A company car allowance scheme is where you get a lump sum of money added to your salary by your employer, which you can use to buy or lease a car, as well as cover the costs of running it. With a car allowance, you’re responsible for finding and buying or leasing the vehicle yourself, as well as taking care of maintaining and insuring the car. There are no limitations on the sort of vehicle you can get with a car allowance, and the money is essentially yours to do whatever you ...
What is a company car allowance?
Make payments to lease or buy a new vehicle. Apply their allowance retroactively to offset the upfront cost of buying a new car in full. The company car allowance gives employees a greater level of freedom and flexibility to use other finance options, rather than sticking to a company car. What is a reasonable car allowance in the UK?
How do you salary package a car?
The typical way to salary package a car is by way of a novated lease, which allows an employee to buy a new or used car and have their employer cover the cost of lease repayments. The employer makes repayments to the leasing company out of the employee's pre-tax salary, which reduces the employee's taxable income.
How do you calculate car allowance?
Since no two employees in the same company can incur the exact same cost when it comes to work-related vehicle expenses, there is no quick and easy formula for calculating car allowances. What employers usually do is estimate the business-related mileage an employee is expected to drive and the cost of using a personal vehicle.