Company Car Tax - another question

19ninety

Long story short I started a new job this year with a company car ... it also came with a pay rise and a healthy performance bonus which is seeing me earn £45k before deductions.

That's all great, except the last couple of months I've had nearly £1000 PAYE deducted on my payslip.Logical thing was to call the HMRC and see if there was a mistake as I checked online and found my tax free allowance for the year had dropped to £155.

After three days of trying to get through to a human and a good half an hour of being very patient, despite repeatedly going around in circles as the advisor couldn't explain why the additional tax was being collected, th best answer I got was ... "your Tax is calculated from your Tax Code ... but I can't tell you how your Tax Code is calculated...".



One thing the chap said to me is that I earn £45,000 per year, and that the BIK for the company car is £6,651, so HMRC add that to my projected earning for the year as well as reducing my personal allowance by £6,651 and then say I have a taxable income of £51,651... . So the HMRC advisor said that the Gov are taxing me 20% on £46,195 (as I only have £155 personal allowance), and then 40% on the remaining £5,300.

Is that right? As that way sounds like I'm getting taxed twice..? Or is the BIK value only deducted from the tax free personal allowance, which is how I thought it worked...?

BoGoF

You would be better off posting in the cutting tax forum....but, what is your current tax code and how is it made up?

daveyjp

If its a new job there may be issues from previous employment working their way through the system.

As you are in a higher tax band set up your HMRC account now and you will at least have some idea of how it is worked out.

Also speak to your payroll. They provide the figures used by HMRC.

Cisco001

BIK £6651 will be deducted at income tax allowance.