Car allowance - BIK savings

Roley32

I currently have a company car and have worked out that as a higher tax payer I am paying circa £400 per month in tax. I have the option to take a car allowance of £500 per month (£300) after tax.

My question is, if I choose to take the car allowance and then lease a car instead, would the BIK be adjusted straight away, meaning I'm £400 better off per month? I was thinking that this would allow me to lease a car for up to £700 per month.

Of course I would need to cover insurance, maintenance etc but it seems like a good option to get a better car.

Car_54

I suspect it won't be adjusted automatically, you'll need to call HMRC.

BTW it used to be the case that any fuel benefit was taxed as a full year, with no pro-rata adjustment, but that may have changed since I gave up my company car.

AdrianC

Whether it's immediate or not depends on your payroll dept. It should be. It'll balance out over the tax year, anyway.