Car allowances

[cheezemonkhai]

So what's the current deal with company travel mileage claims, car allowances and also what you can claim on a company car.

I'm aware that it's currently 45p/25p on the mileage for your own car, but what does happens when it's a car that you've got through a car allowance?

Also what exactly is a decent rate for a company car these days?

How much would you expect to get for:

- Something like a 1 series, Octavia TDI/Passat Estate or similar class of car?

- An exec Saloon, such as an Audi A4/A5 2.0TDI, 3 Series or C class.

(Nothing too flashy, but not poverty spec to the point it shows it is)?

Finally can anyone explain how the taxation works on this these days?

Ta

[hertsnminds]

If you run your own business you can claim whatever figure you want for a milage allowance. However, when you reach a certain amount for the year HMRC suddenly take an interest in the figures. As the tax rules change at least every 6 months I would always advise talking to an accountant to see what the current situation is as well as any proposed changes.

This is the HMRC website discussing car and car fuel benefit http://www.hmrc.gov.uk/calcs/cars.htm

[cheezemonkhai]

It would be a car allowance with me employed, so I'm more curious as to what people get for a car allowance.

Ta

[trundlenut]

Do you get an extra amount on top of your wages? Do you pay tax and NI on the allowance.

If so you can get up to 45/25p a mile. I used to be in this position but I only got about 10p a mile to cover fuel so I claimed tax relief on the difference (20% on 30p).

Sent from my Nexus 4 using Tapatalk 2

[lol-lol]

So what's the current deal with company travel mileage claims, car allowances and also what you can claim on a company car.

I'm aware that it's currently 45p/25p on the mileage for your own car, but what does happens when it's a car that you've got through a car allowance?

Also what exactly is a decent rate for a company car these days?

How much would you expect to get for:

- Something like a 1 series, Octavia TDI/Passat Estate or similar class of car?

- An exec Saloon, such as an Audi A4/A5 2.0TDI, 3 Series or C class.

(Nothing too flashy, but not poverty spec to the point it shows it is)?

Finally can anyone explain how the taxation works on this these days?

Ta

Well my understanding is......

The car allowance is actually just treated as addition pay and is taxed accordingly except it does not count as part of the employees or employers pension contribution.

The 45p (up to 10K miles) and 25p (over 10k miles) rate, apparently, can be claimed as tax relief as you would have to pay this.

Car allowances range from £300 to about £750 I am led to beleive in my firm but after tax I doubt anybody real is getting enough to cover a decent car doing very high mileages. That said better than nothing whic I use to get with HMRC effectively.

Fuel card can be a real benefit.

[trundlenut]

Well my understanding is......

The car allowance is actually just treated as addition pay and is taxed accordingly except it does not count as part of the employees or employers pension contribution.

The 45p (up to 10K miles) and 25p (over 10k miles) rate, apparently, can be claimed as tax relief as you would have to pay this.

Car allowances range from £300 to about £750 I am led to beleive in my firm but after tax I doubt anybody real is getting enough to cover a decent car doing very high mileages. That said better than nothing whic I use to get with HMRC effectively.

Fuel card can be a real benefit.

That's pretty much the position I used to be in. I got about £330 per month but it was dependent on grade.

Sent from my Nexus 4 using Tapatalk 2

[gadgetman]

Usually the firm will work out what it costs them to get their car, maintain and insure it.

Typically most businesses would offer £3-400 for something Mondeo sized.

Check your company car policy for opting out. Usually you'll need cat 1 business use, fully maintained and may even have to have a minimum size /spec depending on your role.

Generally payment amounts are too low, so the assumption is they pay for their use and you top it up to get a better car.

As a friend does. Instead of the mid spec focus, he has a fairly loaded BMW M3. Ashe sees it, if he has to do the miles he wants a decent car. Downside is car is worthless at the end due to the miles and excess mileage charges on his BMW finance.

His employer stipulate car must be under 3.5 yrs old, Mondeo sized, diesel, fully insured for company use and if off the road any loans car must match company policy stipulations. So if he has a service or accident, he has to hire something of a similar size.

He is also expected to make the car available for whatever the company would expect if it was their car during his working hours. Be that taking coworkers to a meeting, carrying parts/equipment etc etc.

Are you opting out to top up and get better, or simply not to pay any more than given?

