You're only being screwed if the car allowance they pay you doesn't cover the cost of you buying and running the car and fuelling it. i guess the insurance will be very expensive, get a quote on meerkat or confused. If your business mileage was say 15,000 then your employer could get away with a modest allowance say £350 to £400 a month pre tax plus say 15p a business mile and you claim the 25p extra to 10,000 miles and 10p after that against tax etc. But 50,000 miles pa suggests the car is a vital tool for you to do your job. Whatever you buy will be worth next to nothing with 170,000 miles on it in 3 years so the car allowance has to cover 90% of the depreciation you're goingto suffer. At higher tax rates £1,000 a month less tax is less than £600 a month which if you're very careful how you drive and have no surprise repair bills is what it will cost you to finance, insure, tax, retyre twice a year, service at least 3 times a year, change the drive belt two or three times on a one or two year old Focus or Golf which will be worth naff all after 3 years.

I've experience of companies adopting this practice to reduce costs ie the workforce and the cynic in me might view it as not so subtle constructive dismissal. I'd ask them to explain in detail why the change especially when the job demands you do very high mileage. Do your maths but I can't see it working unless they pay you a very very high allowance and that might affect adversely your tax position. Take your contract of employment to Citizens Advice Bureau and get their view.

Just a thought is your employer telling you via the car allowance what your budget is monthly for a new company car, one of my previous companies did this and all it meant to us was how much a month we had to spend on our new company car.

If they are expecting you to run a private car on your stated mileage og 60,000 miles a year with an allowance I would agree with the previous post that you need to look at your situation very seriously.as you cannot really be expected to run a private car for your work

Ignoring fuel - Back of a fag packet calculation based on Hyundai i30 1.4(5yr unlimited warranty) purchased new from drivethedeal and run for 5 years then thrown away:-

£11000 - Hyundai i30 classic 1.4(inc 1 year car tax) (£12k loan about £200 month for 60 months excl redundancy insurance)

£460 - car tax years 2-5

£3000 - service (no cam belt)

£4000 - tyres @£800 year(two replacements per year!)

£2500 - insurance £500 year(clearly variable)

£200 - 2 MOTs

£21,000 If you add this lot together = £4200 year = £350 month (excluding borrowing costs)

5 year unlimited warranty so no nasty surprises

Cam chain - so no belt replacement

Sligtly simplified view but I've done a form of this in the past

1)Buy the car with a bank loan.

2)open a separate account to pay your allowance and company car tax savings (be honest!) into – important to keep this separate from your normal finances.

3)Pay car expenditure (loan and servicing etc..) out of this. The best way is to judge the financial balance so that the account gradually builds over the years, if you want a better car then supplement it with an additional monthly payment.

I know you would prefer a company car, but if you are stuck with the situation then make the best of it. Due to the current financial climate probably not a good time to protest and dig your heals in - keep your head down!

Edited by Big John on 07/10/2011 at 22:15

I agree with Oldtoffee above. 40-50k a year is a ridiculously hugh milesge to expect you to drive in your own car - worn out and worth nothing after 2-3 years.

A company run by stupid men in suits who don't understand what their employees do for a living is not one that deserves your working for them. You need a job that either gives you a car or expects you to drive fewer miles.