If Rodgers & Hammerstein were discussing this, I reckon they’d start at the beginning, a very good place to start…
So (the temptation to write ‘a needle pulling thread’ is strong, but I’m going to resist)… A company car scheme is where a business offers its staff the use of a vehicle – vans and motorcycles included – for personal and business travel. And a car allowance is an additional amount in your monthly pay packet designed to cover the cost of your own vehicle.
If that’s as simple as do-re-mi, the difficult bit is figuring out which route is going to be best for you. If you’re in this position – or are thinking of switching from one option to the other – please get in touch. We’d love to have an informal (no strings and no cost, that’s the Whittle Hall Finance promise) chat.
Benefits of a company car scheme
One big plus of a company car scheme is that it enables you to get a new model every three or four years, with all the benefits that brings. We’re talking higher spec, the latest technology and more better fuel efficiency. And of course, not having to find a buyer when it’s time to get rid.
If though, like Peter Capaldi, you think that four years in long enough in one job then this may not be your top consideration, so what else is there to write home about?
Well, it’s stress-free, as there’s unlikely to be any unexpected costs: an employer usually takes care of servicing, insurance, maintenance and breakdown cover.
As far as extra cash in your pocket is concerned, if the scheme also covers fuel, then being able to claim back after a trip to the petrol station is a winner, even if this is taxable. All in all, the likelihood is that if your daily commute is of decent distance then there’ll be a financial benefit to opting for a company car scheme.
This is especially the case if you choose your vehicle carefully from the list of available options, taking note of benefit-in-kind, which determines you how much tax you’re going to have to pay. You can find more information about benefit-in-kind and choosing a tax efficient company car by calling the WHF team on 01925 713212.
Benefits of a car allowance
With a car allowance, you get a wider choice over what you drive – it’s your decision and your car, after all – though your company may still set restrictions, to ensure employees are representing the company appropriately.
Your employer may set certain restrictions on what you can drive under a car allowance.
If you’re able to find a vehicle that’s cheaper per month to lease than the chunk of money you get under the allowance scheme after tax then you keep the difference, which may be a big incentive.
Though of course, you are responsible for insurance, maintaining the car and keeping a track on business mileage.
Whatever your position, drop us a quick line about your circumstances and we can help you work through the best solution for you.
Photo, top: Let Whittle Hall Finance help with the sums [credit: Marco Verch]