BiK company car / Salary sacrifice pension

hcinc9

Morning all,

I’ve recently changed roles and my new basic salary is exactly £50k, so as it stands I fall in to the 20% BiK bracket for company car tax. I also get a discretionary yearly bonus of circa £5k, which tips me into the 40% BiK bracket for company car tax. 

However, I also pay 15% per month into my company pension, therefore does my taxable income reduce to £42,500, thus meaning I need to have a bonus of more than £7500 to take me in to the 40% BiK company car tax bracket? Or do my pension payments not affect my taxable income at all? 

Thanks

Grumpy_chap

This would be better suited to the cutting tax forum.

Salary  + bonus  + BIK =  income.
Pension contributions reduce income.
Whatever proportion of the balance exceeds the threshold will be taxed at 40%.  That is only the marginal amount - BIK is not just one or the other.

Petriix

Get an EV, then the BIK is 1% of the P11D.

Car_54

hcinc9 said:

Morning all,

I’ve recently changed roles and my new basic salary is exactly £50k, so as it stands I fall in to the 20% BiK bracket for company car tax. I also get a discretionary yearly bonus of circa £5k, which tips me into the 40% BiK bracket for company car tax.

Sorry, the tax band is determined by your total income, including the BIK amount for the car and any other perks.