At the company where I work, if you’re entitled to a company car, you get an amount that you can either put towards a company car or you can take a car allowance and use your own car. However, if you take the car allowance, you don’t get as much as if you went for the company car and I’m wondering why.
The amount is £200pm so you can put that £200 towards a company car (not that £200 goes very far and you have to pay a lot of your own money as well) but if you wanted to take the car allowance instead, you only get 80% of this amount, so £160pm, so by the time you have paid tax and national insurance on that £160, it’s much less.
Apparently the reason it’s only 80% is for tax purposes but I’m a nosey person and I just want to know why……it doesn’t even affect me as I don’t get a company car/car allowance, but as I said, I'm really nosey! I mean…curious and enquiring (that sounds better than nosey!)
Can anyone explain what the tax reason is, just to satisfy my curiosity?