Thoughts on car allowance and fuel payment offer

DB_SamX

DB_SamX

DB_SamX

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Looking at changing jobs and I have an offer which includes car allowance. To date, I have never had this so trying to work out impact of my expenditure. There is no option for personal company car but there are pool cars.

I asked about conditions related to car allowance and got this back:
"The conditions around the car allowance are that you are required to have a car available for business use of an appropriate standard, condition and reliability for someone representing the Practice and to have insurance to cover business use."

I have a reasonably well maintained 2004 Toyota Celica so no idea if I would have to change. I will check my my insurers cost of having business use added.

Company mileage rate is 16p/miles when using my own car. Does this look reasonable based on your experiences? I believe I can claim tax relief on the 45p-16p difference.
 
DB_SamX said:
Looking at changing jobs and I have an offer which includes car allowance. To date, I have never had this so trying to work out impact of my expenditure. There is no option for personal company car but there are pool cars.

I asked about conditions related to car allowance and got this back:
"The conditions around the car allowance are that you are required to have a car available for business use of an appropriate standard, condition and reliability for someone representing the Practice and to have insurance to cover business use."

I have a reasonably well maintained 2004 Toyota Celica so no idea if I would have to change. I will check my my insurers cost of having business use added.

Company mileage rate is 16p/miles when using my own car. Does this look reasonable based on your experiences? I believe I can claim tax relief on the 45p-16p difference. At the moment, with no car allowance, I can claim the full 45p/mile from my employer.
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How much is the allowance? Will you be paying 40% PAYE on it?

Often there are stipulations around being under warranty or maximum age so thats worth checking. Adding business use doesnt normally add much, if anything, to the premium.

How many business miles are you likely to be doing, and do they offer a higher mileage rate without the allowance? Often having no allowance and a higher mileage rate can work out better as there's no PAYE on mileage expenses
 
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My car allowance stipulates a similar condition, but also requires no older than 6 years and less than 150,000 miles.

To that end my 2008 Honda Civic with 130,000 miles is being traded in this weekend for a 2013 model with 7000 miles.

An 11 year old car may be disallowed, I would check.
 
The biggest problem you are likely to have is the fact the car is 3 door rather than the age.

You'll need to read the conditions (which sound usefully loose) but any time I've had an allowance 4 doors plus is stipulated even where there is no age requirement
 
rodenal said:
The biggest problem you are likely to have is the fact the car is 3 door rather than the age.

You'll need to read the conditions (which sound usefully loose) but any time I've had an allowance 4 doors plus is stipulated even where there is no age requirement
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This. My conditions are Astra-sized or larger, 4 doors and maximum of 5 years old.

Whether it makes more sense to take the full mileage rate or the allowance depends on:
1. the size of the allowance
2. whether you pay basic or higher rate tax
3. how many business miles you do
 
Size of allowance is £4k.

I would still be within basic 20% tax bracket.

I cannot see myself doing more than 2000 miles, if at all; it is an office based job with meetings say on a weekly basis within the county or not far. As said, they do have pool cars for such travel arrangements usually.

I think I will have to get more specifics. Having to change car to meet any age/mileage/etc requirements would mean that I would probably have to spend all the allowance just to meet their criteria, and the basic pay allowance would work out as a big pay decrease from my current position. I otherwise have no plan to change my car; I still like it and maintain it with a view to keeping it for a few more years.
 
You might find you're not allowed to use a pool car if you're an "essential" car user (eg one receiving an allowance) - but double check on the specifics and the mileage rate for casual car users then it's easy enough to work out
 
DB_SamX said:
Size of allowance is £4k.

I would still be within basic 20% tax bracket.
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Based on that you'd be MUCH better off choosing the allowance over the full mileage allowance, assuming you wouldn't have to change cars to meet the requirements.

Car allowance = £4,000
Mileage allowance = £900
 
I'm quite thankful that my company doesn't put stupid restrictions on what car I have to use.

The only one is that there must be enough doors for each occupant to have a direct exit from the vehicle - so I couldn't use a 2 door coupe, and carry 2 passengers.


I'm also quite lucky in that I get a car allowance, AND 45p per mile :)
 
Havana_UK said:
Based on that you'd be MUCH better off choosing the allowance over the full mileage allowance, assuming you wouldn't have to change cars to meet the requirements.

Car allowance = £4,000
Mileage allowance = £900
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Think I have come to the same conclusion; all depends if I have to change cars.

With regards to claiming the fuel, have I understood correctly?

16p/m from company + 0.2x(45p/m-16p/m) tax relief to be claimed= 16 + 5.8 = 21.8p/m total?
 
DB_SamX said:
Think I have come to the same conclusion; all depends if I have to change cars.

With regards to claiming the fuel, have I understood correctly?

16p/m from company + 0.2x(45p/m-16p/m) tax relief to be claimed= 16 + 5.8 = 21.8p/m total?
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Yes, that's right, but it's only for the first 10,000 business miles. After the first 10,000 miles it's 25ppm.

So, your company will pay you 16ppm as you submit your expenses, you get the rest back from the tax man when you've submitted your self assessment.
 
Havana_UK said:
Yes, that's right, but it's only for the first 10,000 business miles. After the first 10,000 miles it's 25ppm.

So, your company will pay you 16ppm as you submit your expenses, you get the rest back from the tax man when you've submitted your self assessment.
Click to expand...

Thanks, as I assumed.
 
Reviving this thread, I am filling in the online P87 form.

I have done ~1200 business miles. The form automatically works out that, x 45p = £540, and I have manually put in that my firm has paid me back £192.

The form then automatically calculates that the total mileage allowance relief = £348 i.e. the difference.

Up to here, it all makes sense.

But at the bottom of the form, it automatically summarises that Total net allowable expenses you are claiming for the year is £348.

Shouldn't the amount I get back be only 20% of £348? The wording gives the impression I will get £348 back.

/edit. Or am I being stupid and that form just ask for total expenses, and they will do the maths (20% calc) later based on the final figure?
 
Your bottom assumption is correct :) you are claiming £348 allowable expense which will come off the headline number you get taxed on.
 
I'm on a car allowance and am still in my 2003 Accord, been meaning to change it but have never got round to it. Apart from the initial tell us about your vehicle they've never ever asked about it or asked to view the car although I suspect that one day they might eventually get round to reviewing my car status.
 
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