Help understanding how car tax is paid

oliwatts

Hello everyone!

A quick and hopefully simple question which I'd really love some help with. I've tried a search which turned up no results...

On starting a new job which comes with a company car I've recieved a Coding Notice. The notice makes reference to a deduction being made to cover the 'benefit of using the car for private use'.

Does this mean that the BIK tax amount is collected automatically using my Tax Code, or will there be additional monthly deductions made when I'm paid?

Cheers!

Oli

nomunnofun

The deduction for car benefit is based on the list price and a scale percentage of the list price - the higher the cO2 emissions, the higher the deduction. If you are a basic rate tax payer, multiply the deduction by 20% - that will be the amount of tax attributable to the company car and this will be collected through your salary. If the coding adjustment is correct you will have nothing further to pay.

jem16

oliwatts wrote: »

Does this mean that the BIK tax amount is collected automatically using my Tax Code, or will there be additional monthly deductions made when I'm paid?

As your tax code has been lowered you will pay more tax when you are paid. There should be no other deductions.

oliwatts

Thanks for the quick replies

By collected through salary/pay more when I'm paid does that mean I'll see an extra deduction on my payslip?

The reason for the confusion is my lease company's website lists a monthly BIK tax figure. I wasn't sure if that was included already through my tax code.

Thanks again for your help!

nomunnofun

The tax code reduction, by itself, as a result of the company car will mean that more tax is taken from your gross salary. There are no other 'charges'.

jem16

oliwatts wrote: »

Thanks for the quick replies

By collected through salary/pay more when I'm paid does that mean I'll see an extra deduction on my payslip?

No it means that your PAYE figure will simply be higher.

The reason for the confusion is my lease company's website lists a monthly BIK tax figure. I wasn't sure if that was included already through my tax code.

Thanks again for your help!

What tax code were you on and what tax code have you now been given?

What amount is listed under the deduction on the Coding Notice?

oliwatts

Thanks so much everyone

It changed from 707L to 810L.

There's a car benefit amount listed, which I presume is the bit worked out using the P11d calculations?

--

I meant it changed TO 707L from 810L

jem16

oliwatts wrote: »

Thanks so much everyone

It changed from 707L to 810L.

Do you mean that? Going from 707L to 810L is an increase.

I meant it changed TO 707L from 810L

That's better.

There's a car benefit amount listed, which I presume is the bit worked out using the P11d calculations?

It would be, yes.

nomunnofun

A reduction of 103 points, equivalent to a car benefit of 1030 - that sounds very low!

Secondly, is there a Week 1 or Month1 after the code 707L? If not you will pay an extra £206 tax in March, assuming you are a basic rate taxpayer.

CLAPTON

when exactly did you start the new job with the car?

oliwatts

Thanks. I started on 7/1 which I guess is why it's so low?