How to work out exact budget on car allowance

20vt-rs

Going onto car allowance shortly, and have been doing some sums etc and not sure if this is the best way to work out my exact month allowance that I will actually take home. (I have used general sites that go on 20% or 40% basis but some of the allowance is 20 and some 40 for me)...

So
Using this site:
http://www.thesalarycalculator.co.uk/salary.php

I firstly fed in my current tax code, salary amount, salary sacrifice pension amount to get my current monthly take home, and that seems pretty much bang on.

Then did the same again but added the £7300 car allowance as a bonus (so it doesn’t get included in salary sacrifice pension calculation, which my allowance wont either) and fed in what my new tax code would be with no company car BIK on it, to get a monthly figure including the allowance.

With the two figures I took the first away from the latter and that gave me my monthly car allowance...

Does this sound like the best way to work out the exact number?

Thanks

jimmo

I’ve never seen that tax calculator before but, from a quick look, it seems to handle bonuses as single annual payments whereas your car allowance will presumably be paid monthly.
In your case that could throw an anomaly on N. I.
Again, from a quick look, they seem to ask you to input an actual figure for Salary Sacrifice as opposed to a percentage of your gross earnings.
If I’ve got that right then you will get a more accurate result by increasing your annual salary by the amount of your car allowance.
Just in case you haven’t thought of them:
1) There will be a delay between your switching from a company car to car allowance and HMRC adjusting your PAYE code.
2) Whilst you will be able to claim tax relief on the difference between what your employer pays you in mileage allowances and the HMRC official rates you won’t be able to make your first claim until the end of the tax year.

20vt-rs

Hi thanks for the response - Yes the calculator handles the bonus but gives results in daily / weekly / monthly / yearly. So to get my monthly I entered in my monthly allowance I'd get paid and it adds it with no pension contribution deducted from it.


I did it that way so that the pension deduction doesn't get included in the allowance value, as it won't when I get it paid into salary. Reference the pension (salary sacrifice), the calculator does actually ask for a percentage amount.


Good pointers on the PAYE coding and tax relief, for budgeting I haven't included any of the mileage allowance relief so that will be a bit of a yearly bonus. I will also make sure I call the HMRC myself to get coding adjusted, not relying on my employer to do this!


Any other feedback appreciated if this approach in post 1 is correct to work out my exact take home allowance.
Thanks.