Car allowance and child benefit

cambb

Hi,
I currently earn about £51,000 + £6000 car allowance. I pay 40% tax on the £6000 so i come with £300 a month, I've paid for the car i drive and its worth about £15000 so my only outgoings a month are about £50(road tax,insurance + running costs). Now I can go into a company car therefore lose the £6000 and basically pick a low co2 car which will cover the benefit in kind so the car will cost about £30 a month after tax. Am i correct in thinking if i take a company car and lose the cash allowance i will receive a greater child benefit allowance for my 3 children? Also for the £1000 above the £50000 if i paid this into my pension i would receive the full amount of child benefit?
thanks in advance

xylophone

http://www.telegraph.co.uk/finance/personalfinance/consumertips/tax/9655291/Company-car-Your-child-benefit-could-be-cut.html

http://www.guardian.co.uk/money/2012/nov/16/beat-taxman-keep-child-benefit
might be of interest.

cambb

Thanks for the articles.

I have just checked and the BIK for the car i fancy is £99 a month but i get a trade down allowance of £73 hence the cost after tax to me is £26. i also currently pay £172 a month into my pension.

So my calculations would be £51000 + company car £1188 (£99 x 12) - pension (£172 x 12) £2064 = £50124.

Does that sound correct?

PGC_Tax

I have written a guide on this subject-which of course I am NOT advertising but I know about it in depth.
Yes your calculations look correct. You income for determining whether you are above the £50k threshold is called your net adjusted income. It will be your salary plus the BIK of the car-it looks like you have the correct calculations. You then (as you have done) take off your pension contributions to arrive at your net adjusted income.
As you have 3 children you will be getting £2450 each year. But for every £100 you are over £50k you will lose 1%. So as things stand you will lose just 1% (£24.50). If you bump your pension contributions to get your income down to £50,k not only will you get 40% relief on these but also you will save the £24.50-the tax rate you are saving at is 66%!
Hope that helps.

somethingcorporate

I think it looks correct too, I would take the advice of the above posted and increase your pension contribution to get below £50k as the marginal benefit it high in tax relief and additional CB.

zygurat789

Low CO2 is getting lower each year

http://www.hmrc.gov.uk/manuals/eimanual/EIM24705.htm

JimmyTheWig

cambb wrote: »

i also currently pay £172 a month into my pension.

So my calculations would be £51000 + company car £1188 (£99 x 12) - pension (£172 x 12) £2064 = £50124.

Is the £172 pension contribution taken out of your wages before tax is deducted?
Or does it come out of your bank account?
If it's something that you pay after tax then you need to "gross it up". £172 / 0.8 = £215.
The extra that this takes off your final figure will take you below the magic £50k...