Car allowance or company car

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This is going to be taxed to the hilt. There is a Revenue notion of taxing on its pollution index but this is a slight variation on High Tax v. Slightly Higher Tax. The lease car companies (google 'em) had online calculators to show how poor you'd end up on a company car.

The more you're willing to pay for vanity, the greater the value a[n ever new] co. car is!

Now *this* is what got me to click Reply. Fuel cards begin to make some sort of sense if you use a lot of petrol (diesel, whatever), if you drink the stuff, bathe in it, run the cooker and central heating on it, have a home electricity generator as well as burn up the miles then they may pay off. Our pal Gordon silently jacked up the employee & employer tax on fuel cards in 2003. None of my chums who motor regularly kept their fuel cards after April 4 2004.

Sadly the days of company car 'n' gas perks are over.Investigate the alternatives..

I dont think this is necessarily correct. If you have a private car, and the company pays your petrol, then your liability is tax on the petrol spent on private mileage (its pro-rated). hence, you are getting your private petrol at 60% of the actual cost. If you have a company car, then sure there is a massive tax downside to a fuel card.

But the days of private car 'n' gas perk is still here.

FWIW and back to original Q, one point to ponder. If you have a company car, the tax is only going to get worse in successive years.

Finally, might be worth looking at whether a car is a benefit overall or if you might be better off getting taxis or public transport to normal place of work even if you have to pay for them out of the allowance (after tax is deducted of course).

Not quite the way the tax office explained it to me.

If your company provides a fuel card for ALL fuel, including private, you either have to prove that you contribute the full amount for private use back to the company or you will be taxed on ALL your fuel at Inland Revenue rates (can't remember but it's something like tax on 2k per annum). You cannot just pay tax on a proportion of the fuel. It's a set figure.

I may be wrong, but this is what I was told by the Inland Revenue and the last two companies I have worked for.

Regards, Ian

Not what happens here. I keep a log of business use, then pro rate the spend, then pay tax on the amount that was private useage. Example. Cost of petrol 1500, business use 33%, tax on 1000 = 400 to pay. Are you sure what you are outlining isnt *just* for company cars?

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We were given calculations for tax year 2003/04 and on showing that for private cars a spend of something of the order of 14000 quid would be needed to cover the high tax scalp. For company cars, this was on top of the benefit in kind. And the employer paid a wodge for the petrol too. It would only need access to a fuel card for 1 day in the

365 of that tax year to be taxed to the hilt. Biz mileage of 40p/mi is a bargain in contrast. But I confess to not having those numbers anymore. The then 3 of us flung the fuel cards back as fast as they could travel.

It does seem hard to get this info off the web. Accountants OTOH have reams of scary numbers, no matter what tax band you're in.

Open to more precise (not hard..) number crunching. The fin wizard did say that the govt had done the fuel card scheme in in a "pre announcement" in the 2003 budget if that helps, he also said it was not publicised well and he could see the whole fuel card scheme dying a death very quickly, except for very - and I mean very - high biz mileage users.

I think you are referring to the provision of a Fuel Card in association with a company car?

For a privately owned car, the claim is based on the IR approved mileage rates.

What is your estimated annual business and private mileage?

I'm leaning towards the company car I think mainly since I don't fancy the risk of repair costs etc on my own car. Also, I am not very keen on locking away my cash in a car that depreciates in value

Apparently I can opt out of the fuel card, and claim costs of business mileage at a rate of 12p per mile.

I seem to have read somewhere that the IR rate for mileage is 40p per mile - does this mean that I can claim 40p - 12p = 28p per mile back through my tax return and reduce my tax liability by the number of business miles multiplied by 28p?

So for example if I do 10000 business miles in one year, does that mean that my taxable income is reduced by 28p x 10000 = £2800??

Or (which seems more sensible) does this only apply if I use my own car?

Thanks again

Yes, you can. I've done it in the past, when the company reimbursed me at 45p, and the rate for my car was 63p.

This applies only to using one's own vehicle, and not a company one.

In those days, one could claim finance interest also.