Company Car Tax - Additional contributions taxed net

ccooke01

Hello,

My employer offers me either a cash allowance or a company car, I can also contribute to the car if the cost exceeds my cash allowance. 

I have recently opted for a company car and due to the type of vehicle, I am making an additional monthly contribution. To my surprise the additional contribution has been deducted from my net pay rather than my gross, which means with the Benefit in Kind on the vehicle I am effectively being taxed twice !

My expectation was that my additional contribution would be deducted before tax because I am being taxed via the Benefit in Kind scheme.

I searched the HMRC website regarding company cars and employee contributions, however the only information I can find is in relation to one-time capital payments, which can be deducted from the overall value of the car to reduce the Benefit in Kind, however it doesn’t mention monthly payments.

In addition, my employer offers a “Salary Sacrifice” car scheme, this is open to all employee’s and I this is deducted before tax, if fact it is the key selling point of the scheme. If I compare the same car on both schemes, the company car is 7% cheaper, however because the additional contribution is being deducted net, the company car is actually costing me 21% more.

My assumption was that the additional contribution would be deducted before Tax and the company car would be treated in the same way as the salary sacrifice option, am I correct ?

Thanks

Carl.

[Deleted User]

When you agreed to make a contribution to the cost of the company car this would be exactly that - your contribution. You could hand a sum of money to your employer each month or, as has happened , the amount is taken from your net pay. There is no tax relief on this.

Dobberah

Purdyoaten2,
What about for an EV? You can salary sacrifice the lease cost of an EV so would this not apply to a capital contribution or a monthly contribution as Carl makes.  Say if the vehicle is £40k and the allowance is £31k then Carl would pay £250 per month out of gross salary? 
D