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AteMoose

Is It Worth It?

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I'm in the higher rate tax bracket and I have been offered another job with a bigger salary and a company car allowance. The rise in salary isnt anything spectacular due to half of the difference going to the tax man, however there is a car allowance and a bonus which will bump things up marginally. Unfortunately I'm not entirely sure its worthwhile; I currently often cycle to work. Does anyone else get a car allowance, is it worth changing jobs for one? I did a quick google search and they look tax free but is there anything I should look for/watch out for?

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A car allowance is taxed as regular income. Don't think of it as anything other than part of your salary. The only thing to bear in mind is that it's usually not taken into account when calculating employers' pension contributions.

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A car allowance is taxed as regular income. Don't think of it as anything other than part of your salary. The only thing to bear in mind is that it's usually not taken into account when calculating employers' pension contributions.

Yeah, it's a bit of a mine field and in many cases ends up costing you, if you are the type own and run a nice newer car anyway it would be worth while if not it might be more trouble than it's worth.

I'd definitely suggest looking at the implications carefully when calculating if it's worth it.

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I'm in the higher rate tax bracket and I have been offered another job with a bigger salary and a company car allowance. The rise in salary isnt anything spectacular due to half of the difference going to the tax man, however there is a car allowance and a bonus which will bump things up marginally. Unfortunately I'm not entirely sure its worthwhile; I currently often cycle to work. Does anyone else get a car allowance, is it worth changing jobs for one? I did a quick google search and they look tax free but is there anything I should look for/watch out for?

You should be more interested in the reasons why they want you to have a motor. Are you expecting to be travelling a lot?

Do you get per diem and mileage allowance for travel, or is it included in the 'car allowance'?

And yes, my cousin used to work for a bank and they gave her a car allowance.. she got a lovely SAAB G3 diesel if I recall...however she got taxed on it and it ended up being a pain in the backside.

Read the fine print, or post it on here... blank out your details of course.

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A car allowance is taxed as regular income. Don't think of it as anything other than part of your salary. The only thing to bear in mind is that it's usually not taken into account when calculating employers' pension contributions.

That's how I see it. It's just salary that's not included as pension.

Nothing to do with a car. You can still ride your bike.

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Never mind the salary and the benefits, do you actually want to switch job?

I mean are you fed up with your current job and want to change, or are you only thinking of changing because of the slightly better pay and benefits?

I wouldn't leave a good job with good colleagues purely for more money, I normally only change job when I'm fed up with the current one as changing jobs is always a risk, you never know if you will actually like the new job and the new colleagues.

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Never mind the salary and the benefits, do you actually want to switch job?

Agreed. Moving job just for a small amount of money isn't a good idea idea unless you're really hard up. If, on the other hand, you're fed up with the current one then, fair enough, go for it.

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I'm in the higher rate tax bracket and I have been offered another job with a bigger salary and a company car allowance. The rise in salary isnt anything spectacular due to half of the difference going to the tax man, however there is a car allowance and a bonus which will bump things up marginally. Unfortunately I'm not entirely sure its worthwhile; I currently often cycle to work. Does anyone else get a car allowance, is it worth changing jobs for one? I did a quick google search and they look tax free but is there anything I should look for/watch out for?

Probably depends whether they are going to sort the car out for you or buy one for you up to a certain budget. Don't know if they've changed the rules but it used to be taxes as a percentage of the list price every year (where the percentage was a function of CO2 emissions).

Eg. £25k list price.

CO2 emissions (table was available on HMRC website) say = 22% (used to get a 3% difference for diesel but that's probably changed now)

It used to be that a Lotus Elise was classed the same as a Ford Fiesta (although the list price is obviously different).

If CO2 figure comes in at say 22% then you are (were) taxed as a benefit in kind on that. As a higher rate tax payer this means you would be paying:

£25k * 22% * 40% = £2,200 in tax every year.

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Never mind the salary and the benefits, do you actually want to switch job?

I mean are you fed up with your current job and want to change, or are you only thinking of changing because of the slightly better pay and benefits?

I wouldn't leave a good job with good colleagues purely for more money, I normally only change job when I'm fed up with the current one as changing jobs is always a risk, you never know if you will actually like the new job and the new colleagues.

Plus, don't you lose certain benefits, such as redundancy based on continuous length of employment ?

What you say to me is right, in the respect that sometimes you can be extremely competent but still go to a new place where you don't fit in or click with the business style.

In an old business your reputation can be based on what you have delivered previously, whereas in a new one your credibility is up there to be tested, especially if you have been bought in over the heads of some young guns who think the job should have been theirs.

