Company Car Allowance - affect on tax paid?

timbotambo

Hi guys, just hopefully a quick question:

I have a new job offer where I can either have a company car based on £330 a month allowance from a list, or have a cash allowance of £3.5k.

I have decided to take the company car but was wondering if the basic salary remaining takes account of the company car payments made by the company? If it does then it pushes me into the 40% tax rate and vastly increases the tax I pay on the company car.

I hope that makes sense, I just want to ensure that I pay 20% tax on the car and not 40%. My resultant salary with the company car is just under the 40% tax threshold.

getmore4less

Might be worse.

The BIK calculation uses your personal allowance so you can end up being taxed and have NI at the high rate.

The car allowance just adds o the salary

You need to do the sums and see what the end results are.

Miss_Havisham

I don't know if this still applies but when I had a company car about 10 years ago I had to do a certain number of business miles per tax year in order to save a bit on tax through BIK. The first "break" was 3000 miles and the next was 18,000.

I put up with the extra tax because I got a new, decent spec car every 6 months, tax and insurance were included and it was just easier all round for my very busy job.

Miss H