Company Car oe Car Allowance? Please can someone help . .thanks

mickey2012

Hello, I know this is like one of those first world problems . . .but. . . . I have had a company car for the last 13 years, and the company recently changed fleet providers, and the list of cars is quite restrictive, as with 3 little ones all under 5, I would like to get a car with a bigger boot (to fit the double buggy in)

They have offered me a BMW 3 Series Saloon- Audi A4 or similar- all of which are very very nice, but not spacious enough.

I do less than 15k miles per year, so a lot of people are saying I should take the car allowance of £4.2k per year, I currently a basic rate tax payer- but this will take me over the £45k mark- My tax code is currently 0858M/0 so I am not sure what to do . . .can anyone point me in the right direction?

Darksparkle

You'd need to know how much the car benefit was with the company car for a start.

Also what happens with fuel?

Car allowance is essentially just extra salary. You'd then have all vehicle costs to pay out where as with the company car they pay.

booksurr

presumably as an existing company car user your tax code already reflects the benefit in kind hence your code has been lowered to 858

depending on what happens to fuel if you take the car allowance cash instead the BIK would be removed from your code so it is impossible with the info provided to say what impact switching away from a co car would give to you

yes your salary may go over the HR tax mark but you (probably) will get back some of your tax free allowance as well so its not as simple as gross salary split between basic and HR tax as we don't know if your 858 code is due entirely to the co car BIK

jneves

If your company car is the only reason for yout tax code, if you stop using it then your personal allowance will go up by around £2400. That means that only the amount of car allowance over £2400 would be taxable.

You can check on your tax notice or on https://www.gov.uk/check-income-tax-current-year if the company car is the sole reason for your reduction in personal allowance.