Job offer - tax implications - complete confusion.

shop-to-drop

I would have thought the permanent job would be much better. Presumably it has a pension, sick pay and more job security too. Probably prospects for promotion etc.

dori2o

Will he ever use a car for work? If not the fuel card is rather pointless.

If he won't ever be using a car for business could he maybe negotiate with the employer to increase the 'Travel Allowance' to cover the cost of the Travel Card at the expense of the fuel card?

Sooz00

Thank you for the input. We're still in a quandary about this. And I made a mistake on his hourly rate - it's actually £23 p/h.

Basing things on Harvey115's calcs:

Weekly salary = 42.5 (hours) X 23 (per hour) = £977.50
Yearly Salary = 52 X Weekly salary = £50,830
Expenses = (132 X 52) + (8.99 X 52) = £6,864.00 + £467.48 = £7331.48

NOTE - there is tax relief on the expenses. I have no idea how that is calculated an at what rate.

His tax, because via an umbrella company, is PAYE not via self assessment/tax return.

Also, he pays both employee's and employer's NI (I don't understand why to be honest).

Assuming he takes no holiday apart from 8 bank holidays, we'd need to deduct £1564 (8.5hrs @ 23p/h x 8 days)

I'm not sure what this brings his salary out at though due to the tax relief though...



The permanent employment would be £44,000 per annum.
Travel allowance £4300
Fuel card + individual private healthcare (from April 2013) and pension (from April 2013).

SUJMAN said:
'Seems a little odd they supply a fuel card but no company car? But looking at the fuel card alone, the tax cost of the fuel card will be around £20,200 x 20% x 40% = £1616. Current travel card costs £132 per week or £6864! I have a company car with fuel card and the toal I lose thru tax is less than £4000. Excellent value in my case and still cheaper than you £6864 travel card costs.'

How did you work out the tax for the fuel card?

The thing is, we live 50 miles outside London and the job is central London, right in the city. It's not an option for him to drive, it would take 2.5 hours, he'd have to pay congestion charge, central London parking fees plus the cost of petrol is ridiculous. The train is quicker (an hour) and although expensive, probably cheaper than driving.

I am struggling to find anything online with HMRC or elsewhere regarding how fuel cards work with your own car. Calling them go me nowhere either, just went round in circles as they couldn't/wouldn't give me a definitive answer.


DORI2O said:
'Will he ever use a car for work? If not the fuel card is rather pointless.

If he won't ever be using a car for business could he maybe negotiate with the employer to increase the 'Travel Allowance' to cover the cost of the Travel Card at the expense of the fuel card?'

You are thinking what I am thinking... I'm not understanding how he/we get any benefit from a fuel card? He has asked the question about an alternative but they are saying the travel allowance is the maximum for his grade.

Slightly off topic, but he also wont get paternity pay apparently if he takes the job. He had informed the umbrella firm (his official emplyer) and his boss (at the company he's contracting at) by the 15th week before baby is due. When the company offered him the permanent role, his boss who offered the job said he would get both CPP and SSP but now HR are saying no. They instead have suggested he takes it as holiday but also say he can only take what he will have accrued which will only be 1.75 days. I am not happy with that at all. I don't have any family/close friends around me to help with anything and obviously we don't know how things will go yet either.

Also, they are now saying the healthcare and pension offered will not apply until April 2013 due to the annual enrolment.

Feeling quite fed up with it all. All we want to be able to do is cover our outgoings (1800 per month), cover his travel (around 500 per month) but it just seems impossible.

getmore4less

Unless contracting gets paid holidays you use 46.4 weeks work not 52.

less if the holidays is more than 28 days.

watch out for overtime increasing.

As an employee(of umbrella) they should not be allowing him to work holidays for pay.

Sooz00

His holiday pay gets paid alongside his earnings up to what he's accrued that month. So basically he's getting around 2 days holiday pay a month although he's working. The documentation confirms that the employee has the option to do it this way, or they can have it held back and save it for a period when they want time off.

sujman

You asked how I worked out the fuel tax. I made some assumption but basically, the tax payable on a fuel card, assuming personal miles are paid for is

£20,200 ( fuel benefit multiplier)
Times a percentage value calculated on the co2 emissions of the co car
Times the personal marginal income tax level.

I assumed the car % would be 20% and the income tax bracket would be 40%. So my estimation should be decent but still fairly accurate.

jimmo

sujman wrote: »

You asked how I worked out the fuel tax. I made some assumption but basically, the tax payable on a fuel card, assuming personal miles are paid for is

£20,200 ( fuel benefit multiplier)
Times a percentage value calculated on the co2 emissions of the co car
Times the personal marginal income tax level.

I assumed the car % would be 20% and the income tax bracket would be 40%. So my estimation should be decent but still fairly accurate.

That is completely wrong because if there is no company car, there can be no car fuel benefit.

If you have a company car and your employer pays for any private fuel then, regardless of the details of how its done, you will face a car fuel benefit charge.

If you have a fuel card but use your own car there can be no car fuel benefit. Then the fuel card reverts to being a “credit token”.

http://www.hmrc.gov.uk/manuals/eimanual/EIM16090.htm

So, if you use your employer’s fuel card to pay for fuel but don’t do any business mileage you will face a benefit charge on the cost of the fuel.

I can’t help the feeling that the fuel card thing is just a standard clause in the employer’s standard employment contract and, in your OH’s case, it is a red herring.

However if your OH does get a fuel card that would end up with the employer paying for your fuel and your OH paying tax instead of pump prices. Now that’s a pretty good deal but for your purposes, I think you should ignore it.

sujman

jimmo wrote: »

So, if you use your employer’s fuel card to pay for fuel but don’t do any business mileage you will face a benefit charge on the cost of the fuel.

Ok, so given what you know about the OP's cirsumstances, would you estimate would be the "benefit charge" on the cost of the fuel?