Forum

• # 74303
• Tue 13 Sep 2011 08:36 AM

A friend of mine has asked should he take Company Car Allowance or Mileage from his Employers?  I have printed out some info from internet but is there an easy answer?!?  I know the basics of mileage payments but don't know anything about Car Allowances. 

• Bev G
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• # 74411
• Fri 16 Sep 2011 03:23 PM

Hi Bev

Most people who get a car allowance also get mileage.

Usually a car allowance is their to cover the cost of buying the vehicle and you are given a mileage allowance towards the cost of running it.

It would be more usual to be posed the question company car or Car allowance.

I have even come accross a situation where a company pays a mileage allowance to individuals who have company cars (at a substantially reduce rate).

Kind regards
Stuat

• Forum Moderator, South East & Greater London Regional Chairman
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• # 74600
• Fri 23 Sep 2011 11:03 AM

Hi Stuart, thanks for this and sorry I haven't replied sooner....I am new to the Forum and was waiting for an email to tell me someone had replied!

Well, I didn't know you could get all this....mileage and company car?!?!  I've always believed I'm correct in saying mileage is not put through paye so not taxable, and obviously company cars are, but what about a car allowance?

Many thanks
Bev

• Bev G
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• # 74602
• Fri 23 Sep 2011 11:49 AM

Hi Bev

You are correct mileage does not go through PAYE.

When paid at 45ppm for the first 10,000 miles and then 25ppm thereafter mileage allowance is not taxable. However any amount paid above these rates would have to be declared on a self asessment return and tax paid.

A Company Car Allowance is added to you salary and you pay tax on it in the normal way you would for your salary.

e.g. if you have a salary of £40k plus a £5k car allowance you would be taxed on £45k through the PAYE system.

this differ slightly to a company car as you are taxed via an adjustment to your tax code however you still pay TAX via the PAYE system.

the main difference is for the company as I believe though I do stand to be corrected that where as a company will pay Class 1A NIC on the benefit on kind on a company car there is no Class 1A NIC payable on a car allowance as it is you car not the companies.

Milage at the rates stated ablove is not taxed as it is seen to a reimbursement of out of pocket expenses rather than an income.

I hope this clarify's things for you.

Kind regards
Stuart

• Forum Moderator, South East & Greater London Regional Chairman
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• # 74609
• Fri 23 Sep 2011 01:48 PM

Hi again Stuart

Very many thanks for this - good to have somewhere (finally!) I can get straight answers without trying to read between the lines!

 

• Bev G
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