company car question

[Bagman]

I'm contemplating a job offer from the UK and they have offered 5k a year car allowance or use of a company car (doesn't say anything else as yet). Any advice on this as I haven't lived in the UK for over 10 years and know next to nothing about the pros and cons.

Do I get taxed on the allowance and at what rate?

Also what are the names of any rc clubs in or around Birmingham?

[MatJohnson]

Car Tax - Depends on what car you get will depend on how much you pay back a month, for example, I've got an S40, its only a 1.6 diesel but it costs me around £40 a month in car tax. This is based on me being in the 20% tax bracket. You can use calculators (comcar.co.uk is good) which will tell you how much you pay a month. They give you a benefit in kind figure (so an equivalent amount they think it would be in sallary) and alter your tax code to match that.

With the allowance I'm not sure how that works, i assume its they give you an extra 5k and that pays for your monthly payments on a car?

[Bungleaio]

Car allowance is an additional amount given to you each month and will be taxed at your normal rate.

Depending on your employer you will be able to spend it on whatever you want. Mine doesn't have any limits on what car I have but some may say for example maximum of 8 years old, 4 doors etc.

[WHITTLER555]

Hi, I work for a car leasing company so maybe you could consider the following:

Your £5k allowance can be supplemented by AMAP's which are pence per mile rates you can claim through your tax return, currently they are 45p per mile for the first 10000 business miles and 25p thereafter so you can calculate how much you can claim.
This all sounds great but consider what your £5k + AMAP's less your personal tax rate has to cover.
The cost of the car per month
The Maintenance on said car
The tyres for the car
The insurance for the car, it must be covered for work use and is dependant on personal circumstances
The fuel for the car - diesel is currently £6.50 per gallon in the UK!
Another consideration these days for company's giving cash benefits is Duty of Care which means they are unlikely to let you drive around in an old banger in case you kill yourself in it on business and they get done for corporate manslaughter

The alternative is a company car where you will pay Benefit in Kind on the P11D price of the car. This figure is dependant on what your tax rate is and what Co2 emitting car you are allowed to choose.

My personal opinion on this is that company car is best.
You are likely to be covered for maintenance, insurance and business fuel and you will be in a new car. You are also not liable for the car should you leave the job which you would be if you financed it yourself via the cash allowance.

Hope that helps a bit.

[Bagman]

Thanks boys, I was heading towards the company car route as it's less hassle and looks to be the best value. God knows what it'll be though.