Company car tax calculations

Beastface

Hi,

I'm for the first time considering a move from car allowance to company car due to the higher mileage I'm now doing. I think I have fully understood the calculations but would appreciate someone could just validate my understanding.

I have ignored the allowance payment for now to keep the figures balanced and easier to understand.

Salary: £57,475
Current Tax Code: 862L
Take home salary: £3,331

Company Car Tax (as calculated by comcar.co.uk): £2434
New Tax Code: 619L
Take home salary: £3250

Thanks in advance,

BF

Caz3121

I don't think the revised tax code is correct. If you are a 40% tax payer and need to pay and additional £2434 tax then your code will need reduced by more than that....reducing code by £2434 will only generate £974 in additional tax...so think to generate £2434 it will need to be reduced by over £6000.....my last company car put me on a negative tax code!

zygurat789

Beastface wrote: »

Hi,

I'm for the first time considering a move from car allowance to company car due to the higher mileage I'm now doing. I think I have fully understood the calculations but would appreciate someone could just validate my understanding.

I have ignored the allowance payment for now to keep the figures balanced and easier to understand.

Salary: £57,475
Current Tax Code: 862L
Take home salary: £3,331

Company Car Tax (as calculated by comcar.co.uk): £2434
New Tax Code: 619L
Take home salary: £3250

Thanks in advance,

BF

You reduce the code number by the notional extra income of the car, otherwise known as the benefit in kind, NOT the tax payable which your figures indicate.
You are right to ignore the "allowance" just add it to your salary which is what it really is.