Should you take a Company Car vs Car Allowance??

Should you take a Company Car vs Car Allowance??
This video could be also be titled "Car Allowance Explained" as it hopefully helps explain in simple terms the main benefits of a company car vs the benefits of a car allowance, it also looks at the downsides of a company car in the UK as well as the downsides of a car allowance.
We also touch on things like UK mileage allowance, private fuel benefit, car leasing vs buying and much more
Other useful videos:-
Company Car Tax Explained : • UK Company Car Tax Exp...
UK Tax Codes Explained : • UK Tax Codes & Income ...
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[@DefinitelyNotAGuru]

Visit my site and support me here : notaguru.co.uk/support-me/ Click through Amazon here : amzn.to/3dLVstT Buy me a Coffee at : ko-fi.com/notaguru

[@jamescarter7663]

Great video Jim. Seems like 80% of the time a company car is more suitable. Not having to worry about the running costs etc is half of the battle and especially not signing yourself up to finance for work. That’s my opinion from watching your video anyways. I am sure everyone’s circumstances are different.

[@DefinitelyNotAGuru]

That’s probably the case for most people mate, yes. 👍

[@apttodo]

Great video! Very clear and helpful.

[@DefinitelyNotAGuru]

Thanks

[@owainparry1262]

Really good explanation- helped cement my thinking and other advice I'd been given around taking an EV company car!

[@DefinitelyNotAGuru]

Glad it was helpful Owain

[@cmgilmour123]

Great help, thanks for the video

[@DefinitelyNotAGuru]

👍👍

[@Cerebrotes]

Thanks for the info!

[@DefinitelyNotAGuru]

Thanks

[@gregtdmorrison]

Great video, thank you!

[@DefinitelyNotAGuru]

Thanks

[@h.bsfaithfulservant4136]

Interesting video Jim 👍 I’ll check out your video on tax codes as soon as I’ve stopped immersing myself in the Olympics!

[@DefinitelyNotAGuru]

Stop watching that beach volleyball H.B's Faithful Servant and get watching my videos 👀👍😂

[@h.bsfaithfulservant4136]

@@DefinitelyNotAGuru Haha 😆… you know your own tricks best 😁!

[@DefinitelyNotAGuru]

😂😂

[@colinlee8367]

Good video. Thank you.

[@DefinitelyNotAGuru]

Thanks 🙏

[@tonyfreeman3683]

Excellent stuff fella, the wife is out 3 days a week and covers a lot of the north from notts upwards, so mileage wise gonna go for the company car. Thanks 👍🏻👍🏻

[@DefinitelyNotAGuru]

That’s it, if you do big miles it’s a bit of a no brainier as long as you don’t want a Range Rover 😁👍

[@tonyfreeman3683]

@@DefinitelyNotAGuru managed to talk her into an A3 hybrid😆👍🏻

[@DefinitelyNotAGuru]

@@tonyfreeman3683 good choice 👍

[@nevarius9010]

New drinking game, take a shot everytime he says "Company Car" :D

[@DefinitelyNotAGuru]

👍

[@NONstopNINJA5]

Great vid thanks for breaking it down! Subbed :^)

[@DefinitelyNotAGuru]

Thanks dude

[@johnroberts9212]

Hi Jim. I'm commenting mainly to help with the infamous algorithm. It's certainly an important topic for many but, thankfully, now that I have escaped the rat race it's not one that troubles me personally!

[@DefinitelyNotAGuru]

Thanks John Roberts, really appreciate it - we will get there 😁 👍

[@memduherdogar150]

Thanks for the video, I used company car for 7 years than I took my car allowance and purchased 5 years old bmw 330d now coming to 4 years in the ownership, im considering whether to go back to company car or not I do around 12k miles per year. I think if I purchased economical car would of been better but I had to get timing chain and brakes done cost almost £2k plus tyres etc. when I had company car I never had any expense like that.

[@DefinitelyNotAGuru]

I think now it only really makes sense for most to get a full EV or a PHEV as a company car, tax rules will no doubt change again soon makign them much more expensive than they currently are but god knows what will happen with diesels and petrols - I'm the the BIK rate will skyrocket before long so be careful.

[@Idontknowwhatnametopick]

I have a 508 I pay 235 pm. Through tax. Company car and fuel i will never bother using my own car for work. So worth it. And I can't have anything less from now on.

