company car tax

pany

pany

pany

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Joined
4 Dec 2002
Posts
675
Location
beverley, england
Hi there,

I hope someone can help me out.

I am about to order my new company car, and was wondering exactly how the 40% and 22% values work.

For instance, does car tax work like income tax, and will I mostly pay the value of the car at 22% as I only earn a couple of hundred quid over the threshold, or as I am now paying the higher rate, does it just act like a switch and mean I have to pay the 40% benefit in kind cost every month. If so, that latest pay rise will leave me worse off, as the difference in cost is about £100 per month :(

Cheers for any help
 
I would imagine it was proportional surely?

More to the point won;t your employer let you opt out? Thank god for car allowances tbh.. I think company car tax is a joke.
 
If your company car costs £20000 and it's tax rate is 18%, then you'd be liable for tax on £3600. The £3600 essentially just gets added to your salary as taxable income pushing you into whatever tax bracket is applicable.

So if you earn £30000, you'd now be liable for tax on £33600 minus all the allowances etc.
 
actually isn't it taken off your tax free allowance because its a taxable benefit?

So basically if there is a £4k charge, you'd get a tax code like 100L meaning you only earn 1k before you start paying tax rather than the normal 5k?

effectively that would mean you always paid it at 22% because you just start paying the basic rate sooner?

Could be totally wrong.. I'm just about to clear through a job I had last year with a car that gave me a K code (I owed them money before getting out of bed)..

Back to lovely lovely 522L :) :)
 
matt100 said:
actually isn't it taken off your tax free allowance because its a taxable benefit?
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Nope it is added to your wage as a taxable benefit. Your tax free allowance always stays the same.
 
cymatty said:
Nope it is added to your wage as a taxable benefit. Your tax free allowance always stays the same.
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no it doesn't, thats why you have different tax codes to make it as if you've already earnt the money?
 
Your both right :) in a way.

For calculation purposes you can simply add the taxible benefit to your salary then duduct any personal allowances and calculate the tax due on the balance (bearing in mind the taxible benefit will be proportional to the availability of the benefit to you between 6/4/07 to 5/4/08)

The method of collection of tax will be via your tax code, effectively reducing your freepay or even sending it negative (k code) ensuring that HMC&E get whats due to them over the course of the year.

M@rt
 
Regardless of how the actual tax is taken, at the end of the day the OP will be paying list price * co2 %age * 40% in tax. Beware of large petrol engines basically.
 
We have a different setup at our place, its called a car ownership scheme, basically the company gives us a interest free 5k loan a year towards a car on the scheme, we then pay how ever much is required ontop of that to make up for the cost of the care, i basically pay £65 a month for gas guzzling focus ST :D

The only tax is pay is for my fuel card.

Other companies are looking to use this kind of scheme.
 
Don't quite see how that works but if it's such a good way of getting around the tax, expect the government to clamp down on it real soon :)
 
wohoo said:
We have a different setup at our place, its called a car ownership scheme, basically the company gives us a interest free 5k loan a year towards a car on the scheme, we then pay how ever much is required ontop of that to make up for the cost of the care, i basically pay £65 a month for gas guzzling focus ST :D

The only tax is pay is for my fuel card.

Other companies are looking to use this kind of scheme.
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company car tax dodging focus STs for the win! ;)
 
thanks for your help guys, still think I am going to go for the golf gti, just not looking forward to the tax bill. :eek:
 
Vertigo1 said:
Don't quite see how that works but if it's such a good way of getting around the tax, expect the government to clamp down on it real soon :)
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Essentially the company buys the car for us, then gives us 15k over over the 3 years towards it, my car costs the company 17.5k, i then pay the 2.5k over 3 years as my contribution.

Im sure its a tax fiddle, but as i work for one of the worlds largest companies, im sure its above board :p
 
pany said:
thanks for your help guys, still think I am going to go for the golf gti, just not looking forward to the tax bill. :eek:
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It is £2035 a year at 40% for the GTI.

Which is actually pretty good for the class of car, performance etc. One of the reasons why I chose it :) Only a couple of quid more than a 320d, & less than an ST or CTR.
 
I appreciate that it is cheap compared to owning the car etc, but coming from 2.0 tdi A3, that cost £700 a year, it seems huge
 
Vertigo1 said:
But you don't have to pay the £15k back? If not then surely you have to pay tax on it as it's income?
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Yeh... can someone clear this up? If it was a loan in the first place, then surely you have to pay it back too, albeit @ 0%.
How does the car allowance scheme work anyway? Any allowance they give you is presumably a taxable benefit also?
 
s0ck said:
How does the car allowance scheme work anyway? Any allowance they give you is presumably a taxable benefit also?
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Yes, any allowance is effectively added to your basic salary, hence you are then taxed on that at your normal rate.

i.e. If I took my car allowance option of 3K instead of the car I would be taxed on that at 40%, thus 3000 - 1200 = £1800.
 
I would guess they give him a £15k loan at 0% then pay him £15k plus tax into his salary?

Not dissimilar to my car allowance although mine is less formal, I just get £10k a year paid into my wages.
 
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