How do car allowances work?

Skiddley

Skiddley

Skiddley

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Joined
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Cheshire
If a package offers a 6K allowance, I assume that is 6K over the year paid as a payment in kind (so taxed 40%)? Hmm + 11% NI?

Does it have to go directly to a leasing scheme? Or does it go straight into my pocket for me to do what I like with?

Do companies usually have 'guidelines' that may dictate the type of car that can be bought?

Looking for a new job, and the most likely opportunity is offering this allowance as a sweetener. I have no idea how these things work.

Skiddy.
 
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- It is classed as normal salary, so is taxed exactly as that would be, so yeah, assuming its on top of a salary of in excess of £39,900 (08/09) it will be at 40%+NI.

- It goes into your pocket, its simply extra salary.

- Depends on the company, mine let you buy what you like within reason. A lot do have guidelines though as obviously you are portraying an image by what you drive to a site.
 
Jez said:
- It is classed as normal salary, so is taxed exactly as that would be, so yeah, assuming its on top of a salary of in excess of £39,900 (08/09) it will be at 40%+NI.

- It goes into your pocket, its simply extra salary.
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The only conditions for mine is, the car must be less than 5 years old and have business insurance.

Wish it was 6k though. :p
 
My problem is I only have one car parking space at my property. And I'm into sports cars, so it'll have to be a 2 seater or i'll go insane. Not sure how it will look turning up at customer sites looking like a flash git... :p

Thanks for the info. Yea 6K is nice, but after Gordon has raped me it'll be worth bugger all.
 
As long as its respectable looking (not a chavvy jap wagon or something) and you arnt going to be required to carry any kit or clients around, then i dont see what difference it being a 2 seater makes at all. Depends on the company but i know mine wouldnt have an issue with it.
 
Shouldn't have to take any clients or kit about. Just turn up at sites as a consultant. Probably a new shape boxster. I'll get the job offer first, then approach the subject :)

Out of interest, how much of a premium would you expect to pay for business insurance over normal personal cover?
 
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I get £462 a month which is £272.58 after stoppages ( 40% tax + 1% NI )

We are allowed to do what we want with it as long as you have a vehicle suitable for work ( no one has ever been told anything was not suitable )

I them get 16p a mile for fuel and claim AMAP tax relief on the difference between 40p a mile ( for 1st 10k then 25p )

I pay no extra for business cover
 
Skiddley said:
At the end of the tax year only? Bit of an accumulating hit to absorb through the year if so.
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you can normally get a credit in advance ( to your tax code ) and then work out the difference at end of tax year

my employer pays it monthly in my salary for me and then makes an annual claim from the tax folks which seems a great method to me
 
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