Active discussions

Meet the Other Phone. Flexible and made to last.

Meet the Other Phone.
Flexible and made to last.

Buy now

Please or to access all these features

Talk
Work

Chat with other users about all things related to working life on our Work forum.

Original poster

Company cars and tax

12 replies

chocolateyay · 17/05/2015 08:30

Can someone please explain to this bear if very little brain (small words please) how this works?

I've been offered a car allowance, and they are keen for me to take a fleet car. I don't use it for business travel. So they cover tax, insurance and servicing.

If I take the fleet and it's worth less than the allowance, does the balance get added to my salary? I have a choice of car.

Would I be better off taking the money and buying my own car?

OP posts:
AlternativeTentacles · 17/05/2015 08:42

Sorry - if you don't use the car for business travel then why are they offering an allowance? You will get stung on the tax so you usually calculate the cost/benefit on business miles. You don't usually get the rest of the allowance given to you.

prh47bridge · 17/05/2015 08:48

Whether the difference between the car allowance and the car you take gets added to your salary is up to your employer. You need to ask them.

As for whether you would be better off taking the money, no-one can tell without a lot more detail. Remember that the company takes the risks if you take the company car. Servicing could cost more than expected, you may have an accident that increases your insurance costs and so on. With a company car all those costs will be picked up by the company. With your own car you will have to pay them yourself.

RiskManagement · 17/05/2015 08:55

The allowance is taxable (as a car would be)

The way it works for us is you get the allowance paid with your salary, less tax, and then pay a monthly charge for the car, so anything left over is yours.

It must be a much more generous allowance than our if you might be able to lease a car for less than the allowance though!

As prh says it's hard to know which way is best. I'd go towards leasing because then all the hassle is the company's not yours but if you have an adequate car already that you're not fussed about changing, keeping it might work out cheaper. The lease deals are usually pretty good because as a commercial user the company (your employer) don't have to pay VAT

TheGirlFromIpanema · 17/05/2015 09:07

Well, 50% of Vat is reclaimable on lease cars not all of it but a lease/fleet car is still probably the cheaper option for your employer which is why they might prefer you take that option.

You can enter the car deatils here to work out what you would get taxed on the car.
You will be taxed on the allowance at your usual rate of income tax.

Work out which is better for you and ask for that - they wouldn't give you an option I suppose if they forced one option on you Smile

TheGirlFromIpanema · 17/05/2015 09:07

details

Original poster
chocolateyay · 17/05/2015 11:38

Do you know what the deal is with a fleet car regarding scratches and this GS lime that? We have on street parking and there's always some bastard who walks past with a brolly, decides to dump crap (not literally) on your roof, or a cat who decides to use your bonnet as a slide...

OP posts:
prh47bridge · 17/05/2015 11:55

Again it depends on your company. If they run a large fleet of company cars the lease company is likely to be a lot more flexible about what is acceptable condition for a car being returned than if your company only has a handful of vehicles. Some companies will deal with any scratches and other minor damage themselves, others will expect you to get them fixed before returning the car. Note that if you opt to get a car on a personal lease instead of taking the company car you will be expected to deal with anything other than very minor damage before you return the car.

If you want to work out which will be cheaper you need to work out the costs both ways and compare.

If you go with the company car there are two costs:

  • you won't get the car allowance, but remember this is taxable. So if, say, you pay 40% tax and the allowance is £500 per month you will only be "losing" £300 per month.
  • you will pay additional tax because you've got a company car.

If you decide to buy the costs are:

  • the cost of buying the car including any finance costs. If you would opt for a personal lease don't forget any mileage charge that might be payable.
  • servicing (which is easy to underestimate)
  • tyres
  • insurance

Add them up and compare. If the figures are close I would go with the company car so that your employer takes all the risk around servicing and insurance costs.

Original poster
chocolateyay · 17/05/2015 11:58

What happens with regards to small scratches, oh, such as would be made by some bastard doing a starsky and hutch bonnet slide on it?

We have on street parking and it happens...

OP posts:
prh47bridge · 17/05/2015 14:36

See the first paragraph of my last answer.

You really are not going to get the answers you want on here. Many of them depend on your company's policy.

bbcessex · 18/05/2015 15:18

In my experience, companies only want you take a fleet car because they have them with unexpired leases from employees who have left.
You still have to pay tax, which if I recall, is considerable and is based on the original list price of the car.

Car allowance is the far better options. It is taxed as cash through your payroll (I think) but you can do what you want with it.

prh47bridge · 18/05/2015 17:44

I disagree with the last poster. Some companies insist that you must have a car that meets certain requirements if you take the car allowance. If you don't do that you don't get the car allowance.

Car allowance may be a better option but without a lot more information it is impossible to tell.

Original poster
chocolateyay · 18/05/2015 17:47

Its quite a 'green' company, so I suspect a hummer is out of the question!

OP posts:
New posts on this thread. Refresh page