Company car allowance

undecidedsteve · 16 Jan 2019 at 12:39

Hi All
I have been offered a job as Field Service Engineer with a car allowance of £550 per month and fuel allowance at HMRC rates .45p for 1st 10k and .25p after 10k miles.
I can purchase anything at any age , type etc.
My only question and doubt is that I will be driving up to 30,000 business miles a year excluding personal which would probably be up to 3000 miles.
I am concerned as to whether this is a good deal or not?
What do you think? Any suggestions?
Steve

Mercenary Keyboard Warrior · 16 Jan 2019 at 13:10

30k miles pa is quite a lot, anything decent is quite likely to cost you more in depreciation and running costs than your allowance covers (once you pay tax on it)
You should in theory of course add in the costs of running your current motor

Your riskier approaches are, run something older or newer but already with high miles
Go PCP, take it out for low mileage and VT close to the end. But make 100% sure you will pay more than 50% off before the end, so that you can VT. Its certainly not risk free but its an option

This site will probably help you

https://www.fleetnews.co.uk/car-running-costs-calculator#

undecidedsteve · 16 Jan 2019 at 13:19

Sorry what is VT?

200sols · 16 Jan 2019 at 13:21

Do they not offer a company car?

Mercenary Keyboard Warrior · 16 Jan 2019 at 13:22

undecidedsteve said:
Sorry what is VT?

Sorry voluntary termination, means to exit early and hand it back.

undecidedsteve · 16 Jan 2019 at 13:37

200sols said:
Do they not offer a company car?

No company car on offer no. I have an offer of 36,000 annual salary and I suppose I am saving by not having to pay BIK on a vehicle I am still uncertain

undecidedsteve · 16 Jan 2019 at 13:38

Mercenary Keyboard Warrior said:
Sorry voluntary termination, means to exit early and hand it back.

Ah ok I was not aware I could do that! Thanks for the advice.

200sols · 16 Jan 2019 at 13:44

undecidedsteve said:
No company car on offer no. I have an offer of 36,000 annual salary and I suppose I am saving by not having to pay BIK on a vehicle I am still uncertain

I assume you will finance the car?

You are saving on the tax, but at 30000 annual mileage your servicing and maintenance costs will be high and your (pre tax) £550 car allowance will be swallowed up by the PCP/lease cost on anything decent at such a high mileage.

Phemo · 16 Jan 2019 at 13:50

I'm in a fairly similar position. I do around 30k a year, sometimes more and I get a car allowance but not as good as yours would be - mine's only £400 a month. What I chose to do was spend around 10-11k on a 3 ish year old car with the intention of keeping it for around 3 years as the car allowance mostly covers that anyway after tax. The way I see it is that anything it gives me beyond 3 years is a bonus as the car's pretty much been paid up and then some anyway and the car's value will have taken a pounding after that point.

I've been lucky with my previous cars - I got 120k miles out of one over 3 years, 105k out of another in 3 and a half years and my last one I only owned for 10 months but did over 20k in that with no issues. None of them have ever given me any significant bills that weren't consumables but I realise that's partly down to luck, but also because they spent most of their lives on motorways they had a fairly easy life despite the high miles.

chroniclard · 16 Jan 2019 at 13:59

There are plenty of fully serviced lease deals around on decent cars for that sort of budget.

undecidedsteve · 16 Jan 2019 at 14:00

200sols said:
I assume you will finance the car?

You are saving on the tax, but at 30000 annual mileage your servicing and maintenance costs will be high and your (pre tax) £550 car allowance will be swallowed up by the PCP/lease cost on anything decent at such a high mileage.

Yes it would be me who had to finance it. I think about everything that is required - Breakdown cover, Maintenance costs, servicing tyres etc also when it breaksdown I will have to pay for a loan car. I am trying to see the benefits but as yet I am not convinced.

undecidedsteve · 16 Jan 2019 at 14:01

chroniclard said:
There are plenty of fully serviced lease deals around on decent cars for that sort of budget.

