Company car tax used car

tasticz

Is company car tax charged at the price you expect to pay the company if it were purchased directly

or is it charged at the rate you buy the used car at

eg a brand new car cost: £32,830, this would be liable for tax of£1,311 @ 20%

if I was to buy a second hand version of the car couple year old @ £10,599 will i still pay the full £1,311 or will i pay tax on the £10.5k only as its the buying price or the £32k


also what happens to car tax if your salary is below £8500 as its tax free?

morgani

Benefit in kind value is always the list price of the vehicle when new so what is pais is irrelevant.

rs65

tasticz wrote: »

also what happens to car tax if your salary is below £8500 as its tax free?

The benefit in kind reduces your personal allowance so you will pay tax.

John_Pierpoint

I think the OP is asking if he might be allowed benefits in kind tax free if he is "lower paid". Could he take advantage of this rule:

Who has to pay tax on company benefits?

If you're a company director, or you earn at a rate of £8,500 or more in a year - including the value of your benefits - then you'll always have to pay tax on any benefits you get.
You may have to pay tax on some benefits - such as living accommodation that's provided by your employer - no matter how much you're paid and whether or not you're a company director.

zygurat789

tasticz wrote: »

Is company car tax charged at the price you expect to pay the company if it were purchased directly

or is it charged at the rate you buy the used car at

eg a brand new car cost: £32,830, this would be liable for tax of£1,311 @ 20%

if I was to buy a second hand version of the car couple year old @ £10,599 will i still pay the full £1,311 or will i pay tax on the £10.5k only as its the buying price or the £32k


also what happens to car tax if your salary is below £8500 as its tax free?

The price of the car, when new, is multiplied by a percentage determined by the car's CO2 emissions and it is the resultant product which is the taxable figure and is added to the salary which is taxed in the normal way unless this product is less than £8500 in which case it is ignored.

nomunnofun

zygurat789 wrote: »

The price of the car, when new, is multiplied by a percentage determined by the car's CO2 emissions and it is the resultant product which is the taxable figure and is added to the salary which is taxed in the normal way unless this product is less than £8500 in which case it is ignored.

I would have to correct you on your last line. There is an entirely different calculation for determining the tax due on a benefit in kind from that which is used to determine whether one is higher paid. In determining whether one earns more than £8500 total running costs of a car are added to salary earned. If for example one earned £6000, car insurance is £1500, tax £150, repairs £1000, the taxpayer would be higher paid as the total is above £8500. At that point the tax on the benefit is calculated. I once fell foul of this rule when coming up against a very diligent tax inspector in my early days as a tax advisor - I have never forgotten it!

http://www.hmrc.gov.uk/guidance/480.pdf

Paragraph 1.7 (b) and 11.14 - not easy to find!

jimmo

Ah! Para 11.14 says


• the settling of a debt incurred personally by the individual in respect of motoring expenses

• the reimbursement of expenditure incurred by the employee in connection with the vehicle,

Therefore if the employee incurs the tax and insurance that is included

If the employer incurs and pays the tax and insurance, it is not.

http://www.hmrc.gov.uk/manuals/eimanual/eim20105.htm

nomunnofun

jimmo wrote: »

Ah! Para 11.14 says


• the settling of a debt incurred personally by the individual in respect of motoring expenses

• the reimbursement of expenditure incurred by the employee in connection with the vehicle,

Therefore if the employee incurs the tax and insurance that is included

If the employer incurs and pays the tax and insurance, it is not.

http://www.hmrc.gov.uk/manuals/eimanual/eim20105.htm

Indeed jimmo - your memory is clearly better than mine!

jimmo

nomunnofun wrote: »

your memory is clearly better than mine!

Not necessarily, I had to look it up.

wronlaster

When your going to buy it direct then its means no company charges.