Company Car tax confusion

pdhenin

Hi All,

I'm starting a new job at the beginning of April and I'm being provided with a company car. I will pay all the fuel on this vehicle and claim back business miles at 14 pence on the mile.

My New salary is £42,000 and I'll be paying 4% into the pension scheme.

The car I have been offered has a benefit in kind of 10,310. I originally thought I'd only pay 20% which is £2062

I seem to be getting different figures on how much company car tax I'll pay some sites say £160 a month, however, when using a site like comcar when I put my salary in it jumps to £238.96. I'm new company car tax so I'm not sure why there is such a difference.

Any help would be greatly appreciated.

Dazed_and_confused

You have to be very careful with sites like that.

They often work on the basis that a company car benefit is taxed at a particular tax rate, say 20% or 40%.

But that isn't actually how tax works.

The car benefit is essentially just additional income as far as working out your tax liability is concerned.

Salary is often irrelevant for income tax, it is taxable salary which counts so assuming your pension is a "net pay" contribution then your taxable salary might be £40,320.

Plus car benefit £10,310 gives taxable income of £50,630.

So based on the information you have provided you might be mostly paying extra 20% tax due to the car but some will be taxed at 40% (in 2019:20).

Or if you are Scottish resident for tax purposes is will be some at 21% and a fair bit at 41%.

But you really need to look at your total taxable income, not just pay and company benefits, and other things like personal pension contributions which might make a difference.

pdhenin

Thanks, I've asked the company to get their accountant do a complete breakdown for me.