HELP PLEASE! explanation needed company car tax for dummies(me!)

zygurat789

suso wrote: »

Can you quote where you get these figures from, I can not find any source for them, but I might be looking in the wrong place.

First see #10 above then see EIM24705.

zygurat789

Sambucus_Nigra wrote: »

If your fuel is paid for, what business mileage exactly are you claiming for?

No fuel has been paid for. An addition has been made to GROSS salary and taxed that was called fuel allowance, it could just have easily been called food allowance.
So having paid tax on all income is a taxpayer not entitled to claim for business miles for which he has received no recompense?

zygurat789

jimmo wrote: »

I put list price £17500 and CO2 emissions 119 into the HMRC calculator and came up with exactly the same figures.

I am surprised that you had to use a calculator to work out 10% of 17500

zygurat789

jimmo wrote: »

In my younger days I spent a few years on the road for what was then the Inland Revenue, driving an old banger and being paid a mileage rate appropriate for a much newer car and made quite a bit of money in doing so. However when the clutch started slipping I bought a new one and fitted it the same day in order to ensure that I was back on the road the next day.
.

Would that be an admission of fraud?

CLAPTON

chalky2011 wrote: »

I kind of thought this was the case, am I right in saying that if I go for the company car the BIK for the fuel and car will be offset against my personal allowance for the year therefore reducing it or even negating it altogether so I would be liable for tax on my full £36000 salary at 20% ? and that if I go for the allowance then I will retain my personal allowance (£6745? I think) which would be deducted from the £45000 leaving £38255, which would be taxable as £36000 at 20% and £2825 at 40% ?
Interestingly though I did not realise I would be able to claim back any business mileage, I'll need to find out more about this would I then need to keep keep records of business miles and private miles?I can feel another thread coming on!! lol.
a very big thankyou for your help in this I think I am beginning to understand a bit more about the "mysteries" of company car tax!!
hope you can answer my final questions.

the way BIK work is like this


a. just add you BIK to your salary and work out the tax i.e

36000 + 9000 = 45,000
7475 tax free leaving 37,525
the first 35,000 is taxed at 20% so that's = £ 7,000
and then 2,525 at 40% = 1,010

so total tax is £8,010

or 2. they may adjust your taxcode

so taxcode will be adjusted thus

7475 - 9000 = - 1,525 or a taxcode of K152 (negative tax code)

then you have NO tax free allowance instead you are taxed thus
salary 36,000 + taxcode adjustment of 1525 = 37,525
first 35000 taxed at 20% as before
and remainder taxed at 40% i.e. 2,525 at 40% as before

so tax is exactly the same both ways (which of course it must be)

jennifernil

chalky2011 wrote: »

if I go for car allowance it will be about £4500 per year and a fuel allowance of about £4500 per year obviously I will have additional running costs and insurance on top.


thanks in advance:)

Normally, if you opt for a car allowance, then your employer would l pay a certain amount per mile for business mileage, so you need to ascertain exactly what that amount is to be able to work out what is best for you.

If they are just paying for fuel, how far you drive, and whether they will pay for your private fuel too, will be an important consideration.

HMRC allow you to have 45ppm tax free for the first 10000 miles, then 25ppm. If what you get is less than that then you can claim tax relief on the shortfall.

So you need to put some figures on the distance you will cover and the fuel payment, and then consider whether you need to buy a second car or can use the one you have.

The car allowance is added to your salary and taxed in the normal way, how you spend it will be up to you.

getmore4less

when comparing BIK against allowance don't forget NI.

zygurat789

getmore4less wrote: »

when comparing BIK against allowance don't forget NI.

And do your employers pension arrangements include BIKs?

Sambucus_Nigra

zygurat789 wrote: »

No fuel has been paid for. An addition has been made to GROSS salary and taxed that was called fuel allowance, it could just have easily been called food allowance.
So having paid tax on all income is a taxpayer not entitled to claim for business miles for which he has received no recompense?

No - of course not.

The allowance that the person is taxed on is in respect of the PERSONAL mileage that they have done that the company has paid for. Business Miles done, where the company has picked up the bill for the fuel cannot be claimed again by the taxpayer.

zygurat789

Sambucus_Nigra wrote: »

No - of course not.

The allowance that the person is taxed on is in respect of the PERSONAL mileage that they have done that the company has paid for. Business Miles done, where the company has picked up the bill for the fuel cannot be claimed again by the taxpayer.

Where did the OP say that?