Should I get a company car, or take the allowance?
What are the pros & cons of either option?
Answers:
You need to sit down and estimate, from your driving habits, how many personal miles you expect to put on a company car.
Compute that at 12p/mile.
This requires a record to maintained.
Assumimg all maintenance and repairs would be the company's expense.
The average calculated mileage for personal use is about 15,000 miles per year, more or less.
Compare that to owning a car, payments per month, insurance, petrol, wear and tear, depreciation, and maintenance.
Reimbursement of 450 lbs./month.
You state taxable, but again, you would have to keep a record of all business mileage which would be deductable from your taxable income.
Here in the US, mileage allowance is all that one can deduct.
All other expenses are the owner's responsibility.
Would 450 lbs. per month, less your personal mileage charge, equal or exceed the cost of ownership?
Bear in mind depreciation on a personal car. It's a big consideration. If business mileage is high, the depreciation can eat up a car's value very quickly.
Just off the top of my head, I think a company car is more economical. 12p/mile seems fairly reasonable for personal use, if all other expenses are the company's responsibility..
Here in the states, most manufacturers consider the life of a car @110,000 miles.
Based on that figure, in a past business, for me, that's about two years and the car was fully depreciated. That doesn't mean it was worthless, but the mileage decreased the value greatly. Certainly that number is not carved in stone.
Sounds similar to my situation, take the allowance because the tax on a company car is a killer (it is based on Co2 emissions). I took the allowance which is the same as you £450/month I then leased a brand new Audi through Lex for £350/month. Save my self £100!! When you lease a car you can get a full maintenance contract so all you need to do is insure it and put petrol in it.
insurance- unless u still have your own car u will lose out on your ncd year, it dont sound like much but over the years can hike up the cost of your insurence.
take the allowance. your going to pay for either of them on your taxes unless your employer wont charge you for using a company car.using your own vehicle can be costly should it break down and have to replace it.yes you may have to purchase a new car but payments are deductible in many areas.
It does depend on the mileage, because if it's over 10,000 your own car will cost & depreciate at a higher rate than they are paying.
If you already have a car - then you've got another one to look after, clean and park and generally worry about
However
Company cars are usually basic models, crappy colours etc etc.
For what they're offering you could buy something for £10,000 and run it for 3 years and it be yours, yours, yours.
Deppends on the car. Tax is calculated based on CO2 emmissions so find out the official rating for the car(s) potentially on offer.
Check here for more details.
http://www.hmrc.gov.uk/cars/
Personally, if your compay are charging you for your use of the car I would be very careful about what your tax liabilities are because you could find yourself the company and the taxman.
add note to izzy. and the car is yours to keep! you don't have to give it back if and when you leave the company's employ!
There are several websites that can help answer your question, as much depends on the costs etc! Therefore, check out
www.parkers.co.uk (this has company car/private car calculator)
www.autotrader.co.uk (as above)
www.emmerson-hill.co.uk (this site gives running costs for cars, taking into account breakdown cover, insurance, maintenance, etc)
Getting a company car has many advantages, they pay for business miles and etc, but if you take the allowance you can buy a car and know if you lose your job within 4 years, you will have the car for any other purpose.
Hope this helps you with your decision.
youve got to take into account how many private miles you do how many you do for them
but i would let them supply the car and fiddle your miles to cover private use also 12p a mile is bloody dear
i had a company car they paid all expenses and it cost me over £100 a week its a complicated old game
look into lease hire that includes m#r that way you know exactly how much a month the car will cost and then astimate how much fuel you need
I think take the allowance and get a lease car. I just got my brand new Honda Civic today as a lease car and I love it, it's also much cheaper than £450 a month!!
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