Company car tax and fuel benefit - Threshold?

MrPez

I am considering getting a company car.

I know there is a threshold for company car tax of £8500 per year and my earnings for the company in question fall under this so no emissions-based tax is applicable.

I'm not so sure about the fuel tax though. If my company pays for all fuel and my total income is still under the £8500 threshold (including said fuel), is there any fuel tax to pay?

Also, am I right in thinking that the above are the only two taxes involved with company cars?

Thanks!

zygurat789

The threshold may be £8,500 but this is the aggregate of:-
earnings and benefits-in-kind. The latter are car benefit and fuel benefit.

MrPez

Thanks zygurat789
So does that mean that as long as my monthly salary + car repayment + fuel comes to less than £708 there is no tax due?

MrRedundant

I'm guessing your a director or senior if drawing such a package?

zygurat789

If you are a director you will be charged a BIK.
It has nothing to do with car repayments or fuel payments and everything to do with the chargeable BIK.
ie if your car costs £15k with CO2 emissions of 160grs/k then next year the chargeable BIK would be 21% , £3,150 and if you receive any petrol for private use there is another £3,948 so your earnings would have to be less than £1,402. If there was no fuel your salary would have to be less than £5,350.
The car BIK will change with value and CO2 emissions and is charged pro-rata, the fuel is one rate only

MrPez

I'm not a director, no. Its a family business, my dad is the director. I just work on the evenings doing the accounts, but the company is fairly small so this doesn't take all that long - hence the low salary.
So assuming I had a car as you described, I could get paid up to £1402 per year and have fuel and car repayments negotiated with the company and have no tax to pay?

zygurat789

MrPez wrote: »

I'm not a director, no. Its a family business, my dad is the director. I just work on the evenings doing the accounts, but the company is fairly small so this doesn't take all that long - hence the low salary.
So assuming I had a car as you described, I could get paid up to £1402 per year and have fuel and car repayments negotiated with the company and have no tax to pay?

Nothing to do with repayments - see previous post
Do you understand a benefit-in-kind and how it operates?

bob_a_builder

well he's 'doing' the accounts

MrPez

zygurat789 wrote: »

Nothing to do with repayments - see previous post
Do you understand a benefit-in-kind and how it operates?

Not really! I understand the company car tax that is based on list price and emissions, but not the fuel part. Any info you could direct me towards would be appreciated!

And Bob - "doing" accounts isn't meant to sound corrupt, its just general office admin!

zygurat789

because you have a car provided for you by your employer HMRC will charge you tax on it at a value they determine. This effectively increases your salary. So if you ran that car above and had fuel provided for private use and earned £1,400pa, you would be taxed on £1,400+£3,150+£3,948 = £8,498.
The fuel benefit is £18,800, HMRC given value for all, multiplied by 21%, your cars %.
All this has nothing to do with payments or repayments.
Oh and BTW since you are the bosses son and all this may be considered not to be at arms length it opens up a whole new can of worms. Check with your firms accountant.

MrRedundant

You have to be careful though as there are rules in place to avoid directors giving family members unduly generous packages in order to bypass tax, It may not affect you but if you get a car for next to no work it may affect his tax.