Help! Worse off after pay rise?

WLITC

​So I've been promoted at work and I got a £1k rise and £7k 'car allowance'. I don't actually get a car or have to buy a car so combined it's essentially a £8k pay rise. I believe the car allowance is what's called a benefit in kind?

Anyway, excited to see what my new take home salary would be I plugged all the figures into a salary calculator and I was shocked to see that it throws out a figure about £182 less a month than I get now?

According to theSalarycalculator.co.uk with a basic salary of £39,300 I'll bring home about £2,484 but if I add in the £7,000 taxable benefit its brings it down to £2,302. Surely this can't be correct?

Nick_C

I think you are misusing the tax calculator. If your employer was giving you a company car that had a value of £7K a year, your take home pay would drop because you would have to pay tax on the value of the car. Because your £7K is simply an allowance to do what you like with, I think it will just be taxed as salary. So gross = £46,300 and net monthly = £2,848

CLAPTON

WLITC wrote: »

​So I've been promoted at work and I got a £1k rise and £7k 'car allowance'. I don't actually get a car or have to buy a car so combined it's essentially a £8k pay rise. I believe the car allowance is what's called a benefit in kind?

Anyway, excited to see what my new take home salary would be I plugged all the figures into a salary calculator and I was shocked to see that it throws out a figure about £182 less a month than I get now?

According to theSalarycalculator.co.uk with a basic salary of £39,300 I'll bring home about £2,484 but if I add in the £7,000 taxable benefit its brings it down to £2,302. Surely this can't be correct?

it's not a benefit in kind
it's simply an increase in salary

somethingcorporate

As per the above, car allowance is a bit of a misnomer since it's just extra salary and is taxed as such.

WLITC

Phew, thanks all that's a relief! :j