Company Car vs Car Allowance

M

MattHall91

Member
 Cheshire
Evening,

I'm going to use some hypothetical numbers to keep this straight forward. Reason being, my job change comes with a pay rise, but this will complicate things when finding out how much goes in my back pocket at the end of the month.

I've currently got a fully expensed company car that costs £100 per month in tax and I spent £20 on private fuel each month. Let's say my salary is £30,000 a year. This leaves me with £1837 left each month.

Let's say my new jobs pays the same £30k, however I get £5,000 car allowance and 45ppm/25ppm. My annual mileage is 30k per year.

Can anyone work out how much I will end up with after this? And then how much I'd have to spend on a car, insurance and maintenance to still end up with the £1837 at the end?

Thanks in advance, Matt.
 
don't know about the figures but my personal preference is to run my own car

where i work i have the option of either a insignia or a auris, neither of these cars excite me so i have my own
 
Surely deduct 20% from the 5k and then work out your monthly payments for the car, insurance, fuel, tyres, tax etc.....

These will all vary from car to car so only you can work it out.

Or am I missing something :?
 
srhutch said:
Surely deduct 20% from the 5k and then work out your monthly payments for the car, insurance, fuel, tyres, tax etc.....

These will all vary from car to car so only you can work it out.

Or am I missing something :?
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No you're probably not missing anything, I just haven't experienced it before.

Sounds simple enough, and then do 10,000 x 45p and 20,000 x 25p every month? Add that on?
 
I take the car a ford mondeo business edition which has a decent spec sat nav etc ,I don't take the fuel card just pay the private fuel it's negilable .I like the worry free motoring no tyres to buy no tax or insurance and if it's damaged I just get another one .

I dont look too closely at the figures so probably no help
 
alane29 said:
I like the worry free motoring no tyres to buy no tax or insurance and if it's damaged I just get another one .
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definitely a big advantage of a company car, in the last 6 months i've spent over £1500 on my car urghhhh
 
Ive just been given a car allowance and fuel card (part of the reason im changing the zed). Didnt get the option for a company car, but I presume that the potential choices would be severely restricted?
 
I enjoy the worry-free side of it now, however no choice in my next job.

I would be financing new anyway, so hopefully no unexpected costs.

Basically, I'm trying to work out how much I can spend per month.

It's looking at about 350 for car, insurance and maintanence. Could obviously choose to spend less and pocket the difference, but spending a fair amount of time in it each day, I think I'll see what I can get.
 
alane29 said:
I take the car a ford mondeo business edition which has a decent spec sat nav etc ,I don't take the fuel card just pay the private fuel it's negilable .I like the worry free motoring no tyres to buy no tax or insurance and if it's damaged I just get another one .

I dont look too closely at the figures so probably no help
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I pay for my fuel to. It is cheaper for me to do so, but also something I hadn't though of.

It costs me £5 per day for the company sooter to go to and from work.

It costs me £10 per day to use the Z4 to go to work and back.

If I was fully funded I would still be paying for fuel even though I was using the Z4 as it would be pro rated, costing me more than £10 per day. Glad I didn't choose that option.

Also worked out it would cost me nearly £10 a week in tyres. Company car is cheap :D
 
Just on this topic. Does anyone know if you can use a company car allows (£xxx per month) to get a business contract lease? I cant see a definitive answer anywhere online or in my limited company documentation!
 
Was in the BMW dealership yesterday. Seems there might be a bargain to be had on a 5 series at £225 a month. I don't know anything about company cars, but the sales rep was inundated.
 
Hi Matt.
The 5k per year car allowance is treated as normal salary by the taxman so he pockets the Tax (20% as your not over the higher tax band threshold) and National Insurance ( 12%)
and you end up with £5000*0.68 = £3400 per year.

Plus you get your 45p for the first 10000 miles, then /25 p per mile for the remaining 20k miles a year you are doing. ( this is a very good rate by the way, I only get 11 p per mile, although my allowance is higher)

This amounts to £9500. This is tax free, as you are allowed to claim this by the taxman without getting taxed on it.
Also as it's not a company car you do not have to pay the (current £100pcm) benefit in kind so that saves you another £1200 per year
So you have a nice sounding £14100 per year to run your own car

Also as it's not a company car you do not have to pay the benefit in kind so that saves you another £1200 per year

If you take fuel to cost £1.21 per litre ( I've stuck a bit in extra to cover any rises) this amounts to £5.50 per gallon ( or near as).
A car that averages 30mpg will cost you £5500 in fuel leaving you £8600 to spend on a car for the year
A car that averages 40mpg will cost you £4125 in fuel leaving you £9975 to spend on a car for the year
A car that averages 50mpg will cost you £3300 in fuel leaving you £10800 to spend on a car for the year.
You can do a private lease on some fantastic cars for that money. I think I've seen you on the PH leasing thread, so you'll know all about that.
Just one thing to check.
Make sure the fuel you're getting is the 45/25 rate.
My company pay me the company car rate for fuel, and I have to claim tax back on the difference between that and the 45/25 rate you mentioned.
The difference if you got say a 2.0 Diesel would be
( and here's where it gets complicated....)

£3300 for the govt company car fuel rate currently at 11 p per mile
plus 20% tax back on the difference, so
£4500-1100 *0.2 = £660 for the first 10k
£5000-2200*0.2 = £560 for the next 20k

SO a total of £4520
against your original assumption of
£9500 for the 45/25 rate.

Like I say, make sure that you have the right figures!
HTH
ttt
 
Surely the 45p rate can't apply as that means the company are paying you twice.

It would be the 11p rate surely.
 
srhutch said:
Surely the 45p rate can't apply as that means the company are paying you twice.

It would be the 11p rate surely.
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Depends on company policy, the contribution scheme is usually salary compensation and the miliage allowance is to cover the cost. However any half decent accountant will see it your way because its cheaper, but they may not be making that decision.

I would be very wary of going down your own car route doing so many miles, depreciation on 30,000 miles is going to be a killer, if you buy used this can be offset but new you are going to lose 70% in 3 years.

I get an allowance and do 20,000 a year, finance my own car and it costs me £300 a month out my own pocket, and as I'm happy to do it because I'm not trying to get the best return on my salary I just like a nice car :D

If you want to be better off keep the company car or buy something really cheap, Focus etcetera
 
bluestreak56 said:
Just on this topic. Does anyone know if you can use a company car allows (£xxx per month) to get a business contract lease? I cant see a definitive answer anywhere online or in my limited company documentation!
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Not if you don't have a business to do the lease through. A lot of the time the VAT is the only difference between the prices.
I have heard examples where the lease has been applied for through the business, but the payments have come out of a private account ( or I think a director's loan account) and so BIK has not been payable.
But if you work for someone else's company and they pay you an allowance then the answer is no :(
 
Thanks all.

Got the job and confirmed the figures.

£450/month allowance and £9500 a year fuel based on 45/25p.

Looking at 120d Sport or M Sport of budget will reach. Not sure what else will offer 45mpg, 0-60 <8 secs and a decent steer. Obviously the 30k per year bumps the prices way up. But just the way it goes.

It'll be my only car going forward so I'm happy to pay a bit more for a nicer car.
 
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