cost of company car, can anyone work out ?

[ewan221]

My company car is up to be changed in a few months so have option of new car or take an allowance of £550 a month. Have not really thought about the actual cost to me until got my tax code through today, and its been calculated at £7600 a year.

 

Not totally sure how this works but assume if I decide to take the allowance I would be better off by £550 x 40% tax. Plus the £7600 again x the tax ?

 

So I'd be better of by about £470 a month in total ?

 

Or am I speaking crap

[Ricey]

Isn't a company car is a taxable benefit in kind (ie you get the benefit of a 'thing' rather than a monetary amount) and the allowance is also a taxable source of income (you get 550 and x amount is taken in tax from your payslip).

 

Eg company car max allowance £550 a month means your tempted to get a car as close to the value of £550 as you can to milk the benefit in full but you will pay x£ in tax on this high figure.

 

Take allowance in cash and you pay tax as above on the £550 allowance but you can go get a less flash car for £200 a month and pocket the difference.

 

Summary - Company car gets you a flash car as a taxable benefit in kind (I.e You pay tax out of your wages)

Allowance gets you a less flash car and potentially a bit of cash in your hand after you have paid tax on the 550.

[Bockaaarck]

Isn't a company car is a taxable benefit in kind (ie you get the benefit of a 'thing' rather than a monetary amount) and the allowance is also a taxable source of income (you get 550 and x amount is taken in tax from your payslip).

 

Eg company car max allowance £550 a month means your tempted to get a car as close to the value of £550 as you can to milk the benefit in full but you will pay x£ in tax on this high figure.

 

Take allowance in cash and you pay tax as above on the £550 allowance but you can go get a less flash car for £200 a month and pocket the difference.

 

Summary - Company car gets you a flash car as a taxable benefit in kind (I.e You pay tax out of your wages)

Allowance gets you a less flash car and potentially a bit of cash in your hand after you have paid tax on the 550.

 

+1 on this, you get stung big time in relation to a company car as a taxable benefit. In your shoes I'd take the allowance, even though that will be taxed. I would then look to get a smart 'shed' outright, if you think your position in the company and the nature of your job will allow that.

 

So spend a little bit of money on a decent shed, get the benefit of the allowance to use for fuel for work, spending on work lunches or even buying a spandex cat suit if you so wish

[glrnet]

Isn't a company car is a taxable benefit in kind (ie you get the benefit of a 'thing' rather than a monetary amount) and the allowance is also a taxable source of income (you get 550 and x amount is taken in tax from your payslip).

 

Eg company car max allowance £550 a month means your tempted to get a car as close to the value of £550 as you can to milk the benefit in full but you will pay x£ in tax on this high figure.

 

Take allowance in cash and you pay tax as above on the £550 allowance but you can go get a less flash car for £200 a month and pocket the difference.

 

Summary - Company car gets you a flash car as a taxable benefit in kind (I.e You pay tax out of your wages)

Allowance gets you a less flash car and potentially a bit of cash in your hand after you have paid tax on the 550.

 

+1 on this, you get stung big time in relation to a company car as a taxable benefit. In your shoes I'd take the allowance, even though that will be taxed. I would then look to get a smart 'shed' outright, if you think your position in the company and the nature of your job will allow that.

 

So spend a little bit of money on a decent shed, get the benefit of the allowance to use for fuel for work, spending on work lunches or even buying a spandex cat suit if you so wish

 

It's a bloody good job SMD doesn't get a company car allowance

[ewan221]

Spoke to my payroll person if I don’t take the company car i would be better off by £472 a month in total with the allowance and savings in tax.

 

Typical cars on the list to choose are a BMW 320, Audi A4, Merc C class or a compact 4x4 such as Ford Kuga or a Tiguan but basically anything with 4 doors up to value of £32 K

 

So it’s now to weigh up if having a new car that I don’t have to pay tax, insurance, servicing, repairs for etc is worth £472 a month

 

The policy states that if I take the allowance I must have available a 4-door car, that promotes the image of a senior manager of the company - so suppose that’s pretty open.