company car vs car allowance

A question about : company car vs car allowance

From the tax point of view is having a company car the same as getting a car allowance and buying/leasing one yourself ?

Best answers:

• Not remotely the same.
  If you get a car allowance, the whole allowance is taxable income, but you can offset against tax the actual costs of running your own car (or the Inland Revenue's standard allowances for running your own car, whichever is better for you).
  If you get a company car, the Inland Revenue calculated taxable benefit is subject to tax as if it's income.
  Your circumstances will determine whether it's better to take the company car or not, but if the allowance is a fair one it's probably worth having the car if you do LOADS of personal mileage, but not worth it if you do hardly any personal mileage.
  I say this because the personal mileage is the benefit you get which isn't taxed on a marginal basis.
  There are company car calculators on a number of leasing company websites, but they generally compare buying a brand new car yourself (at full list price) with having a company car. If you would in fact run a nearly-new (or even older) car, the costs of that option would likely be cheaper, weighting the decision from the suggestion they will make.
• Not really the same at all, you get an allowance pay tax and NI on it before you receive it, you usually have to pay for the car plus all maintenance and insurance from the allowance.
  With a company car you get a taxable figure dependant on the emmissions and the retail cost of the car when new. This figure is added to your earnings and you pay tax on the total. If the company give you a fuel card that is taxable too.
  I pay £115 a month tax for a new £20k car every 2 years, pay for my own fuel and get 11p per business mile from the company. Hope that helps.
• My employers have a rather odd way of doing these things - we dont get any benefits as standard other than discount on own products but get a catalogue of items you can buy as a benefits such as company car, pension, health insurance etc. We can also lease cars from them as a personal car rather than company car.
  With all the cars I have been interested in (unfortunately all high CO2 output) then lease was much cheaper unless I was going to be doing mileage over 35,000 a year at which point company car was cheaper after paying for it and the BIK
• £5k is a good car allowance - about the same as mine. It doesn't cost £5k a year for most people to run their own car, even if you do buy new.
  Like I said, it's more the level of personal mileage which matters IMHO. If you are doing hardly any mileage IN TOTAL, it won't cost much to run your own car; if you are doing loads IN TOTAL, it will cost you a lot making the company car relatively more attractive.
• useful?
• Good link, xbox.
  I agree with solar that 18,000 personal miles a year is semi-loads, and it would probably end up being better to take the car on those figures, as long as you can choose a car (or the car you have no choice about) that has low emissions so a low tax rate.
• Try this calculator, it includes pretty much all costs involved and you can change most parameters to suit.
  https://www.comcar.co.uk/newcar/compa...ro.cfm?clk=308
  Hope it helps
• Thanks - that's a great tool! Seems to say that I should get a company car as it will save me money - problem is that I really want a 3dr and can't get that through the company!! But don't want to leave myself out of pocket....eeek, what to do??
• I currently get an allowance of Ј5160 which is taxable etc plus I pay 10% pensions also from this allowance as it is added to my salary as a whole.
  I cover roughly 17000 plus mile a year and receive 15p per mile with the rest claimed back at the end of the year.
  The problem I have is that services come round far to quickly, tyres and road tax also.
  The deal I have on my current car is 3 years 30,000 miles but every mile thereafter charged at a rate of 7p can this be claimed back by the tax man?
  I had to pay Ј5000 deposit to get the payments down to Ј306 per month but the depreciation will be a further Ј6000/Ј7000 plus interest.
  After tax/NI I'm left with roughly Ј270 per month how can you buy a car for this amount without paying a depsoit plus tax, tyre and service, its impossible.
  I get roughly Ј1300 per year back after tax (claiming the mileage difference back from the inland revenue) but this is no where near covering my costs.
  What can you advise?
  Regards
  Dave
• Keep your car for longer. Depreciation is one of the major costs of car ownership and you are most of it and passing a 3 year old car on to someone else.
  If you actually are going to change your car every 3 years you are probably no worse off having a company car even with the tax. At least this way you don't have to worry about repair costs, insurance etc.
• Hi all
  Total newbie here.
  I am considering whether I should have a co car or continue with my car allowance.
  Car allowance Ј300 a month (I know this is very low but i'm not a manager which I have had for the last 4 years)
  Business mileage roughly 2000 - 4000 miles p.a
  Personal mileage roughly 9000 - 10000 miles
  I am just into the 40% tax bracket - I earn just under Ј40000.
  Is their anything else I should add for all the experts need to help me.
• This thread got me thinking and now i'm :confused:!
  I had to buy my own car (cost Ј7k) pay tax, insureance, Maintenance ect. which is fine but i have to use it for work (less than 10k per year) and only get paid 40p per mile. I the more i thought about it the more :confused: i got.
  I couldn't work out if its costing me money to work? can anyone help?
• My company is offering me a Ј175 a month car allowance (fuel to be added) to opt-out of having a company car.
  This seems incredibly low to me and to everyone i speak to. Can anyone tell me if there is a regulated body with suggestions for this kind of allowance? I have been looking on the web and cant really find anything.
  Thanks in advance
  c
• sorry to jump on this thread but i could do with some help.
  the company i work for pay Ј500 per month, plus .40p per mile (having browsed a few threads i now know i am on a decent wicket)
  my 3 yr deal is up for negotiation with my boss, as the company has had a tough year (like we all have) i guess he is going to want to play hard ball.
  do i:
  A) opt for a lease car, making my monthly outgoing alot less than they are now
  or
  B)look at going back to a company car/pool car
  i currently do around 1100 miles per month, 300-400 business rest private
  my current car costs me around Ј500 per month for the loan, insurance & other bills will bump this up a bit, tax code is in 40% bracket.
  i am really confused which way to go, any advice?
• My company car (2.2d civic) costs me 320 a month. No other outgoing except fuel, which is handy.
  If owning a new car is important I would definately stick with a company car. I need a bigger car so looking to come out or employer scheme and buy a 5/6 year old but 'nicer' car. Depreciation is by far the biggest cost in owning a new car.
• thanks cov, but i am still searching for anyone who can give me a good idea what to do, do i:
  A) opt for a lease car, making my monthly outgoing alot less than they are now
  or
  B)look at going back to a company car/pool car
  Lee