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IMHO a company car is only worthwhile if you get all of your private mileage included.. that benefit in kind is worth holding on to.

Reason being that the tax at 20% or 40% of a car* at RRP is not much better and in some cases much worse than what you could lease the same car for yourself and surely then they'll reimburse you for business mileage at 40pence per mile upto 10,000 miles and 20p thereafter which is tax free.

Fuel wise we use ~£300 a month in fuel which roughly equates to what we pay for the BIK on both the car and private mileage.

* ie list price £28k co2 of 22% = £6,160 and 40% of that is £204 a month.

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IMHO a company car is only worthwhile if you get all of your private mileage included.. that benefit in kind is worth holding on to.

Reason being that the tax at 20% or 40% of a car* at RRP is not much better and in some cases much worse than what you could lease the same car for yourself and surely then they'll reimburse you for business mileage at 40pence per mile upto 10,000 miles and 20p thereafter which is tax free.

Fuel wise we use ~£300 a month in fuel which roughly equates to what we pay for the BIK on both the car and private mileage.

* ie list price £28k co2 of 22% = £6,160 and 40% of that is £204 a month.

Clearly you need lessons in your monthly "expense" returns :lol:

.........Salesman of the month HAS always been the "employee" who manages to include their mortgage repayment!!!! :lol:

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Yeah, it's a bit of a mine field and in many cases ends up costing you, if you are the type own and run a nice newer car anyway it would be worth while if not it might be more trouble than it's worth.

I'd definitely suggest looking at the implications carefully when calculating if it's worth it.

No its not. A car allowance is simply an amount added to your salary and taxed as regular income. You may be getting confused with the benefit in kind charge where a vehicle capable of private use is provided by your employer. Then it becomes a minefield because of the way the deemed value of the benefit is calculated. It is currently based on the CO2 emissions of the vehicle.

Ever wondered why car manufacturers place so much effort in reducing the listed CO2 emissions. Company car tax is one of the factors.

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I now have more details, I'm midlands based

Current salary is about 50k (but only because of paid overtime)....however low transport costs as I can cycle in/get the train

The new one doesnt have paid overtime

£55k basic salary + 5k car allowance (added straight to basic)+ £5k bonus = 65k total

The annoying things is PAYE, its more money but I dont really see it/it will get sucked up travelling 45mins each way. I think it will be a yes, the company feels like it will have more oomph and direction and I will be able to have more influence, but you know what they say. The grass is always greener, and you dont know until you make the move.

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Not worth having a company car IMHO

Wife had one for 3 years, and it took a hell of a lot of phone calls once she left that job and lost the car to get ANYONE to honour her company no claims (or the no claims she'd built up in the 10 years prior on a private car). In the end Direct Line were the only ones who even offered, and that was only 10% rather than the 60 or 70% she would have kept if she'd not had a non-private car for a few years (never claimed on the company car either)

I did the sums and I worked it out that on her mileage (about average I think) she paid the same for a company car as she would have done for a 2 year old private one the same make and model BUT she would have had an asset at the end of the 3 years she had it, rather than just handing it back

An (as mentioned above) she lost almost all her no claims too.

Rip off if you ask me

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I now have more details, I'm midlands based

Current salary is about 50k (but only because of paid overtime)....however low transport costs as I can cycle in/get the train

The new one doesnt have paid overtime

£55k basic salary + 5k car allowance (added straight to basic)+ £5k bonus = 65k total

The annoying things is PAYE, its more money but I dont really see it/it will get sucked up travelling 45mins each way. I think it will be a yes, the company feels like it will have more oomph and direction and I will be able to have more influence, but you know what they say. The grass is always greener, and you dont know until you make the move.

The travelling means you're effectively working another day a week for that increase. Presume the bonus is not automatic and given the car allowance stuff - I'm not sure it would be worth it to me. That said, perhaps you are already working the extra hours due to overtime.

Job interviews are two way; they are trying to sell the company to you as much as vice versa - and the dangle is a well known negotiation tactic that's used in those circumstances.

I think it comes down to how desperately you need the extra cash in the end. Most people are not getting any payrise, so anything that helps with inflation is worth considering.

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If it is a car allowance, you own the car and insure it for business use. Therefore, no issue with NCD if you move on.

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Indeed. Mine had to be < 6 years and < 100k miles and in good roadworthy condition. By the time it got to 6 years I was doing very little business mileage so I was able keep it by not bothering to claim for mileage in my expenses (reg no. had to be entered and was checked). Some got around it with private plates.

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  • 244 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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