Car Allowance

Soldato
Joined
18 Oct 2002
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4,892
What's a reasonable car allowance these days?

I've not done much business mileage in my own car for about 10 years.

Business mileage will be 3-5K, almost all longer trips 50 miles plus out to customers once or twice a week. Currently a pool car is provided.

Is the standard HMRC 45p rate OK, or should I expect a monthly allowance as well?

I understand that ultimately it's down to what you can negotiate, but I'd like to get a feel for what companies are currently paying.
 
Associate
Joined
11 Jun 2004
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245
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UK
at my company I get the choice of a car leased for myself.... or I can use my own car and get €800 per month, plus 25p per mile.

So what are you driving around in that could possibly cost 800 euros per month?

I'd lease a fiesta and pocket the €700/month and retire at 45 ;)
 
Soldato
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location, location
I get £600 / month and 21ppm.

On this budget I run a brand new (when I bought it) M135i for ~30K miles / year and I'm still better off than I would have been in a 2 litre diesel 3 series company car.
 
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Soldato
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So what are you driving around in that could possibly cost 800 euros per month?

I'd lease a fiesta and pocket the €700/month and retire at 45 ;)

My vehicle is a Lexus IS300H, 20k a year mileage. I sourced it myself.
Full servicing included.

My company pays £540 a month for this. My company also covers all my fuel usage. No per mile crap to worry about. Insurance i sorted out for the vehicle is personal insurance with business too (not just a business policy) this is £900 a year.

So per month
£540 (lease -includes all services, repairs, tyres and other comsumables etc)
£75 (insurance)
Saving myself £50 a month in personal fuel

So £540+75+50 = £665.
€800 = £680 - but you get taxed on car allowance and at 40% tax - would work out at only £408 no thanks.. so I'm much better off.. Note that the same car to lease privately myself would cost more than the £540 as business lease is cheaper. Also note the starting payment of £2k and end payment of the lease of £1k.

Granted I could get a lesser private car myself and pocket the money, but having a new luxury car every 3 years is nice.
 
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Soldato
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We offer a stonking £350 per month plus 11p per mile...

Most people decline both Company Car and Car Allowance, as they say they lose a lot of money on it. Same for Cycle To Work scheme, which is just weird...
 
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Soldato
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I am UK based, I work for a company based in Netherlands.

My basic salary is fixed in GBP, but for car allowance is it paid in GBP but each month worked at the live rate from €800 EURO. same with any bonus or commission.

So actual fact, when the rates were 1.40, €800 would only have been £571.42 back then, of course now it is higher as the rate is 1.17, so it is £683.76. (even worse after tax too)

I get a UK PAYE wage and I'm a proper UK salaried person, liable to UK tax etc. My BIK tax is £90 a month due to being a hybrid car with very low emissions. Any differences would be marginal at best and to be honest I like the lack of hassle each month/year having to sort car tax, etc out.
 
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Soldato
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Why would you decline car allowance? You can't loose money on that?
I dunno.
Our company is all about complicated financial maths that screw you over.
Might be something to do with only covering fuel and not the maintenance, or something, or being stuck in traffic... All I know is that most employees either decline it outright or stop it after a short while, complaining that it costs them money... they're not as bad with maths as me, either!
 
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Soldato
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Why would you decline car allowance? You can't loose money on that?

Oh you can.

So if said person gets £350 a month, but they have a car which is worth £10k, but due to doing 10-15k business mileage could lower the resale value of the car over a 2 year period, then the extra cost in tyres, brakes, extra servicing, and so on... It is easy to lose money on it.
 
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Soldato
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In that case you're a 20% tax payer surely, unelss the allowance bumps you into the 40% band? Best IS300h is at 97g CO2 so falls in the < 99CO2. I'm not saying it's a bad deal, I have a company car but you're missing bits of the maths out ;-)

My basic is just under the 40% tax limit, but any extra screws me into the 40% rate. Which is why a car allowance is a bad move for me.
Also - at the time my personal car was a very thirsty Scooby, which did 15mpg when sat on the motorway doing 70mph. Nobody wants to use that for business, especially when doing 12-15k miles a year for business.
 
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Don
Joined
18 Oct 2002
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21,442
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Wargrave, UK
Why would you decline car allowance? You can't loose money on that?

We get 25ppm a mile if you have car allowance/company car, 45ppm if you don't.

In my old company we worked it out that it was financially in our interest to not take the car allowance if we were doing over 18k business miles per year. This was due to the tiny ppm (11p IIRC) that was given to car allowance holders vs the HMRC rates for people who didn't receive one.
As I was doing 30k miles per year, I refused the car allowance.
 
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Soldato
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Basically any expenses relating to my work, whether it is fuel, lunch, toll road charges etc.

I just provide receipt copies and my company pays me that amount per month seperate to my salary, so nothing is taxed. I believe they do not claim the VAT back as they are not UK VAT registered either.
 
Permabanned
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12,336
Fuel benefit, is rarely a benefit, you need to be doing a stack of private miles (15k plus!) for it to be worth it, certainly if you are a 40% tax payer.

Company cars arent really the perk that they once were imo, i'd love to opt out, but my company wont let me, and even those that can, have to have a car thats less than 3 years old and it must be a 4 door.
 
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