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Company Car Allowance

Company Car Leasing with UltraCar

Is it possible to lease a car with a company car allowance, if I have a bad credit score? The answer is yes!

We are helping more and more business professionals get into their company cars despite a low credit rating.

Many of our current customers have come to us because they find themselves with a new promotion/job, which includes a company car allowance. However, if you find yourself in this position, and you have an adverse credit history, you may find that you are unable to secure a car lease.

Despite a large percentage of us located in the UK having a poor credit score, it still seems to be something we are not willing to talk about, especially to an employer.

Company car or car allowance?

With a company car you may not get a choice in what you will be driving, however by having the cash you can get the car you want. Everyone’s circumstances are different, and you really need to weigh up which will be the most cost effective for you as an individual.

Below we have put some guidance notes to help, however it is always best to talk to your accountant, or HM Revenue & Customs.

Company Car Benefit

If an employee of a company receives a car as part of their pay for working. The Government treats this the same as receiving a salary for the work that the employee is doing. The car benefit system is a way of quantifying how much salary any car is worth.

How to calculate the benefit value of any vehicle

The benefit value or salary that a motor vehicle is worth can be calculated by multiplying the cost of the car new by a % figure which the government have calculated based on the CO2 emissions of the car. This benefit is adjusted so that an individual only pays tax for the period of the year that the vehicle is available. There are a number of websites which will let you know the (P11D) value of your car for the benefit calculations, an example of which is Tax Calculator this site will also give you the % figure to multiply the cost of the car. Normally the cost given is the basic cost without any extras such as metallic paint etc.

(for example, a car with a P11D of £10,000 with an emission rating of 15%available for the whole year, means that you will be treated as though you were earning another £1,500 in addition to your salary)

How much tax will I have to pay?

You simply multiply the benefit figure calculated above £1,500 by your highest tax rate and this is how much extra you will have to pay after adjusting for any period that the motor car was available. The government has a calculator that will work out the amount you will actually pay once you enter the value of the car and the emissions automatically and it is available on the following link

(In the example above a basic rate tax payer will pay £300 extra tax in a year that is £1,500 X 20%)

Note for Van Drivers

All vans and vehicles treated as vans (such as flatbed vehicles with 1 tonne load capacity) will be treated as a fixed benefit of £3,230 which has to be multiplied by your highest tax rate.

Please note that if an employee also receives any fuel for private use, there will be an additional benefit.

The benefit in kind rules only apply to employees not self-employed individuals, or partners in partnerships, or Limited Liability Partnerships

Applying for a company car lease

Along with all the regular supporting documents we require, to help support your affordability, it is also a good idea to present evidence of your company car allowance.
This can either be shown in a letter from your company, contract, or wage slip.

This article is for general guidance only, before taking any action, and for specific advice to your circumstances you should contact your accountant or HM Revenue & Customs.