRC, the benefits of having a company car and claiming milage etc have long since been closed by the tax man.
Couple that with the minimal actual company milage she will rack up (its an office/home officve based role) & I'm guessing it would be better to have the equivalent and just PCP a new-ish car.
are there other variables at play?
for ref - she is a higher rate tax payer, and the allowance is about £6k so i guess that this would be a BIK of and the 'real' equiv is c. £3,600 - so for us to use it exactly as intended it would be c. £300 pcm on a lease deal/PCP etc. - but without the flex of it being company fleet etc.
any view/opinions on the most efficient way of utilising the allowance?
apolos that this has probably been done to death, but its a looong time since i last looked into this, so wouldn't mind a view from the PH massive.
Mrs BERGS has just got a new job with a large corporate (previously with a small start up) and now has a car allowance.
IIRC, the benefits of having a company car and claiming milage etc have long since been closed by the tax man.
Couple that with the minimal actual company milage she will rack up (its an office/home officve based role) & I'm guessing it would be better to have the equivalent and just PCP a new-ish car.
are there other variables at play?
for ref - she is a higher rate tax payer, and the allowance is about £6k so i guess that this would be a BIK of and the 'real' equiv is c. £3,600 - so for us to use it exactly as intended it would be c. £300 pcm on a lease deal/PCP etc. - but without the flex of it being company fleet etc.
any view/opinions on the most efficient way of utilising the allowance?
BERGS2 said:
Scrump said:
If she wants an EV then a company car may make more sense as they currently have zero BIK.
so does that effectivly make a £6k allowance £500/month?I would look at circumstances and what your preferences are.
Low to average mileage, no long journeys and you want a new car regularly and zero hassle? Get an EV through the company car scheme if you can.
Low to average mileage and you don't care about a new car? Look at the terms of opting out - i.e age of car and either go bangernomics if that floats your boat or get something sensible on a PCP/HP/Cash/Whatever is your poison.
Probably need a little clarity here before you can get more information.
Is she presented with the option of taking a company car or is it company car allowance only? If she is able to take company cars, has she been presented with a list of cars available to her for her banding?
Remember that the company car comes with insurance and servicing, which would need to be deducted from your £3,600 PCP fund you mention. Your wife would also be charged a BIK deduction based on the banding of the car, I believe EVs are 0% and rising to 1 or 2% in April. Fuel will only be able to be claimed at the below figures.
Petrol -
1400cc or less 10p
1401cc to 2000cc 12p
Over 2000 17p
Diesel -
1600cc or less 8p
1601cc to 2000cc 9p
Over 2000cc 12p
If you take the car allowance she'll pay 40% tax and 2% NIC, plus 9% if paying off a student loan. From that left-over money you'll need to buy, maintain and insure the car. You will however be able to claim mileage rates of 45pence per mile for the first 10k miles and 25pence per mile after that - The company may not pay these full amounts and may pay the above fuel rates instead, in which case your wife can claim tax relief on the difference.
It may also be worth considering whether or not there are strict criteria on the car - Does it have to be minimum 4 door? Less than 5 years old? Other criteria.
Is she presented with the option of taking a company car or is it company car allowance only? If she is able to take company cars, has she been presented with a list of cars available to her for her banding?
Remember that the company car comes with insurance and servicing, which would need to be deducted from your £3,600 PCP fund you mention. Your wife would also be charged a BIK deduction based on the banding of the car, I believe EVs are 0% and rising to 1 or 2% in April. Fuel will only be able to be claimed at the below figures.
Petrol -
1400cc or less 10p
1401cc to 2000cc 12p
Over 2000 17p
Diesel -
1600cc or less 8p
1601cc to 2000cc 9p
Over 2000cc 12p
If you take the car allowance she'll pay 40% tax and 2% NIC, plus 9% if paying off a student loan. From that left-over money you'll need to buy, maintain and insure the car. You will however be able to claim mileage rates of 45pence per mile for the first 10k miles and 25pence per mile after that - The company may not pay these full amounts and may pay the above fuel rates instead, in which case your wife can claim tax relief on the difference.
It may also be worth considering whether or not there are strict criteria on the car - Does it have to be minimum 4 door? Less than 5 years old? Other criteria.
BERGS2 said:
so does that effectivly make a £6k allowance £500/month?
You're confusing car allowance with company car schemeHer allowance is income and taxed (and NI'd) accordingly
If she chose a company car instead of allowance, she'd lose that income and then pay BIK on whatever she picks. If she picks an EV, its 0/1/2% in 2020/21/22
I'm looking at giving up my car allowance (roughly the same amount as yours) and ordering a Tesla Model 3 on the car scheme. I've worked out I'd be around £100 better off a month before accounting for servicing and maintenance against the Audi A4 Avant PCP I currently have.
