How does company car allowance work

As mentioned above, the cost of fuel, maintenance, taxes, and reimbursements all influence how much the car allowance will be. There are many tools and softwares available online to calculate your fuel costs. One worth using is FuelEconomy. The AAA is an established repair and maintenance company, providing emergency repair assistance to those across the USA.

It depends on the car in particular. Car insurance can vary greatly from one company to another and depends on what you want covered. Using a site like CarInsurance. And finally, make sure to consider depreciation in a vehicle too. This is one of the biggest expenses and differs depending on the type of car the employee picks.

There are plenty of free depreciation calculators online to utilize, such as this one. Mileage is the amount of distance the car covers over time and mileage rates are something that are necessary to consider. The amount of CO2 emissions produced can also influence the charges on the vehicle.

These rates differ depending on the vehicle and tend to be updated quarterly—so make sure you keep up to date. For example:. HMRC has a full list of advisory mileage rates , which is worth checking out to calculate what you can offer to your employees. There are also differences for vehicles used for charity and medical moving purposes. These mileage rates are important for businesses when trying to get a clearer overview of necessary costs. A mileage allowance, unlike the car allowance, is tax-free —worth considering when making your decision.

Most people receive the allowance as a monthly lump sum. But does that monthly payment cover all business vehicle costs? A standard vehicle allowance is a monthly compensation for the costs of using a motor vehicle for work. This payment is typically part of a paycheck. You just do your job and enjoy what essentially amounts to a perk. But problems can arise when your work-related driving costs exceed the amount of your allowance. See survey results here. Any vehicle reimbursement program should cover the costs of use and ownership, since the employee is required to possess a vehicle for the job.

However, it is reasonable to expect your employer to cover all vehicle costs required of you to complete your job. Insurance and depreciation often constitute more than half of these costs , so make sure to include them.

Estimating the business costs of your vehicle and comparing these to your allowance is worth the time. But make sure to compare your costs to the after-tax amount if your payment is taxed. A car allowance is taxable unless you substantiate business use of the payment. This is called a mileage allowance, or mileage substantiation.

Hope this helps Karen. Can anyone offer guidance on what the best course of action is? I would envision my total mileage being about 20k split 15k business and 5k personal.

I would look to take a BMW M3 or similar on the scheme. I've tried some of the calculators but found them pretty inflexible in that they tend to compare to 'purchasing' a new car through a hire purchase scheme rather than someone already owning a car. All guidance appreciated!!! Mickyp Forumite 55 Posts.