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

Sambucus_Nigra

chalky2011 wrote: »

if I go for a company car the limit £17,500 with fuel card.

zygurat789 wrote: »

Where did the OP say that?

It's in the bit that mentioned the FUEL CARD. The fuel card which will be used to pay for fuel.

Sambucus_Nigra

I think all this nonsense has confused the OP

OP - you need to work out for yourself the tax implications and the benefits of having a company car over an allowance. Personally, I'd never have a company car again, particularly with a fuel card as you end up with a K code and, unless your personal mileage is huge, it just isn't worth it in the long run.

Get a spreadsheet, work out a scenario with a company car and one with an allowance - make sure you allocate your expected personal miles and work out which one is better for you.

zygurat789

Sambucus_Nigra wrote: »

It's in the bit that mentioned the FUEL CARD. The fuel card which will be used to pay for fuel.

But he doesn't have a fuel card he has a £4500 addition to salary instead.
Go back and read it slowly.
The fuel card option is where the company pays for all fuel and there is a BIK on £18,800 at the relevant %
The fuel allowance option is where the fuel allowance is fully taxed and the recipient can claim for business mileage.

Sambucus_Nigra

zygurat789 wrote: »

But he doesn't have a fuel card he has a £4500 addition to salary instead.
Go back and read it slowly.
The fuel card option is where the company pays for all fuel and there is a BIK on £18,800 at the relevant %
The fuel allowance option is where the fuel allowance is fully taxed and the recipient can claim for business mileage.

I know - but he thought that he could take the fuel card AND claim the mileage.

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.

I have no idea what other people think.
My post was clear either/or so don't go having a pop at me for what you think other people think

Sambucus_Nigra

Rofl - First rule of spam - get the email address right. Muppet.

zygurat789

Sambucus_Nigra wrote: »

Rofl - First rule of spam - get the email address right. Muppet.[/QUOT

You should think about changing your username, it could get you into serious trouble with the law

Sambucus_Nigra

zygurat789 wrote: »

Sambucus_Nigra wrote: »

Rofl - First rule of spam - get the email address right. Muppet.

You should think about changing your username, it could get you into serious trouble with the law

Eh? Why is that then?

[I fixed your quote for you].

By the way - you obviously didn't see that spammer....

sujman

I have done some calcs based on my limited knowledge of company car tax and simplified some of the assumptions, so that you can see the value of one choice over another.

Key assumptions:

1. Use Year 2 BIK Tax rate of 14%

2. Assume when taking the cash option for fuel of £4,500, it is in the form of added salary and is subject to NI%

3. Assume when taking the cash option of car allowance of £4,500, it is in the form of added salary but is not subject to NI%

4. Ignore for now the value of claiming miles v cost and other benefits (pension contribution etc)

Option 1 - Take cash for car and fuel -

Total Gross Salary = £45,000 (£36k + £4.5k + £4.5k)
Income Tax Paid = £8,010
NI Paid = £3,993
Take Home pa = £32,997 or £2,750 per month

But now, you have to fund your own car (with all associated costs) and pay for your own personal fuel. But you might make some "profit" when you claim business miles.

Option 2 - Take company car and fuel card

Total Gross Salary = £36,000
BIK of Car and Fuel = £5,082, so taxable pay = £41,082
Income Tax Paid = £6,721
NI Paid = £3,453
Take Home pa = £25,826 or £2,152 per month

With this option, you have a shiny new car, no hassle with any bills and all your fuel paid for (so weekend trips to the other side of the country can be done without worrying about fuel cost!)

So, taking the company car and fuel means about £600 per month (or £7,200 per year) less money in your pocket but Zero additional car costs.

Or, have the £7,200 cash but you have to fund you own car and petrol costs.

You’ll have to look closely at your personal circumstances to see what suits you best.