How is a car allowance calcuated?

How is a car allowance calcuated?

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I have been offered a salary progression that includes a company car as a benefit. However, my company no longer offers the car but only a car benefit payment. How is this calculated? I assumed that it is based on the equivalent benefit of a car (about £4500 pa for the car I would have been offered) but my employer says no, it is based on miles driven and has offered me £1000. Am I being taken for a ride??? Thanks.
Kevin

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By AnonymousUser
10th May 2002 12:25

Conflicts
A company can decide how much it wants to give as salary, rather than to give a car. It can decide in umpteen ways. It should take into consideration several factors, its own costs, benefits, cashflows, your situation, business mileage and your costs.

I have developed an employee car cost calculator CD based on Excel. It calculates over a 3 year period what the costs of ownership, and compares to the cost of a company car. It allows you to input gross extra salary for your car. Its purpose it to hepl you decide between company car or extra salary.

It sometimes throws up some interesting results. One springs to mind. The employee was better off owning their own car, compared to having the company car, even if no salary was given! Try being an Employer and selling that to the employee!

You could use it as a bargaining tool, but remember that the company has its own agenda, and that there are conflicts of interest.

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By neileg
09th May 2002 09:15

Gift horse and mouth?
I wouldn't have thought that Inland Revenue benefit calculation had anything to do with the value of the car!

If your employer claims it is based on miles driven, do they mean company miles, or private miles? You appear to be viewing the car as a perk while the company are looking to reimburse you for busines mileage.

On the other hand, have you a contractual entitlement to the company car? I suspect not, and you are being offered £1,000 more in salary than you would otherwise get!

Are you expected to use your own car for business use? If so you will be able to claim relief on the mileage traveled based on Revenue mileage rates.

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