What's a fair Car Allowance

Associate
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22 Dec 2011
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Just reviewing the companies car allowance, currently our car allowances are set at ;

Band A (Non Manager role) - £5,062.50 PA

Band B (Manager) - £6,187.50 PA

Band C (Directors) - £7,312.50 PA


Does anyone have any figures on the averages of car allowance?


It would be also interesting to hear from the OCUK members opinion on what we are paying is fair or not.
 
Soldato
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Depends on the definition of 'Director' - seems everyone has Director in their job title these days.

The Directors where I work get chauffeurs and helicopters
 
Soldato
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When we did car allowances (we don't any more - we do electric company cars now) we had £9000 per annum for everyone earning over £35,000 per annum and £6000 per annum for people earning under £35000 per annum and then we paid £0.15 per mile for diesel fuel.

The rationale there was that if you were paying 20% income tax then £6000 gave you a budget of X and if you were paying 40% income tax then £9000 also gave you X.

We are a very small company and we have no company car rules apart from it has to be less than 6 years old and not to be obviously dented or scratched. As soon as the battery electric car rules changed so the BIK was 0-2% over the next few years we had a tidal wave of drivers wanting to swap out their ICE car allowance for a company supplied BEV, so that's what we do now.
 
Soldato
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Ours range from £400 for entry level staff to £950 a month for VPs.

It entirely depends on the sector you're in, location etc as to whether you're competitive.
 
Associate
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You lot are lucky!

I get 5k spread over the year in the form of a MAPs, this is taxed at my 40% rate then claim 14p a mile diesel payment as expenses, absolutely nothing towards the value of the car itself or insurance etc, pretty much break even on fuel give or take.
 
Soldato
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Near Northants / MK
I get my Polestar paid for if that's any idea?

Another member of staff has an allowance of £450 but this is just a token amount as it works out what hes paying after tax.

Quite lucky for me to be fair as I went into my P* expecting to pay for it.
 
Soldato
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Managers get £5750, Senior Managers get £6500. Managers would all be on 40% tax and Senior Managers are all likely on higher rate.

The car scheme was canned so it is just paid into salary. It gives you a bit of an artificial cash flow bump as it isn't pensionable nor company share scheme eligible.

I doubt any more than........ 40%? actually use it for a car.

Edit: Forgot to mention we get full 45p a mile for first 10k miles. No claiming tax back nonesense, all done on our behalf. I think it is then 25p a mile?
 
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Soldato
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I get £400 a month so £4800 a year. Quite on the low side but my company pays 35p a mile for the first 10k miles and 20p a mile after that. After deducting actual fuel costs I tend to make over 3k ‘profit’ a year on mileage so it goes some way to making up for the relatively low amount.
 
Soldato
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Wife gets £4000 per year but it's a car allowance in name only. There's no contractual obligation to use it for a car and it's taxed as usual; it's just non qualifying for pension purposes so they don't have to pay 20% of it into her pension pot. She doesn't even use her car for work, its 8:30 - 4:30 in an office.
 

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Soldato
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£4500 pa and 45p the first 10k miles then 25p/mile.

happy enough with that as they don’t mind me running a 4yr old diesel that’s bought and paid for.
 
Joined
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Wilds of suffolk
£8200 a year here
We give some people an extra £1000 i'm not really sure why, some sort of we as the board need to get special treatment or something like that "logic"

Fuel card as well, I have to pay tax and NI on the fuel, but get to claim any business miles at 40p so a few half decent trips and I can run on free fuel for the month in effect.
Worst case zero business miles I in effect get a 58% discount on pump fuel prices ;)
 
Man of Honour
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When we did car allowances (we don't any more - we do electric company cars now) we had £9000 per annum for everyone earning over £35,000 per annum and £6000 per annum for people earning under £35000 per annum and then we paid £0.15 per mile for diesel fuel.

The rationale there was that if you were paying 20% income tax then £6000 gave you a budget of X and if you were paying 40% income tax then £9000 also gave you X.
Must have been a very long time ago if someone on £35k was paying 40% tax, like 15 years ago?
 
Man of Honour
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Gotcha, so it was more that ~£41k was the threshold, around 2008. Still not convinced that both end up with X allowance though, surely the first person is getting roughly 6000*0.8 = ~£4800 net whereas the second person is getting roughly 6000*0.8 + 3000*0.6 = ~£6600 net? If the objective was to give the same net allowance, shouldn't the allowance increase be tapered if it kicks in before you've hit the 40% threshold on basic salary?
 
Soldato
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Gotcha, so it was more that ~£41k was the threshold, around 2008. Still not convinced that both end up with X allowance though, surely the first person is getting roughly 6000*0.8 = ~£4800 net whereas the second person is getting roughly 6000*0.8 + 3000*0.6 = ~£6600 net? If the objective was to give the same net allowance, shouldn't the allowance increase be tapered if it kicks in before you've hit the 40% threshold on basic salary?


Without going into people’s actual exact salaries it did work out the same. We made it specifically so it did. ;)

And we’ve scrapped it because it’s significantly more tax efficient for us to give people BEVs. We’ve never allowed people to see the car allowance as salary. All of our staff are mobile and they need their cars to work, which is why we supply a car or money to source a car. When it was in the company’s and the employee’s favour to get cash and source their own cars, we encouraged that but now it’s clearly back to the company car as the most tax efficient for both parties.

And we have a 100% staff retention rate since 2006 so we must be doing something right.
 
Associate
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South Wales
The option of a company car at around £500 per month all-in (must have maintenance included etc) or £6k per year paid in addition to salary, but it’s obviously taxed. That’s consistent across the board to all staff regardless of level - idea was to stop the elitism etc that was quite rife in the business. It didn’t work obviously :)
 
Soldato
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Thunderdome
I love how an incentive to reward staff for working harder/achieving more can be seen as elitist :(

My company gives me a car allowance, I’d rather they simply increased my base salary, but we all know why they don’t. I obv don’t go around advertising the fact, because not everyone gets one.
 
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