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Company car allowance

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stuartjl
stuartjl Posts: 75 Forumite
Part of the Furniture 10 Posts Combo Breaker
in Motoring
Hi, i've been give a £5000 car allowance as part of my salary and i'm in the 20% tax category. Can anyone explain how this works?

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  • ukjoel
    ukjoel Posts: 1,468 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Am guessing it would count as a payment in kind so would appear on your P11d at end of year.

    It effectively increases your salary by 5k.

    If this means you are pushed into the 40% tax threshold you could reduce this back down by paying more into your pension.

    You only need to start looking at company car calculators if you have a company car. From what you say its not a car you have been given but a 5k allowance towards a car.
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