Kevin Mc

I've heard loads of times about people coming out of their company car schemes and onto an allowance.

I've worked this out a few times, and each time I come to the conclusion that the allowance would buy a £3000 car (at best), yet loads of people seem to be looking at nearly new cars for £12k. (My allowance is approx. £4500 before income tax).

I'd love to run an interesting car with the allowance, but a £3000 car (with the potential hassle of costly servicing and repairs) doesn't look very appealing against something like a brand new Skoda Octavia vRS (for example).

Am I doing my figures wrong? I'm using the following to calculate the savings / allowance coming out of the company scheme:

Company Car Tax (saving)
Contribution towards company car (saving)
Allowance after income tax
Business Miles Allowance (40p per mile)

Am I missing something? I don't think I am - I can only assume that other peeps put more of their own money into these better cars.

Andy486

It's the level of depreciation not the cost of buying the car. If you don't have the money to hand then you also have to include the cost of borrowing it.

Generally, if you do lots of miles you're better off with the company car otherwise go private. Some also take the company car so they don't have to worry about it. Horses for courses.

dr_ming

Depends how many years you consider. My car allowance pays for my WRX and all running costs after ~6 years. At the end of that time, I still have the car, so I think it's worth it.

Also, I doubt you will get 40p/mile if you take the allowance and run your own car. Most companies will only pay the company car drivers rate (9p/mile diesel, 12p/mile petrol), although you can claim 40% of the difference [(0.40 - 0.12) x 0.4 = 11.2p/mile for petrol] back from the tax man.

Hope this helps.

rotty

I am in the process of doing the same my figures work as follows

Money from Company £462 per month = £273 net
Money saved on comapany car tax = £220 per month
Non payment of contribution for private use = £83 per month
Tax relief based on 40/25p per mile less the fuel money I get = £175 per month

Total = £751 per month

Outgoings Car loan , new STi8 = £540 per month for 4 years
Insurance £80 per month
Maintenance , road tax , tracker subs etc = £150 per month

Total = £770 per month

At the end of 3 years I will owe approx £6.5-£7k on finance

residual should be at least that - 70k miles

The car will be under warranty ( may have to extend if I go over 60k miles ) and will be comp insured so there shouldn't be too many surprises




[Edited by rotty - 12/3/2003 4:47:29 PM]

Kevin Mc

I was taking it over 3 years (same as the company lease) so I suppose over 6 years that would get me into decent car territory I like the thought of the allowance as I can get whatever car I want, and change when I want, rather than being stuck with the same car for 3 years. One option is to get a banger run around for as long as I (and the banger ) can take it, and save the rest for a decent car.

Kevin Mc

Big problem for me is that I get my private mileage paid (less a £50 per month contribution), so I'd be looking at £252 per month extra cost to cover the petrol

Even having said this, I'm still interested in the allowance route because of the freedom to choose (I've been as pessimistic as I could in the monthly calculations too). Apart from the vRS Octavia, none of the other possible company cars look particularly appealing. Anything half decent or interesting seems to be above £400 per month (I'd get about £370 max for a co. lease car).

Suppose it is a nice problem to have, as I remember what it was like before I had the company car, and had to pay for a car anyway!

druddle

Maybe http://www.cashorcar.com can help ?

Dave

Kevin Mc

Thanks for that Dave, I'll check that out.

I've been told about another calculator on the AA's site here which gives me a lot more a month than I was expecting (about £200 per month more, which is a hell of a difference). Hope it's right.

Main difference was down to "Private Fuel Benefit Tax Saving" which I hadn't considered.

Means the difference between an £8k car and a £3k car which is vast.

Kevin Mc

The www.cashorcar.com website confirmed what the AA site said - looks like I may be opting out after all. Cheers for the info.

skoosh

I opted out last year after having my brand new mondeo for 3 months, luckily I have a flexible RD and he shipped the car to another branch.

I receive £400 per month car allowance and claim approximately £300 per month @ 40p per mile due to company mileage, it's swings and roundabouts.

The BIG advantage is that I now attend managers meetings and park my nice shiny, loud, fast, privately owned Scoob wagon right in the middle of all those orrible mondeos and focus's...!!!!!

Cost of scoob ownership...........PRICELESS.

Skoosh.

dba

Its unusual for a company to pay full whack 40p p/mile if you opt out,I can only get 9p after opt out,

rotty

True , I get the opt out money then just 11.5p per mile , 9p sounds very stingy though