[@DefinitelyNotAGuru]

👍

[@Africanqueen263]

Thank you

[@DefinitelyNotAGuru]

Thanks buddy

[@redx11845]

Great video. My situation on a pcp deal and unable to get out of it (early stages) I need to take a car allowance That said I once filed a p11d and claimed buiness miles only and paid no tax, can the same be done with the car allowance. As all miles will in fact be buiness miles. The new role is a massive pay rise, but if I am to be taxed more then it in respect isn't a pay rise, in my calculations Kind regards

[@DefinitelyNotAGuru]

Car allowance is basically just a further pay rise, you’ll get taxed on it as you would salary.

[@97hills]

Nice video. Any thoughts on the "true" cost of 4 year term company car vs 8k annual car allowance (with 40% tax rate). Obviously getting a PHEV or EV is a great deal in terms of tax on that company car. However, I will also be giving up around 20k of take-home income from the car allowance (over 4 years) plus any resale value of the car. So if I was to buy a 2nd hand £20k car now I'm guessing it would have a resale value of about £10k in 4 years time. So I would be 10k better off but obviously minus the cost of maintaining the car, insurance etc. So if that was £1.5k a year then I'd be 1k a year better off in pure monetary terms if I went for the allowance? Could probably add another £1-1.5k that as I'm currently likely to go for a car with an 8% BIK rate (so will have to pay a bit of tax on the the company car) I feel I've probably answered my own question because the lack of hassle and getting a brand new car is probably easily worth the £2-2.5k a year. But I was interested to hear your thoughts? Many thanks

[@DefinitelyNotAGuru]

I’d still take the company car Steve. I had company cars for about 15 years and really miss the lack of hassle as much as the company car tax made me feel like the prettiest boy at scout camp….so to speak.

[@ycrno1]

Jim we have the option of a commercial 4x4 vehicle which has a lower tax rate, I am torn between that and a company car

[@DefinitelyNotAGuru]

Just comes down to your preference really mate

[@Matthewhew30]

Hi! Good to find a video that explains all of this. I’m moving jobs and changing from a car allowance to a company car. I’m trying to do some salary comparisons, do you know if I need to be marking the BIK payment as deducted pre or post tax? Is it a salary sacrifice type of thing? Thanks 👍

[@DefinitelyNotAGuru]

HMRC will automatically deduct it once your employer informs them or puts in a P11D but it takes an age for them to set it up so expect a big back payment at some stage.

[@Matthewhew30]

@@DefinitelyNotAGuru thanks for the reply. Sorry if I’m sounding dumb but, a back log? In what sense? Will once month suffer from a larger pay drop to cover a handful of deductions?

[@DefinitelyNotAGuru]

@@Matthewhew30 so let’s say they don’t get around to charging you until month 6, you’ll get a tax adjustment at that stage where they will go after the back payments as well as what you will normally pay going forwards. Often means the first year has a glorious start and a horrible end.

[@martinmartin9093]

Hi, briliant explanation, I would like to ask, is car allowance part of hourly rate?

[@DefinitelyNotAGuru]

It’s generally paid separately on your payslip but it’s taxed as any other wage is.

[@andymorris8981]

Great video, the only issue these days is the lease rates on most ev's, my company leverages the allowance as the lease rate. So £600 allowance or lease.... Although they stipulate which lessor we use, so finding a decent range ev for under £600 is a challenge. Welcome any suggestions!

[@DefinitelyNotAGuru]

£600 is not a lot if you’re doing big annual mileage which I guess you probably are.

[@Himoutdoors]

Hi Jim, I had a company car in my contract, they stopped doing it and now offer the allowance instead. I was expecting 45/25 rate, but they pay 18p. I understand I can claim the difference (27p) in mileage allowance relief. Should they be paying the 45/25p rate? I think they should. The 18p doesn’t even cover the fuel cost let alone the rest. It’s not the end of the world as I can claim a rebate, but it feels wrong to be out of pocket until the end of the year. Do I have grounds to complain about their stingy mileage rate, or is it their choice? Agree with your conclusions. High mileage = company car, low mileage = car allowance Cheers

[@DefinitelyNotAGuru]

I've heard of other companies doing the same thing so I guess it's legal but I'm not up to date with the current regs etc. An accountant would be the one to ask really. I agree with you though that it feels totally wrong!

[@deangoddard821]

First ‘like’ and first comment oh yeah 😆👍

[@DefinitelyNotAGuru]

Dean Goddard, you da man - now just get 100k of your friends to watch too 😂 thanks mate 👍

[@Mattik_tok]

You’ve convinced me! EV being ordered.

