Company car help!

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I need some perspective or some what would you do type advice as I’m driving myself nuts overthinking this!

My company car is up for renewal but I also have the option of taking a cash allowance instead. The car is a perk, I don’t do much driving for work anymore unless driving to the airport every couple of weeks, otherwise it’s used for the school run.

I have 4 children and my husband has a 7 seater car which he uses to commute to work (2 hours each day) and we use this as a family car at the weekends when we need to seat 6 of us. Whilst the car is practical space wise, it has zero kerb appeal, isn’t great to drive and isn’t all that economical.

I see a few options-: 1. I could get a 7 seater company car, allowing my husband to get something he likes but it would cost a fortune in benefit in kind tax (my current car costs around half the bik). 2. Or I could get a 5 seater badge snob lovely car to drive that is super ecomical to run and let my husband use it for his commute and pay the same as if I got a 7 seater. 3. Or I could get a less swanky car and pay roughly the same as now. 4. Or I could take a car allowance instead and buy whatever I like!

The car allowance option seems to make most economic sense as there’s no bik to pay and I can consider cheaper car manufacturers. I could also consider leasing a car privately which would give me the same car options but for less cost. The downsides being I would need to organise my own insurance and maintenance. Finally if I buy privately I may have to put some of it on a credit card (0%) or if I lease privately then I’ll be committed to a contract for a set period. My job appears to be secure but if something happened then I would have to continue paying for a car instead of simply handing the company car back.

We can afford any of the options and whilst I like the idea of having a fancy car, I am cautious with money and like to have a safety net.

Tell me what you would do and why.

It's a long time since I was in a job which came with a car, but for my last 'company car' I took the cash allowance. My reasoning was that the company would be paying towards my car, which would still be mine when I left. In the end I had a car that I could part exchange against my next one.

There were still restrictions on what I was allowed to have, though.

I always say Company car but you need to carefully do your maths following the new law that’s come in that means your taxed on the difference between your BIK for a car and the allowance, if the BIK is lower than the allowance see here

The thing with running your own car is you have to factor service, tyres, breaks / wear and tear, as well as insurance (to cover Business miles too), which you’ve mentioned. A lease company which you see with good deals (249pm) have really low mileage per year, and should your business miles increase, you might be charged for any over mileage. Remember too that CA is taxed, and if your 40% tax payer, it’s a big hit.

It’s the ease of being able to get your car sorted with no expense if there is a problem vs dropped off for you under the company car scheme, only you can decide if that’s worth the ease.

A few people I know go down the third option of buying a car, second hand, decent one, loan for the car, and then it’s paid off and you’re literally maintaining it. Can work out cheaper in the long run but up front costs need to be factored.

• to be clear on company car, I meant if car needs service, you drop off, pick up, it’s done and charged to company. I’m clearly not making sense to myself so goodness know if others understand me

You need to look at the tax liability of taking the cash. When I’ve looked at it the past the only way I’d be better off with the cash would be with a large Buisness mileage.

As your mileage is low I’d stick with the company car. If you can try and look at the hybrids. Some have very low bik.

Thanks for your replies. I’ve got the net value of my allowance confirmed through payroll so I have a good idea what I can get with it and I’m considering private leasing options with that as I can save the bik on top and use that to fund insurance and servicing (hopefully that should be the extent of maintenance for a new car under warranty.)

I expect to do around 7k private miles and 5k business miles per annum which I have assumed is quite low in the grand scheme of things. I had always assumed with high mileage the company car works out cheaper but maybe I’ve got that the wrong way around?

I’ve booked some test drives to see if that sways me one way or the other.

Decisions decisions!

Oh just to add, I’ve got a couple of hybrids to test drive, the bik is much lower but I do then have to contribute to the monthly cost of the car as it has a higher list price so it pushes it into the same monthly cost as a cheaper car with higher bik albeit it’s a much more expensive car with lower fuel costs.