The starting point
is to calculate the actual cost of your current
or desired company vehicle, as this will translate
into a saving of personal taxation when looking
at a cash alternative. This can be achieved by
using the current government benefit in kind scale
charge as explained later in this guide.
Once you have arrived at
a figure, this can be added to your employers
proposed cash alternative, giving you the total
disposable income with which to run your own vehicle.
However, you must remember to deduct tax and National
Insurance at the prevailing rate from any salary
increase that your employer gives you.
Finally, before you go out
and spend this money on a new vehicle, you must
remember to deduct the costs of fuel, insurances,
Road Fund Licence (RFL) and make provisions for
maintenance, MOT’s and unforeseen repairs.
By now, you may be asking
whether it is viable to take a cash alternative.
This where the Government’s Approved Mileage
Allowance Payments (AMAP’s) will help out.
Within the above vehicle
running costs you have included fuel charges;
most employers will in addition to a cash alternative,
provide you with a mileage allowance for company
business. Coupled with this, the government will
allow you to offset the equivalent of 40 pence
per mile for the first 10,000 business miles and
25 pence per mile thereafter against your personal
tax coding.
Ideally, you should aim
to ensure that the car you purchase will not render
you financially worse off under a “Cash
for Car” policy than with a company car
scheme.