[@DefinitelyNotAGuru]

👍

[@laurenthomas3437]

Maybe I need to watch again but I cant work out what the best option is. I have a new job offer with a £5k per year car allowance. My own car is a financed Merc GLA which has taken a battering from my current role. Im opting for a company car at my new job but I dont understand the tax my new salary is £40k but I dont have the details on the car as yet

[@DefinitelyNotAGuru]

So the car might push you into 40% tax, depending on co2/bik rate. If it pushes you over the threshold (think about any bonus you might get too) your company car tax will be charged at the 40% rate.

[@joshs5281]

How much would a car allowance generally be, or is it based on business decision?

[@DefinitelyNotAGuru]

Business decision, usually depends on seniority in the business (in most companies anyway).

[@ashley595727]

Question - on a company car do you need a good credit score? Do they run checks?

[@DefinitelyNotAGuru]

Nope. The company is leasing it or buying it, not you.

[@ashley595727]

Thanks for the swift reply. Just been offered a job today with company car as part of package and was anxious and not excited as I have a average credit score so now over the moon. Legend thanks 🎉

[@DefinitelyNotAGuru]

You’re fine mate 👍👍👍

[@michaeltandoh7373]

Hi Who notify the HMRC when you receive a company car. Thank you

[@DefinitelyNotAGuru]

You should do it yourself as soon as possible otherwise they only learn about it when your company submits p11d’s once per year and they will then come after you for back taxes! You can notify them using your personal tax account I believe.

[@michaeltandoh7373]

Thank you

[@DefinitelyNotAGuru]

@@michaeltandoh7373 pleasure 👍

[@ericaeperry]

Hi, Could you give me any advice: my company have made an error and have given me a company car and been paying me 45 pm. They realised after a year that this was an error and now want to offer 15 pm. My friend said I can claim 35 pm in a self assessment form and get the 0.35 p through my tax ? Is this corrrect ?

[@DefinitelyNotAGuru]

I'm not sure but I think you can only claim the remainder from HMRC if you took a car allowance rather than a company car, or are simply using your own car.

[@platriani]

£700 a month allowance. Probably £400 after tax. 7yr old car, but making £120 a week from 45p rate (that’s after actual fuel cost….). Car is not depreciating much, and have BMW warranty for £75 a month. So this car is making me money

[@DefinitelyNotAGuru]

👍👍👍

[@lukebalentine-smith8346]

In discussion with my company, took car allowance claimed. I believe I'm entitled to claim 45p mile for first 10,000 and then 25p there after. Company have said I'm not. Where can I find info to support my argument

[@DefinitelyNotAGuru]

You won’t find any as it’s down your company what they pay you for your mileage.

[@lukebalentine-smith8346]

I have a company car allowance. What can I claim in milage. Extra over the 14p per mile for business miles??

[@DefinitelyNotAGuru]

Whatever your company will pay

[@lukebalentine-smith8346]

Company only paying 14p can I claim difference between that and 45p from hmrc??

[@DefinitelyNotAGuru]

Ok yes, I think you can but you need to call HMRC to discuss your circumstances.

[@chrishaps6846]

!

[@DefinitelyNotAGuru]

👍

[@rickyanthony]

car allowances are usually bullshit unless you already own a car

[@DefinitelyNotAGuru]

👌

[@iniester6724]

Why would that be?

[@rickyanthony]

@@iniester6724 The math. It never covers your expenditure during the time you purchase, operate your vehicle for the company. In the UK and USA at least, the math says you are better offer with a company owned vehicle.

[@M50TAF]

You put so much effort into this to get this low of views

[@DefinitelyNotAGuru]

You win some you lose some, thanks for your support 👍

[@johnnymeringues987]

Keep in mind the 40p you get back per mile up to 10000miles is 4 grand for those 10. Only half of that is fuel. I do about 30000 miles a year so profit about £3500 per year just from this reimbursement. Unless your monthly outgoing for the car is over £700 you will make a profit driving your own car. This does not even take into account the fact you have paid off a car and can sell it every 3 or 4 years

[@DefinitelyNotAGuru]

45p with a lot of employees although only 25 with some 🙏

[@johnnymeringues987]

@@DefinitelyNotAGuru you get anything under the 45p back when you fill out your self assessment tax return. Ie 20p from the company and 25p from hmrc