Tax Question...Company car etc

[GinG]

Hi All,

Just wanting to try and clear a few things up on tax amounts etc and how things are worked out.

I am picking my car up tomorrow, BIK will be £118 based on 20%.

Basic Wage is £25,000
Car Cash Value is £7,073 (According to Parkers calculator)

Now I get paid commission, and looking at the car allowance within 40% it increases to £236.

My question is what happens to the tax amount if I was to earn more than £10k gross in commission does the car tax automatically increase to the £236 for example?

I know Tax is a bit of a mine field so a very basic answer is all that is needed for now...just working out for monthly financing reasons.

 

[GinG]

Assuming you don't have any other sources of taxable income you'd need to earn over ~£17k in commission before you entered a new tax bracket.

OK thanks for that, are you sure the car isn't included within the gross salary package?

Due to mileage company car is the best option and allows me to have a car which I am not personally liable to.

 

[GinG]

In fact with the company car BIK you will get to a lovely (crappy) position with over £10K commission where your marginal rate of tax is 52% because the BIK pushes you into the higher rate threshold but you aren't above the UEL for NI.

How do you work this out?

I assumed £25k Basic + £10k commission + £7,073 (Cash equivalent according to government site) = £42,073 so just under the 40% bracket.

 

[GinG]

Salary









+35,000.00

£10,600.00 @ 0% 0.00
£24,400.00 @ 20% 4,880.00
£0.00 @ 40% 0.00
£0.00 @ 45% 0.00
Breakdown
Income Tax on Salary
£35,000.00 £4,880.00 −4,880.00
£0.00 @ 0% 0.00
£7,355.40 @ 20% 1,471.08
£0.00 @ 40% 0.00
£0.00 @ 45% 0.00
Breakdown
Income Tax on Company Vehicle Benefit
£7,355.40 £1,471.08 −1,471.08
£8,060.00 @ 0% 0.00
£26,940.00 @ 12% 3,232.80
£0.00 @ 2% 0.00
Breakdown
NIC on Salary
£35,000.00 £3,232.80 −3,232.80


Total on payslips
£25,416.12

Totals on P11D
£7,355.