Company Car Vs Cash allowance

R

roy2005

Guest
Hi there,

Would appreciate advice from anyone who is familiar with this scenario.

I've been offered a company car or a cash allowance of 10k, I'm trying to figure out what makes sense financially:

1) Cash allowance (10k gross, 6k nett)
Annual running cost of present car tax, fuel, service, insurance, depreciation (9k)

So with this option I spend 3k on running costs (9k - 6k), and also have a depreciating asset (present car), and carry the risk of any additional expenses on the car

2) Company car, all running costs paid for by company
Car Value: 40k
Mileage: I do very little, 8-10k per annum

With this option I could sell my present car (20k), and then would pay BIK on 12k, which would work out at 4920 per annum ( I think)?????

Conclusion: Selecting the company car would mean I would get the funds from the sale of my present car, but would spend 4920 on BIK as opposed to a nett 3k running costs, and would not have the risk associated with owning a car myself?

Is this correct?

Many thanks,

R.
 
Does your company pay for your fuel ? My company doesn't but your fuel costs can be deducted from your BIK, so if you use 1200 Euro a year on fuel, your BIK will be reduced with 1200 Euro. This way I feel I get a nice fuel discount of around 40%.

I have just gone through the same decision making and opted for the leasecar as it worked out cheaper for me, but only because of my mileage ( 40k kms/year) and the associated depreciation.
 
Hi there,

The company pays for the fuel also, so I may have to take into account any additional associated BIK I assume?

R.
 
No, the BIK is solely based on the Original Market Value (new price) of the car. If you pay fuel costs directly to your employer, then these can be offset against BIK.
And don't forget you also pay PRSI over the BIK, so it will be slightly higher than 4920

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