Reply With QuoteNot complex at all, the allowance is taxable like income, the milage allowance assuming you get it is not, it comes in your expenses, max allowable per mile is 45p for the first 10k miles in the tax year then 25p thereafter.
Currently running a company car and as part of the joyous TUPE process I’ll be having an allowance instead.
I was under the assumption the £600/month allowance will be subject to tax and NI as extra income. Someone mentioned at work there is more complexity to the tex treatment of the £600.
I can find nothing online to suggest this is the case. Anyone got any insight?
Thanks
Steve
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Not complex at all, the allowance is taxable like income, the milage allowance assuming you get it is not, it comes in your expenses, max allowable per mile is 45p for the first 10k miles in the tax year then 25p thereafter.
Cheers..
Jase
I get a car allowance and it's subject to tax and NI. As far as I'm aware it's classed as additional income, assuming it's paid into your salary each month.
Thanks, as I thought, treated as additional income, taxed and NI’d at your marginal rate.
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Don't view it as a car allowance. See it as a £7200p.a. payrise with normal income tax and NI apply.
You can get yourself a £1k banger if you want and pocket the rest.
My thoughts exactly!Originally Posted by ViperStripes
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If you’re required to provide a car, it will probably have to be less than 5 years old, have 4 seats and not be a convertible.
I bag the cash and drive an old Touran... I only do about 2-3k work miles a year, so, simply not worth it for me... we are looking forward to a very nice summer holiday as result of not feeling the need to run a new car
If your work pay you less than 45p a mile, don’t forget to do your self assessment tax return to get the money back
Probably?? Surely that depends on company policy and each and every company runs different guidelines.
The company I work for has no car rules other than you can spend your 45p did the first 10k miles in any way you see fit. Drive a 15 year old van and that is ok. Drive a 3 litre barge and that is also ok.
Agreed on first point, neutral to 'banger' - that would need exploring depending on cash allowance policy.
I think policy is <5 years old, not sure about seats, but I suspect no one checks anyway.
I’d take wifeys car in if they start asking!
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It can get a little more complicated if you get paid a car allowance and you are paid less than the 45p/25p business mileage allowance. In this situation you are able to claim an NIC refund on part on the car allowance which makes up the shortfall.
Can I be the first to suggest an MX5 then?
A Mk1 obviously
It's true many companies have a 'fit for purpose' clause, but some don't.
Years back, when there was a variable mileage rate (over 2 litres was more per mile) a colleague of mine ran a 15 year old 525i BMW
M
Mine has clauses about age and doors but I opted out back in 2004 and to date nobody has ever asked for any details of the car I drive.
Opting out was the choice I took. It changed my car choosing decisions considerably. Rather than choosing a car influenced by company car tax and emissions I was able to choose a car based on what I wanted to drive.
cash allowance drivers are fuelling the 'personal contract' explosion...I think given the choice, I would opt out of a traditional company car scheme.
The real value in company car schemes comes in where you can get a car which is otherwise desirable to you but has an engine option with very low co2 to keep the company car tax coefficient as low as possible. Lexus IS300h and BMW 330e exist for this very purpose. There are other factors at play, like whether you pay for your own fuel and the list price of said cars (as this is what the car tax is calculated based on) but it's worth doing the numbers before committing that money to go through the personal tax/NI sieve and paying for a car yourself.
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