[Dr Zoidberg]

We have four bands for company cars and allowances, and ours are pretty good, though the majority of people who get a car genuinely need it to do their jobs..

Band A is up to £19k list price for company car or £440 per month on the allowance.

Band B is up to £23k or £550 per month.

Band C is up to £25k or £660 per month.

Band D is up to £30k or £725 per month.

If you have a company car you get a fuel card which will cost you extra in tax.

If you have the allowance you can claim fuel costs for business miles, the exact amount depending on fuel type and engine size.

People do then claim tax relief on the difference between the mileage claimed and the 45p/25p figure.

The allowance is treated the same as your salary for taxation purposes, so you'll lose either 32% or 42% depending on whether you are a basic or higher rate person.

Our vehicles are leased for three years, and if you have the car allowance you are expected to run something of a similar age.

[slider]

I currently get 45ppm when using my own car for work but just signed up to a company lease deal.

With our scheme employees pay so much a month to cover private use of the lease car, insure and put all the fuel in, but reclaim mileage costs and therefore only pay benefit in Kind for the "private" portion of the cars value.

Don't have the exact figures in front of me but it will cost me around £165 per month plus £20 tax for a Civic 1.6 Dtec EX. Reclaimable mileage rate is 25p for the first band then drops to 12p (first band is supposed to cover fuel and insurance costs, second band fuel only). This is based on 12K private and 18K work miles

[nickguzzi]

Blimy - 45p! When I had a job with fuel allowance about 25 yrs ago, we got 40p then. That was when I first got a Diesel. Some months it nigh on doubled my take home.

[lol-lol]

Blimy - 45p! When I had a job with fuel allowance about 25 yrs ago, we got 40p then. That was when I first got a Diesel. Some months it nigh on doubled my take home.

Pahhh, 40p, 45p.

There use to be another class of pence per mile for cars over 2 litre which was around up to around ten years ago ie 63 ppm!

There was a search on by visiting Officers and Senior Civil Servants to find those cars which were just over the 2 litre mark so they got the migher mileage rate but did not have a complete gas guzzler.

I recall the 2.3 litre Ford's were favourites, I preferred the 2.6 litre SD1 Rover that the cops sometime used. I think 26 mpg was average but 30 mpg was achievable with care.

Petrol prices were half what they are now so figure that one.

[GentleGiant]

Petrol prices were half what they are now so figure that one.

Try less than a third, yet the allowance hasnt changed in about 25 years.

[BossFox]

The few who can manage with an electric car reap large benefits, as do the company.

[cheezemonkhai]

FWIW, I don't believe there would be an option for a co car, just an allowance.

I'm just trying to figure out if the amount is sensible or derisory and also what I'd be able to claim in ppm for fuel and insurance.

[The Ships Cat]

£560 per month extra to your normal wages and taxed with wages, 20.5p per mile , I cover all costs , insurance , tax , servicing, fuel, etc If you buy right and look after the car it can be a nice little earner.

[lol-lol]

Try less than a third, yet the allowance hasnt changed in about 25 years.

There is some argument that cars have, on average, got two or three percent more fuel efficient each year so the fuel element of PPM due to increased cost is offset by the average car being more fuel efficent but the feeling by the thousands who use it in the Civil Service is that it is way under funding running a car.

Interestingly, I feel, that what use to and can happy is that you use your car up to 10K miles and then say "no I am not using it" again until April until the new Tax year starts. I have seen senior Servant go mad when this happens and employee then choose to use Public Transport or pool cars. Many Civil Servants are now forced to use public transport as the car option is effectively removed and this approximate halfs the efficiency of doing the visiting work. Dogma over logic in so many areas. Do not miss that aspect of the Civil Service.

I am just annoyed that company's car allowances seem to get overlooked in the pay and bonuses review hence the just lose against inflation year after year and become even less of a proper subside!

[GentleGiant]

Not sure I agree with that efficiency percentage, all the makers lie about the real mpg of their cars, and if you want a near like for like comparison, my 1982 Audi 100 2.2 petrol could wipe the floor with most modern cars with similar sized petrol engines, giving me about 36mpg (urban) and 50mpg (extra urban). On the motorway at 100mph I used to average about 44mpg, a figure my current Mitsubishi 2.4 couldnt reach even when I drove back from London doing 55mph.

