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Car Allowance v Car

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By (user no longer on site) OP   
over a year ago

Hi does anyone know the most tax advantageous?

Is a car allowance or a car via the company the best option?

And yes I will consult a professional before I decide

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By *ayTVTV/TS
over a year ago

North Yorkshire

Car allowance...company cars are a tax liability

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By *hromosexualsCouple
over a year ago

Near Abercynon

Depends on the car. Fully electric are 1% BIK at the moment

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By (user no longer on site) OP   
over a year ago


"Car allowance...company cars are a tax liability"

Thank you. It was my initial thought actually

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By (user no longer on site) OP   
over a year ago


"Depends on the car. Fully electric are 1% BIK at the moment"

Distance is my issue I travel 110 miles per day.

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By *hromosexualsCouple
over a year ago

Near Abercynon


"Depends on the car. Fully electric are 1% BIK at the moment

Distance is my issue I travel 110 miles per day. "

I suppose it depends on your access to a charger. Range of over 200 miles is pretty common

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By (user no longer on site) OP   
over a year ago


"Depends on the car. Fully electric are 1% BIK at the moment

Distance is my issue I travel 110 miles per day.

I suppose it depends on your access to a charger. Range of over 200 miles is pretty common"

I just don’t think it suits me. I love in rural area so it maybe a bit of a pain!

Have you an electric car?

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By *ts the taking part thatMan
over a year ago

southampton

Depends on how you will use the car as well, if excessive mileage I,d go company car as residuals will be bad on your car & maintaining it higher costs.

If going car allowance remember you'll need business cover on your insurance policy.

Need to be clever on picking the right one for mpg.

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By *ylonseeker2023Man
over a year ago

Harwich

It's a good while back but I got stung by the taxman on a company car...

I believe the value of the car is linked to your salary, it is in essence seen as an addition to your earnings. I am not saying that a £50k car is seen as an additional 50k salary, nevertheless I seem to remember some kind of magical sum that was added to my taxable income...having worked for more than one company in parallel, I had long forgotten this one car and was chased up about 3, maybe 4 yrs later.

By an allowance I assume you mean a certain amount per mile of business use.

Again, I was granted this by one employer, my memory fades, possibly £0.25 to 35p/mile.

With me driving up to 1000 miles a week this worked out fine, especially as the wear and tear per motorway mile is normally less than a lot of town driving. Less clutch wear, even tyres if driven sensibly and of course my fuel consumption was better.

I would strongly advise keeping the allowance funds separate so that the money really is there for vehicle maintenance and of course to fund the next vehicle, be it a deposit or an outright payment. That said, finance CAN be a wiser option in comparison to parting with a large lump sum (cash flow will be better etc etc. There are various adv/disadvantages.)

This may well now be outdated as it was some years back. Whilst maths and figures are constants the tax laws unfortunately change from time to time, as such I would spend a few pounds asking an accountant or failing that, are there possibly colleagues in a similar situation you could ask?

With E-cars and all the automotive changes the taxman possibly has totally new systems or indeed incentives in place.

If possible, a low mileage 1 year old car could be the way forward, if it is you driving on a mileage allowance. The first owner has swallowed the initial (high) depreciation for you and you still have a very new car that may still be under warranty (manufacturer warranty is transferable I believe, but again.. check)

Hope this helps but please check up with an accountant or a reliable colleague within your company as well as someone else who is trustworthy and impartial as employers also make mistakes but you will be held liable.

No doubt there will be a Govt. Website.

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By *ose-tinted GlassesMan
over a year ago

Glasgow / London

Best option nowadays is to get a raise instead - have a car allowance bolted on to your salary.

Unless you definitely want an EV, those have good tax breaks for company leasing at the moment, and in that case you should explore both options and compare.

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By *hatsWhatCoupleCouple
over a year ago

Northampton

Company car = BIK or tax bill.

Car allowance = another name for salary so taxed at your rate. So a £500 car allowance becomes £400 assuming tax at 20% and a further deduction for national insurance

A benefit of a car allowance is the car is then yours so you can claim mileage relief from HMrC for using your personal car for work mileage. £0.45 for the first 10k miles and £0.25 thereafter. This is reduced by any amount your company pay, example £0.18 per mile from company is duducted from the £0.45 HMRC allowance .

So you need to do the sums. But remember the simple rule, tax man always wins

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By *ylonseeker2023Man
over a year ago

Harwich


"Depends on how you will use the car as well, if excessive mileage I,d go company car as residuals will be bad on your car & maintaining it higher costs.

If going car allowance remember you'll need business cover on your insurance policy.

Need to be clever on picking the right one for mpg.

Sorry, was writing up my thoughts as you had posted in the meantime.

Yes....Good point. Very good point you make on the insurance.. often overlooked or declared incorrectly and as such can cause real headaches if something happens.

The mpg is a big one... quite right but the question is as to whether an E-car is practical as an alternative. I am still not conviced .. a matter for a different thread!

"

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By (user no longer on site) OP   
over a year ago


"Company car = BIK or tax bill.

Car allowance = another name for salary so taxed at your rate. So a £500 car allowance becomes £400 assuming tax at 20% and a further deduction for national insurance

A benefit of a car allowance is the car is then yours so you can claim mileage relief from HMrC for using your personal car for work mileage. £0.45 for the first 10k miles and £0.25 thereafter. This is reduced by any amount your company pay, example £0.18 per mile from company is duducted from the £0.45 HMRC allowance .

So you need to do the sums. But remember the simple rule, tax man always wins "

Yes he does lol

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By *olfgangvwMan
over a year ago

Mansfield

As is a car allowance. If it’s a round sum each month it must be taxed and also subject to nic. The o my tax free payment you can get is 45p per mile per business miles travelled. I should know I’m a tax professional. DM me for more j do

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By *UGGYBEAR2015Man
over a year ago

BRIDPORT


"Company car = BIK or tax bill.

Car allowance = another name for salary so taxed at your rate. So a £500 car allowance becomes £400 assuming tax at 20% and a further deduction for national insurance

A benefit of a car allowance is the car is then yours so you can claim mileage relief from HMrC for using your personal car for work mileage. £0.45 for the first 10k miles and £0.25 thereafter. This is reduced by any amount your company pay, example £0.18 per mile from company is duducted from the £0.45 HMRC allowance .

So you need to do the sums. But remember the simple rule, tax man always wins "

Just don’t mention Ken Dodd to them, they get upset

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By *hromosexualsCouple
over a year ago

Near Abercynon


"

Have you an electric car?"

I have one on order, it's been on order about 10 months now...

I'm getting it purely for tax reasons. I think it will bring some challenges but it will be a good saving compared to the company car I have now.

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By *obajxMan
over a year ago

Cheshire

Really consider the allowance and look on this site for used cars that can be leased fully maintained

https://www.carleasing.co.uk/

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By *lan157Man
over a year ago

a village near Haywards Heath in East Sussex


"

Have you an electric car?

I have one on order, it's been on order about 10 months now...

I'm getting it purely for tax reasons. I think it will bring some challenges but it will be a good saving compared to the company car I have now."

I heard manufacturers were not ramping up production of electric cars because they were not selling enough . I suspect it's all being driven by tax breaks on BIK taxation for company vehicles. Few people who do any real weekly mileage would buy one out of their own money and suffer the huge depreciation

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