# Car allowance vs company car and BIK



## upsydaisy (10 Sep 2008)

Hi All,

I have a quick query, my employer has given me the option to take a car allowance and fuel card or a company car and fuel card. I have a car at the moment and the allownace just about covers the car loan repayments but not services breakdowns etc. So would I be better to go with the company car option pay BIK and be done with it? Would really appreciate some advice as I cannot make a decision at the moment!


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## teachai (10 Sep 2008)

BIK  depends on the mileage you are going to do. 

If you do lots of mileage definitely go for the company car. 
You don't have to pay:

Tax
Insurance
Servicing

and are covered for Breakdowns.


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## tyrekicker (25 Sep 2008)

BIK is very punitive unless you do loads of miles, basically could end up paying for the car over 3 years. check revenue.ie


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## FredBloggs (25 Sep 2008)

I don't agree with the above posts. If employer is going to cover everything - ie road tax, insurance and servicing as well as fuel - I think you would be better going for company car. It all depends though on the car allowance.  Is it a Revenue Approved scheme?


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## Bonaparte (25 Sep 2008)

Have done both myself and you really need to work the lot out in a spread sheet. I actually bought my company car at the end of three years and am very happy with the outcome.

Start by checking www.revenue.ie, it is really good news if you are out of the office more than 70% of the time as this has a big impact on bik. Be careful with the fuel card and your own car as you may have a BIK liability on the fuel card. If you're doing big mileage consider mileage payments instead of fuel card. 

When doing the numbers it is a good idea to add a little to the own car option to cover the peace of mind associated with the company car which is very hard to quantify.


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## FredBloggs (26 Sep 2008)

Bonaparte said:


> When doing the numbers it is a good idea to add a little to the own car option to cover the peace of mind associated with the company car which is very hard to quantify.


 

I'd agree with this - unless having your own car saves you a lot you should look at the company car seriously.  In my last job the company had a scheme or you could go for a company car.  I went for the company car and was glad when it was in a minor accident that I didn't have to worry about cost of repair.


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## upsydaisy (27 Sep 2008)

Thanks for all the advice, I think I will go with the company car its much easier and I am never in the office. I will also be travelling to waterford/Cork/Mullingar from Dublin quite a lot over the next 12 months so I think its the way forward. Thanks again..


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## Jackdoes (19 Nov 2009)

Hi,

I have now the choice of getting company car or car allowence.

Had company car for previous 3 years, paid BIK of about €600 per month on it.

I am finding it difficult to decide which way to go now.   I do about 30,000km per year.   I find the BIK quite large but like all the benefits and peice of mind that comes with the company car.

If I was offered a car allowence, how much should I be looking for.   I work for a UK company and live in Ireland.   My colleagues all live in UK and have car allowences as it is much cheaper to buy and maintain a car in the UK.

Any advice or anyone in similar situation.  My employers are not sure what to do either.  They are very fair and will work with me to get the best deal for me.  ie they would rather give me money instead of some leasing company.

S


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## PyritePete (19 Nov 2009)

I would go for the car allowance which is taxed and see can you get a mileage rate. I had driven company cars for 12 years and always hated paying tax on something I didn't own plus every time you get a service, repairs etc you are fleeced as the garage knows its the leasing company that owns the car and they then bill your company and usually for a hefty surcharge - this has happened to me about a dozen times. Business insurance on my own car was the same as social domestic & pleasure. Mileage you receive is tax free and compensates for the depreciation etc. Car allowances vary from 5-10k per year into your salary (taxed) and then the mileage on top. 30,000km per year at 0.50c per km = 15,000. You would have to earn double that to have the same benefit. 30,000km per year is only a bit above the yearly average.


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## Complainer (19 Nov 2009)

The allowance generally gives you a lot more flexibility. You can choose to buy a 10-year-old tank, and pocket the difference on the allowance.

However, the real deciding factor is the amount of business mileage to be done.


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## DB74 (19 Nov 2009)

I would almost always recommend the company car route, especially if the company will change the car every couple of years.

Say you get a company car which costs €50K - BIK is charged on 30% of that which is €15K which means the tax will be approx €7.5K a year or €625 per month BUT this includes all fuel & tax & repairs.

You would never run a €50K car on €625 per month


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## Complainer (19 Nov 2009)

DB74 said:


> You would never run a €50K car on €625 per month


True - but you can run a €15k car on a lot less, and pocket the difference.


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## Jackdoes (19 Nov 2009)

Feul will always be paid for.   I'm sure I would get arount 1k per month allowence.   So I guess the question is could I pay for a car loan, tax, insurance and maintainence for about 1k per month.


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## DB74 (19 Nov 2009)

Complainer said:


> True - but you can run a €15k car on a lot less, and pocket the difference.


 
Surely the difference is taxable?


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## PyritePete (19 Nov 2009)

with a company car they are generally for 3/4 years lease or 100,000 miles ( or whatever comes first). I was nationwide driving on a mileage rate and was doing nicely, most months taking home in excess of 1500 extra per month. Obviously you/I are not going to drive to Cork from Dublin say on a monday, return home and then drive back down again on tuesday - I dont think any company would accept that. Price everything out and if your company are amenable as you have mentioned above, then go the car allowance route. Another factor for me was that I never had my own insurance policy ever and this can make a difference. When other business people who opted for company cars heard about the allowance and how it works out, they then wished they had taken the allowance - I accept this is a bit of a generalisation, my point is that these people didn't price out the allowance option and lost out on a bit of money.


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## Complainer (20 Nov 2009)

DB74 said:


> Surely the difference is taxable?


The whole lot of a car allowance is taxable.


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