Cost of company car?
AvocadosBeforeMortgages
Posts: 44 Forumite
I've been offered a job which includes a (heavily branded) company car, which is essential to do the role (field based). I have until tomorrow to decide if I want the job or not.
Someone mentioned to me when I was talking it over with them that the company car might cost me money (insurance? tax?), and I've become a bit baffled by what's online and why I might have to pay for what's essentially a tool used to do the job. Nothing has been stated by the prospective employer.
I don't currently drive (licence, no car) and have no real interest in using it for personal journeys - but I don't know if it would be officially allowed or not. Salary would be £36k, so just inching into the higher tax rate. No idea what the car model would be, but I'm picturing a sensible hatchback.
Please help me understand!
Someone mentioned to me when I was talking it over with them that the company car might cost me money (insurance? tax?), and I've become a bit baffled by what's online and why I might have to pay for what's essentially a tool used to do the job. Nothing has been stated by the prospective employer.
I don't currently drive (licence, no car) and have no real interest in using it for personal journeys - but I don't know if it would be officially allowed or not. Salary would be £36k, so just inching into the higher tax rate. No idea what the car model would be, but I'm picturing a sensible hatchback.
Please help me understand!
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Comments
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£36k is a fair way from higher tax band.0
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Higher rate (40%) is anything over £33.5k and under £150k per year
https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2017-18/tax-and-tax-credit-rates-and-thresholds-for-2017-180 -
AvocadosBeforeMortgages wrote: »Higher rate (40%) is anything over £33.5k and under £150k per year
https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2017-18/tax-and-tax-credit-rates-and-thresholds-for-2017-18
£45k .0 -
AvocadosBeforeMortgages wrote: »Higher rate (40%) is anything over £33.5k and under £150k per year
https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2017-18/tax-and-tax-credit-rates-and-thresholds-for-2017-18
This thread confused me for a moment, as it is £45k as the other poster has said, and I’m on 35.
Looking at the link that states £33,500, it doesn’t take the £11.5k personal allowance into account. So, in total, you can earn £45,000 before the higher rate kicks in.0 -
You will normally pay income tax on the company car if you are allowed to use it for your personal use. Normally the company will pay all the car costs except petrol but reimburse you for petrol on company mileage.
If you don't need a personal car then you need to ask the income tax position on the car before you take the job.0 -
You say that you don't know what model the car is, but if you can find that out, there is a tax calculator on the HMRC site where you put in all the details and it will tell you what tax will be payable.
There are a lot of variables such as the taxable value of the vehicle, fuel type, how personal mileage fuel is funded (my husband's car is fuelled by the company, but he records private mileage and that is then deducted from his salary) etc.
The provision of a vehicle - if you can use it for personal use (and driving to and from the office each day is classed as private use) - is considered a benefit and has a financial value to you, so your tax is adjusted through your tax code. So, for example, if the model and mileage was calculated to be worth a grand a year to you - then you'd pay tax on that grand as if you'd been paid it.
But if you're going to be field based (i.e. not going to the office each day) and won't use it outside of work, the vehicle is essential for your job and you won't be taxed on it. But once that is declared, as I understand it, you cannot then use it privately.0
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