Car Allowance Query

helimachoptor

Hi guys, can someone tell me what deductions are made for people who are paid a car allowance? Is their an online calculator?

Also what do you think is a good amount for a car allowance?

helimachoptor

Anyone!?

Gophur

A car allowance is treated, by Revenue, as income. You must pay full Income tax and USC on the allowance. Your employer will have to pay their normal salary taxes. The only saving for the company is in any pension contributions where such allowances are normally not taken into account.

As for how much is OK? It depends on mileage, use, requirements and if your fuel (private/business) is paid for.

Take a Ford Mondeo, for example, costing €25k. (ish)

Depreciation over 3 years of €15k
Insurance over three years €3k
Servicing / Maintenance, Road tax etc €3k
That's €21k, or €7k p.a.

To fully cover that with an allowance you would require €15k per year allowance.

(Some people would deduct the BIK you would be paying if the employer provides you with a car, to get the NET cost/benefit)


The question was vague, the answer will be vague, until more specifics are provided.

helimachoptor

Thanks gophur. I have an option of a company car which will be a passat/insignia and the option of a car allowance but waiting to find out how much it will be. My business mileage won't go above 1000kms a month so I'll be on the highest BIK rate.

MrDerp

helimachoptor wrote: »

Thanks gophur. I have an option of a company car which will be a passat/insignia and the option of a car allowance but waiting to find out how much it will be. My business mileage won't go above 1000kms a month so I'll be on the highest BIK rate.

We have a scheme at work here, but its an allowance against a lease (taxed as BIK) or cash instead.

The flease is with one company that provides a fleet, and any options have to be paid for by the individual (including metallic paint).

So here, those that have it take the cash (about 800 pm gross) and put the 400 odd net against a carloan for a decent second hand, rather than taking a boggo new car and paying BIK on top of it.

I should add tho, that you'd only get a focus/golf for the fleet money here. Weighed up against the likes of a new passat I think more people would take the car

Gophur

helimachoptor wrote: »

Thanks gophur. I have an option of a company car which will be a passat/insignia and the option of a car allowance but waiting to find out how much it will be. My business mileage won't go above 1000kms a month so I'll be on the highest BIK rate.

OK.

1. What allowance are they proposing?
2. Will they pay for fuel, on top of the allowance? (or is the allowance supposed to cover fuel)
3. Will they pay you mileage on top of an allowance?
4. When will the car be replaced?
5. If you get an allowance, what restrictions are being placed on your choice of car?

helimachoptor

1. What allowance are they proposing? To be confirmed but should know in the next couple of days
2. Will they pay for fuel, on top of the allowance? (or is the allowance supposed to cover fuel) They will pay for fuel
3. Will they pay you mileage on top of an allowance? Yes
4. When will the car be replaced? I will probably buy a 2010 or wait until 2012 and buy a 2011 model, car will be kept for 4/5 years.
5. If you get an allowance, what restrictions are being placed on your choice of car? None so far

Gophur

helimachoptor wrote: »

1. What allowance are they proposing? To be confirmed but should know in the next couple of days
2. Will they pay for fuel, on top of the allowance? (or is the allowance supposed to cover fuel) They will pay for fuel
3. Will they pay you mileage on top of an allowance? Yes
4. When will the car be replaced? I will probably buy a 2010 or wait until 2012 and buy a 2011 model, car will be kept for 4/5 years.
5. If you get an allowance, what restrictions are being placed on your choice of car? None so far

Wait and see what the offer is and take it from there.

That said, there's a lot to be said for a fully expensed car, especially if you get an unexpected bill.

helimachoptor

Gophur wrote: »

Wait and see what the offer is and take it from there.

That said, there's a lot to be said for a fully expensed car, especially if you get an unexpected bill.

Thanks Gophur, I agree, my main issue with the company car is that i wont be doing much mileage at all and that isnt going to change and i'd prefer not to have to pay BIK. But in saying that if the car allowance is too low it wont make sense to take it.

Appreciate the help!