Dimebars said:
You're confusing car allowance with company car scheme
Her allowance is income and taxed (and NI'd) accordingly
If she chose a company car instead of allowance, she'd lose that income and then pay BIK on whatever she picks. If she picks an EV, its 0/1/2% in 2020/21/22
I'm looking at giving up my car allowance (roughly the same amount as yours) and ordering a Tesla Model 3 on the car scheme. I've worked out I'd be around £100 better off a month before accounting for servicing and maintenance against the Audi A4 Avant PCP I currently have.
OK thanks guys - Her allowance is income and taxed (and NI'd) accordingly
If she chose a company car instead of allowance, she'd lose that income and then pay BIK on whatever she picks. If she picks an EV, its 0/1/2% in 2020/21/22
I'm looking at giving up my car allowance (roughly the same amount as yours) and ordering a Tesla Model 3 on the car scheme. I've worked out I'd be around £100 better off a month before accounting for servicing and maintenance against the Audi A4 Avant PCP I currently have.
looks like we need to get a little more detail on the package.
its odd though, as the level of 'company' use will be slim to negligible. Its an office based roll, largely working from home now and will probably stay that way in at least part.
Just trying to figure out roughly what it would equate to as salary equivalent - as i guess there is rarely an imperative to take a car in these circumstances?
BERGS2 said:
Just trying to figure out roughly what it would equate to as salary equivalent - as i guess there is rarely an imperative to take a car in these circumstances?
If the allowance is £6K then it equates to £6K! It's not usually pensionable, but otherwise is just the same as being paid another £6K.It's not clear from the info you have whether a company car is even available. It's amazing how people's cirumstances vary so there's no balck and white answer but anyway you can't decide until you (or she) understands what's on offer.
The following website has been mentioned a few times on here.
https://comcar.co.uk/
May help with the decision.
https://comcar.co.uk/
May help with the decision.
BERGS2 said:
IIRC, the benefits of having a company car and claiming milage etc have long since been closed by the tax man.
As pointed out above, not always. Depends on individual circumstances but a company car remains the best choice for many. Edited by TwigtheWonderkid on Wednesday 24th February 13:03
BERGS2 said:
Dimebars said:
You're confusing car allowance with company car scheme
Her allowance is income and taxed (and NI'd) accordingly
If she chose a company car instead of allowance, she'd lose that income and then pay BIK on whatever she picks. If she picks an EV, its 0/1/2% in 2020/21/22
I'm looking at giving up my car allowance (roughly the same amount as yours) and ordering a Tesla Model 3 on the car scheme. I've worked out I'd be around £100 better off a month before accounting for servicing and maintenance against the Audi A4 Avant PCP I currently have.
OK thanks guys - Her allowance is income and taxed (and NI'd) accordingly
If she chose a company car instead of allowance, she'd lose that income and then pay BIK on whatever she picks. If she picks an EV, its 0/1/2% in 2020/21/22
I'm looking at giving up my car allowance (roughly the same amount as yours) and ordering a Tesla Model 3 on the car scheme. I've worked out I'd be around £100 better off a month before accounting for servicing and maintenance against the Audi A4 Avant PCP I currently have.
looks like we need to get a little more detail on the package.
its odd though, as the level of 'company' use will be slim to negligible. Its an office based roll, largely working from home now and will probably stay that way in at least part.
Just trying to figure out roughly what it would equate to as salary equivalent - as i guess there is rarely an imperative to take a car in these circumstances?
If you, for example:
- Do a high personal mileage
- Don't have another suitable family car
- Need other people to drive it who have insurance difficulties (due to age, or poor record for example)
- Want a nice shiny car every few years
- Need to have fixed costs so you know exactly what your outgoings are each month
- Don't have time/funds/inclination to deal with things when they go wrong - accidents, damage, maintenance, etc are all someone else's problem.
It's not all about how many miles you will do for work. It's a perk for a lot of people at the end of the day.
The decision as to how to take that perk is key and based solely on your circumstances. I opted out, took the allowance and bought a nice car. That wouldn't work for someone with different circumstances.
Muzzer79 said:
Depends on your circumstances.
If you, for example:
It's not all about how many miles you will do for work. It's a perk for a lot of people at the end of the day.
The decision as to how to take that perk is key and based solely on your circumstances. I opted out, took the allowance and bought a nice car. That wouldn't work for someone with different circumstances.
Do a high personal mileage - no, will be a third car in the HHIf you, for example:
- Do a high personal mileage
- Don't have another suitable family car
- Need other people to drive it who have insurance difficulties (due to age, or poor record for example)
- Want a nice shiny car every few years
- Need to have fixed costs so you know exactly what your outgoings are each month
- Don't have time/funds/inclination to deal with things when they go wrong - accidents, damage, maintenance, etc are all someone else's problem.