I will take a look thanks!

Pudney · 16 Jan 2019 at 14:35

200sols said:
I assume you will finance the car?

You are saving on the tax, but at 30000 annual mileage your servicing and maintenance costs will be high and your (pre tax) £550 car allowance will be swallowed up by the PCP/lease cost on anything decent at such a high mileage.

But he gets 45p per mile for the first 10k miles and 25p thereafter which should cover a lot, if not all, of the fuel and maintenance costs.

Phemo · 16 Jan 2019 at 14:54

Exactly. As mentioned above, I'm in a similar position. The amount of money you can make on the mileage claims certainly helps. As an example, for me taking a trip to my office which is a 118 mile round trip - for the first 10k miles I claim £53 for a single 118 mile trip when it actually costs me about £12 in fuel. Even at the 25p per mile rate that's still £29.50 so it's quite a bit of extra cash either way especially when you're doing 30k a year.

10k miles in my car costs around £1000 in fuel. I claim a total of £4500 for that same 10k miles so that's £3.5k 'profit' there alone.

undecidedsteve · 16 Jan 2019 at 15:39

I want to thank all of you as I just did not understand this way of doing things. Always had Co Cars in the past and never worried about anything apart from the BIK. To be honest the employers are really nice people and the industry very stable for the next 10 years considering brexit. I am tempted to go down the one to two year old car route with around 20 to 30,000 on the clock and pay around 7 to £8000. A small estate like a Fiat Tipo (new shape) appeals to me. I have considered a van also.

Kenai · 16 Jan 2019 at 18:13

Field Service Engineer as a job title would have me looking at decent size estates as a minimum - it screams 'cart tools or spares around a lot' so you'll want big space imo.

Phemo · 16 Jan 2019 at 18:18

undecidedsteve said:
I am tempted to go down the one to two year old car route with around 20 to 30,000 on the clock and pay around 7 to £8000. A small estate like a Fiat Tipo (new shape) appeals to me. I have considered a van also.

Should do the trick. Not sure what the Tipo is like to drive etc but it looks pretty smart. Are you going to need to cart much stuff around? If not then there's probably not much point getting an estate or van unless you have good reason to. You obviously don't want to be doing that kind of mileage in a crappy little ecobox but then there's no point driving something big and beefy around if you don't need it. Especially since you want to maximise, within reason, the benefit of the mileage claims

Scrutinize · 16 Jan 2019 at 19:44

undecidedsteve said:
Hi All
I have been offered a job as Field Service Engineer with a car allowance of £550 per month and fuel allowance at HMRC rates .45p for 1st 10k and .25p after 10k miles.

Assuming your salary is £36k pa as per your post then

Pre car allowance net (after tax/ni) pm £2321

With car allowance (£42.6k) £2696pm

Pension deductions, taxable benefits, student loans etc would change this.

Net gain £375pm

Fuel
10k miles at 45p (£1,125pm months 1-4) £4,500
17k miles at 25p (£531pm months 5-12) £4,250

Depending on your car and fuel type over 27k miles is going to cost you c£3k-£4k, thus say £5,250 net gain so £438pm

Fuel reimbursements are an expense so net of tax.

Total for net car allowance and fuel benefit net of fuel used is £812.5pm (servicing varies hugely depending on brand, model, intervals and age so it's excluded)

Leasing on 30k pa is not cheap and you need to look at a proper commercial business to business lease to get the best deals at this level, esp with risk of excess mileage.

You also want something reliable given reliance on your job and mileage.

Rotty · 16 Jan 2019 at 19:58

200sols said:
Do they not offer a company car?

with a reasonable monthly and the full allowable mileage rates you would be mad to consider a company car

Rotty · 16 Jan 2019 at 19:59

Kenai said:
Field Service Engineer as a job title would have me looking at decent size estates as a minimum.

I do it in the F Type