Company car vs car allowance

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Gingernuts

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Hello, I'm not sure if this thread belongs in this section but wasn't sure where else to put it.

I currently run my own vehicle for work. Recently my employer has decided to move away from paying the civil service rates, offering a lower flat rate instead. Therefore going back into a company car looks somewhat more attractive than previously, and there are now EV with better ranges etc. If I take the company car, I lose my car allowance so my gross salary would be reduced by 12k, plus I would no longer have mileage expenses being paid to me, and I would pay BIK of approx 110(220notional)per month(I know that the BIK on EVs will change over the coming years)

My question is this: I am in the middle of a divorce and I will possibly have to apply for a mortgage in my own name next year. From the perspective of applying for a mortgage, would the banks look more favourably on a person having a company car rather than their own car? My gross salary would reduce as a result of having no car allowance but my outgoings would reduce as I would no longer have any car costs or PCP liability.

From a divorce perspective, is it better to lose the car allowance and mileage expenses anyway? It makes things a little complicated and the other side like to suggest that it hugely increases my income and use it as one of the many sticks to beat me with.
 
After deviously paying €350 a month on a lovely company car and then handing over the keys and left with nothing when I left the company, I vowed never to have a co car again! Part time role.
Have mileage now, choice of any car and it works out better for me.
 
Gingernuts said:
From the perspective of applying for a mortgage, would the banks look more favourably on a person having a company car rather than their own car?
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In my experience Banks are not that interested in sales related bonuses or car allowances etc when looking at your income. They really just want to know your core pay/salary.

From a divorce perspective I'd rather be claiming mileage than have a car allowance or a company car.
 
From my experience, if a car allowance is listed in your contract and not subject to performance etc, banks will consider it as part of your base income in terms of repayment affordability and in terms of lending rules.
Did you have a car allowance and the ability to claim expenses, normally it would be one or the other?
I'd always pick the allowance, then you are free to spend it on whatever you want
 
Sometimes a car allowance could be considered base salary in terms of calculating ex gratia severance and would count towards your income limit for tax relief on pensions if needed.
 
ESRI issued a statement recently highlighting how the cost of running a car is normally far more than people expect. If you go down the company car EV route you'll certainly reduce the BIK charge (for a short time) and make it potentially more worthwhile than running your own car and paying for petrol, insurance, depreciation, motor tax, parking, toll charges and anything else you might otherwise be bearing but won't with the company car. But you'll have to do the calculations.

Drivers greatly underestimate the cost of running a car

Most motorists underestimate how much they spend running their car, according to new research by the ESRI’s Behavioural Research Unit. The findings show that many drivers overlook substantial costs when thinking about the financial implications of car ownership. The study, funded by the...
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@Purple, in relation to claiming mileage from a divorce perspective I'd be interested to hear why this would be case?

I currently get a car allowance and also claim mileage. Trouble is the rate for mileage is changing, meaning that the car will actually cost me money to run. This plus being mid divorce and possibly needing to remortgage next year is making me wonder what I should do
 
Gingernuts said:
@Purple, in relation to claiming mileage from a divorce perspective I'd be interested to hear why this would be case?
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A car allowance can be seen as income. Expenses are less likely to seen that way.

Gingernuts said:
I currently get a car allowance and also claim mileage.
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That sounds a bit dodgy.

Gingernuts said:
Trouble is the rate for mileage is changing, meaning that the car will actually cost me money to run. This plus being mid divorce and possibly needing to remortgage next year is making me wonder what I should do
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If it's a company car and you avail of it for personal use it should be costing you money. That's what's meant to be happening. If it doesn't then you are receiving a benefit in kind for which you are not taxed.
 
There is absolutely nothing dodgy about receiving a car allowance via your salary and then expensing your business mileage via the civil service rates. If you are doing site visits in your own car on behalf of your employer and you have to drive from Dublin to a site in Cork, you can't be expected to fund that yourself. It's a perfectly normal scenario and very common since the BIK rules changed a few years ago. Driving a company car or fleet vehicle is a different matter entirely. You obviously pay BIK based on the value and emission class of the vehicle and the amount of BIK decreases relative to the number of business km that you do. In relation to personal mileage in a company car, Revenue assumes everybody does 8000km personal mileage and this is factored into the BIK calculation automatically. As to whether you actually pay for that mileage or not aside from the BIK liability is a matter between yourself and your employer.
 
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