Company Car tax assistance

PThomas_2

I am lucky enough to receive a monthly Car allowance in my current job, up until now I have taken the allowance and run my own car. However I am now trying to calculate the cost of changing to a Company car.

I have calculated the BIK value of the car and I appreciate there are many sites showing the tax you would pay if you were on 20% or 40% tax - but what happens if you are on the border between the two tax brackets or if the car might push you over the edge into 40%?

For example, if I had a BIK of £3,000 per annum, would I just add this as income in one of the on-line salary calc's and that would show me the amout of extra tax I would pay?

Would I also have to pay NI on that? (Which would be shown if I added it as income in a Tax calc program)

Or is it better to calculate how it would affect my tax code and go from there? (Tax code is currently 745L)

Any advice/help/suggestions gratefully received!

Tax_guru

If the BIK pushed you into the higher rate tax bracket then you would pay 20% of tax on whatever falls into the basic rate band and 40% tax on the excess. You’re right, if you put in the extra £3k for benefit in kind in one of the salary calculations it should work out the right amount of tax. And no, you won’t personally have to pay NIC on the car benefit, the employer will but it won’t affect you!

I think the best thing to do is work out how much extra tax it’ll cost you per year, don’t worry about the tax code for now.