Go back to 60's/70's cars and I agree that more modern cars are more fuel efficient, especially Ford; I remember being impressed at getting 25mpg out of my 1.6 Dagenham Dustbin.

A large part of the problem is the large amounts of additives in the fuel, I remember Top Gear doing a test and getting substantially further on a tank of "raw" lead free petrol than a branded one; then there is the fact that most newer cars carry hideously large amounts of unneeded crap around in them, electric this, electric that, electric fart filter, etc; so weigh an awful lot more (and ARE a lot bigger), than the equivalent car from 10,20,30 years ago.

[lol-lol]

Not sure I agree with that efficiency percentage, all the makers lie about the real mpg of their cars, and if you want a near like for like comparison, my 1982 Audi 100 2.2 petrol could wipe the floor with most modern cars with similar sized petrol engines, giving me about 36mpg (urban) and 50mpg (extra urban). On the motorway at 100mph I used to average about 44mpg, a figure my current Mitsubishi 2.4 couldnt reach even when I drove back from London doing 55mph. Go back to 60's/70's cars and I agree that more modern cars are more fuel efficient, especially Ford; I remember being impressed at getting 25mpg out of my 1.6 Dagenham Dustbin. A large part of the problem is the large amounts of additives in the fuel, I remember Top Gear doing a test and getting substantially further on a tank of "raw" lead free petrol than a branded one; then there is the fact that most newer cars carry hideously large amounts of unneeded crap around in them, electric this, electric that, electric fart filter, etc; so weigh an awful lot more (and ARE a lot bigger), than the equivalent car from 10,20,30 years ago.

As an engine producing a certain amount of horsepower I am confident that the thermal efficiency has improved vastly. Worth remembering cars have doubled in weight over the last 30 years and are only now dropping back in weight. My rather loved Escort Mk2, 1300 cc I recall, I thought was rather good. Probably 35-40 mpg, being a Ford quite tall geared in top. Think it was 50 or 60 hp and did most things well.

Only fair to compare engines of the same output but then the vehicles they are fitted to are much safer.

Naturally aspirated petrols are about 25% efficient, direct injection turo petrols around 35% currently and turbo-diesels approaching 50%. Look at the improvement in the M5 and M3 fuel economy whilst increasing peformance.

I predict the R8 will be turbo in the next year or two but lose a couple of cylinders off the base and higher performance model and hence it will not sound as nice. Sad but inevitable.

[gadgetman]

FWIW, I don't believe there would be an option for a co car, just an allowance.

I'm just trying to figure out if the amount is sensible or derisory and also what I'd be able to claim in ppm for fuel and insurance.

Is it due to role status or required to fulfil the role?

[lol-lol]

Is it due to role status or required to fulfil the role?

Directly supplied company cars are getting increasingly rare as they are so tax inefficient plus the company the employee works for carries so much liability.

Lease arrangement which are personal leases between the employee and the lease company which is underwritten by the employing company have become a more dominant arrangement and the car allowance is the other increasingly common arrangement.

Car allowance is painful when taxed at 40%, personal lease often limiting as to what car and mileage and all that. No arrangement is perfect unless you do the Philip Green and live abroad in a tax haven and use aircraft which are tax free and use tax fre fuel.

[Dr Zoidberg]

I've not heard of underwritten personal leases. Do you have any more details?

[lol-lol]

I've not heard of underwritten personal leases. Do you have any more details?

Had a quick look if any of the car companies quote the details but it looks like such arrangements are held in the arrangements between the employer and the lease company. As someone who had these arrangement it worked that if you left the company employment you the employee were not left with all, or often about half of the outstanding lease payments for the remainder of the term but it was underwritten and insuranced by the employer should that eventuality happen. Presumed it was not too onerous, something like 10 or 20% of the remaining payments as long as the condition and mileage were within parameters.

That is what I hate about leases. Cannot go crazy on the mileage and cannot treat it like a slob ie it is not really your own to do with as you wish.

Our company car allowance only stipulates four doors I think and does not restrict to diesel like many do these days. Though I have seen a couple of employees with Range Sports doing 22 mpg but with a fuel card that is not so painful.

[cheezemonkhai]

Is it due to role status or required to fulfil the role?

Both, more the former though as it's about creating the right impression although plenty of miles will be done. I'd say 20 to 25k miles a year.

Edited 2 June, 2013 by cheezemonkhai