Company car tax question

sparko

Hi

I am applying for a job which comes with a company car. I have tried to make sense of various websites regarding how this would affect me but I am not 100% sure I have got it right.

I have been on Parkers website and put in general details of the car which has a cash equivalent value of about £5k a year. Now it goes on about 20% and 40% bands. I am a 20% tax payer but it is quite possible that I will move into the 40% bracket.
If that happens would I pay 40% on the whole amount or just the proportion I go over the 40% limit.

Finally how does the tax man collect it, if the value is £5k does he just take 5000 off my tax code?

Thanks in advance for any help

Mike

mcfisco

This may help

http://comcar.co.uk/newcar/companycar/taxcalc/g1select.cfm

nomunnofun

How much do you earn? Regardless you only pay tax at 40% on the proportion above the 40% band which, next tax year, is attributable to earnings above £41450

sparko

The job pays £34-36K with plenty of overtime. I do however have a lower tax code for tax year 13/14 of 630L due to an underpayment from the tax year 11/12

zygurat789

So, if the benefit-in-kind value of the car is £5k then your code will be 130L and you will receive £109 tax free each month and you will pay tax on the rest.
Your gross pay and benefits will be £39k-£41K, which, net of free pay means you will be taxed on £37700 - £39700 which is over the basic rate band of £32011.

sparko

Thanks for the help guys, I think I understand now