Benefit in Kind vs Payrolling

Ed-1

You earn £40,000 salary.

If your employer provides you with a company car as a benefit in kind (reported on a P11D) worth £12,000 can this make you a higher rate taxpayer as your total taxable amount is £40,000 + £12,000?

How is it different to your employer payrolling the company car (adding the cash equivalent to your salary)?

Dazed_and_C0nfused

Yes, the benefit is just another form of taxable income.

The difference is the process, payrolling avoids the need for a tax code adjustment.

[Deleted User]

Ed-1 said:

You earn £40,000 salary.

If your employer provides you with a company car as a benefit in kind (reported on a P11D) worth £12,000 can this make you a higher rate taxpayer as your total taxable amount is £40,000 + £12,000?

How is it different to your employer payrolling the company car (adding the cash equivalent to your salary)?

Just to clarify - is the benefit in mind figure actually £12000? What is the value of the car?

Ed-1

purdyoaten2 said:

Ed-1 said:

You earn £40,000 salary.

If your employer provides you with a company car as a benefit in kind (reported on a P11D) worth £12,000 can this make you a higher rate taxpayer as your total taxable amount is £40,000 + £12,000?

How is it different to your employer payrolling the company car (adding the cash equivalent to your salary)?

Just to clarify - is the benefit in mind figure actually £12000? What is the value of the car?

The BIK value is around £9,000 including fuel (£12,000 is hypothetical).

Also payrolling the BIK affects the personal savings allowance (i.e. reduces it to £500) whereas doing it on a P11D doesn't. Is this right?

Dazed_and_C0nfused

Ed-1 said:

purdyoaten2 said:

Ed-1 said:

You earn £40,000 salary.

If your employer provides you with a company car as a benefit in kind (reported on a P11D) worth £12,000 can this make you a higher rate taxpayer as your total taxable amount is £40,000 + £12,000?

How is it different to your employer payrolling the company car (adding the cash equivalent to your salary)?

Just to clarify - is the benefit in mind figure actually £12000? What is the value of the car?

The BIK value is around £9,000 including fuel (£12,000 is hypothetical).

Also payrolling the BIK affects the personal savings allowance (i.e. reduces it to £500) whereas doing it on a P11D doesn't. Is this right?

No.  The tax impact is the same, you have additional taxable income of £9,000 whether it is payrolled or done through a P11D.