It's not all about how many miles you will do for work. It's a perk for a lot of people at the end of the day.
The decision as to how to take that perk is key and based solely on your circumstances. I opted out, took the allowance and bought a nice car. That wouldn't work for someone with different circumstances.
Don't have another suitable family carYes, but its old & increasinly unreliable
Need other people to drive it who have insurance difficulties (due to age, or poor record for example)No -will be just me & her
Want a nice shiny car every few yearsNot really
Need to have fixed costs so you know exactly what your outgoings are each monthhave some flex with savings etc.
Don't have time/funds/inclination to deal with things when they go wrong - accidents, damage, maintenance, etc are all someone else's problem.handy with the spanners for basic stuff - happy to drop car to the local garage for more detailed fixes- have an aversion to main dealers
BERGS2 said:
Muzzer79 said:
Depends on your circumstances.
If you, for example:
It's not all about how many miles you will do for work. It's a perk for a lot of people at the end of the day.
The decision as to how to take that perk is key and based solely on your circumstances. I opted out, took the allowance and bought a nice car. That wouldn't work for someone with different circumstances.
Do a high personal mileage - no, will be a third car in the HHIf you, for example:
- Do a high personal mileage
- Don't have another suitable family car
- Need other people to drive it who have insurance difficulties (due to age, or poor record for example)
- Want a nice shiny car every few years
- Need to have fixed costs so you know exactly what your outgoings are each month
- Don't have time/funds/inclination to deal with things when they go wrong - accidents, damage, maintenance, etc are all someone else's problem.
It's not all about how many miles you will do for work. It's a perk for a lot of people at the end of the day.
The decision as to how to take that perk is key and based solely on your circumstances. I opted out, took the allowance and bought a nice car. That wouldn't work for someone with different circumstances.
Don't have another suitable family carYes, but its old & increasinly unreliable
Need other people to drive it who have insurance difficulties (due to age, or poor record for example)No -will be just me & her
Want a nice shiny car every few yearsNot really
Need to have fixed costs so you know exactly what your outgoings are each monthhave some flex with savings etc.
Don't have time/funds/inclination to deal with things when they go wrong - accidents, damage, maintenance, etc are all someone else's problem.handy with the spanners for basic stuff - happy to drop car to the local garage for more detailed fixes- have an aversion to main dealers
What you buy depends on the company rules. If they don't mandate a limit on age or body type, the Autotrader world is your oyster.
As has been mentioned, car allowance is just another form of income taxed like a salary.
Many would spend it on a PCP/Lease with the monthly equivalent after tax. Some completely ignore the rules of the car allowance scheme and buy an old snotter and pocket the dosh. Others will add some of their own money and buy something tasty.. My company scheme does not allow convertibles/2 seater cars and anything over a V8. Also I think it needs to be within 8 years old.
I would say £6k is a decent car allowance..
G
Many would spend it on a PCP/Lease with the monthly equivalent after tax. Some completely ignore the rules of the car allowance scheme and buy an old snotter and pocket the dosh. Others will add some of their own money and buy something tasty.. My company scheme does not allow convertibles/2 seater cars and anything over a V8. Also I think it needs to be within 8 years old.
I would say £6k is a decent car allowance..
G
Car allowance is income they can attach strings to; conditions usually pertain to the vehicle size, type, fuel economy, age, number of seats and doors and service history/insurance conditions, occasionally I've seen colour and price used to restrict it too. It is however just income that is not pensionable. Taxes as usual are due on it, you can't change how much tax is due based on anything other than the amount you earn.
If you want an EV, you want the company car - no two ways about that. If you do not "need" to meet requirements set out above, then there is no need to "PCP a newer car" unless you have a desperate desire to. In any event, the decision should be one of personal circumstance and the conditions attached to the allowance. Remember in any sums you make that to take the company car you will be £3,500 worse off (assuming no other untoward tax conditions etc) BEFORE deductions for the company car. Having to explain this to an ex colleague was painful when he was trying to explain to me he could get rid of his car that he was claiming allowance against as the "tax" of having a nice Audi was only £200 a month. Yeah, plus the £290 in allowance you give up to pay £200 a month...
If you want an EV, you want the company car - no two ways about that. If you do not "need" to meet requirements set out above, then there is no need to "PCP a newer car" unless you have a desperate desire to. In any event, the decision should be one of personal circumstance and the conditions attached to the allowance. Remember in any sums you make that to take the company car you will be £3,500 worse off (assuming no other untoward tax conditions etc) BEFORE deductions for the company car. Having to explain this to an ex colleague was painful when he was trying to explain to me he could get rid of his car that he was claiming allowance against as the "tax" of having a nice Audi was only £200 a month. Yeah, plus the £290 in allowance you give up to pay £200 a month...
Gassing Station | Car Buying | Top of Page | What's New | My Stuff