Benefits in Kind taxable at 40% or Basic allowance when just going over the 40% threshold?

pete1975

morning all,   my salary is 43.5K  but I have Benefits in Kind of
£6158 private medical insurance for family of 5
£265 AA cover
and i also have a fuel card which i've estimated I will spend about £2000 a year in fuel

We do claim Child Benefit allowance and my wife doesn't earn a income so I complete a self assessment 


Because my taxable pay is over the 40% threshold, are the BIK taxed at 40% or only the benefits that push you over the threshold tax at 40%


If my total taxable pay is excluding the fuel is £ 50,107.00   (inc medical and AA)  so im still under the 40% tax threshold so far.  
the fuel use only gets calculated by the accountant at work but i do keep a running total myself,   so would the 40% only apply to the fuel I use because its pushed be over the £50,271.00 limit.

thankyou

Dazed_and_C0nfused

Tax would be due at a mix of 20% and 40%, it wouldn't all be 40% if you had some unused basic rate band.

This is a situation where additional pension contributions can be extremely tax efficient.

For example with relief at source contributions you would get,

basic rate relief added to your contribution. 

some higher rate tax relief (saves you tax, doesn't get added to the pension fund)

reduction in your adjusted net income reducing any High Income Child Benefit Charge

Jeremy535897

Benefits in kind are taxable income, and treated in the same way as cash salary for the purposes of calculating how much you pay higher rate tax on. You wouldn't pay 40% on all your salary if it was £50,271 and you had no benefits.

As your adjusted net income for high income child benefit charge will exceed £50,000, you will need to complete a self assessment tax return and pay a modest sum of tax.

You should look at whether an additional pension contribution would be worthwhile.

pete1975

thanks both,  ive been trying to figure out a spreadsheet so i can calculate how much i need to put away each month to cover the self assessment tax bill.   
I should have added that I already contribute more to my pension and the 43.5K is the salary I can reasonably get down to and still pay all the bills etc. 

I could loose the AA cover as I havent used it but then again its one of those things just when i get rid of it then i will need it.  

I also did a good search on private health to see if i could get it cheaper but very hard comparing them all as they all word the exclusions slightly different.

Jeremy535897

The AA cover sounds very comprehensive. You could look at whether it includes cover you don't actually need, and you may also find other companies that are more competitive. However, if you did this:

• you pay 100% yourself rather than 40% plus HICBC
• your employer may be unsympathetic if you can't get to work. but could have done using their cover

If you turn down the private health benefit, again you will find yourself paying 100% of the cost rather than the tax on it, plus you are much more likely to face a reduction in cover.

[Deleted User]

One further benefit of keeping below the higher rate threshold not yet mentioned - benefitting from marriage allowance where your wife could transfer 1257 of her personal allowance to the op - saving £252 in tax.

Grumpy_chap

pete1975 said:

and i also have a fuel card which i've estimated I will spend about £2000 a year in fuel

the fuel use only gets calculated by the accountant at work but i do keep a running total myself,   so would the 40% only apply to the fuel I use because its pushed be over the £50,271.00 limit.

You've not mentioned whether you have company car, own car or car allowance.  Tax on a fuel card is only related to how much you spend on fuel if that is a fuel card for your own car.  If it is a fuel card for company car, then the BIK for the fuel card is linked to the vehicle CO2.

Your Accountant (given you have one already) should have been able to advise on all these questions very simply and with far more accuracy / completeness that even the informed and knowledgeable contributors to this forum (who are answering based on limited information).

I assume you are employed PAYE for an employer, not your own Ltd Co.

pete1975

Grumpy_chap said:

pete1975 said:

and i also have a fuel card which i've estimated I will spend about £2000 a year in fuel

the fuel use only gets calculated by the accountant at work but i do keep a running total myself,   so would the 40% only apply to the fuel I use because its pushed be over the £50,271.00 limit.

You've not mentioned whether you have company car, own car or car allowance.  Tax on a fuel card is only related to how much you spend on fuel if that is a fuel card for your own car.  If it is a fuel card for company car, then the BIK for the fuel card is linked to the vehicle CO2.

Your Accountant (given you have one already) should have been able to advise on all these questions very simply and with far more accuracy / completeness that even the informed and knowledgeable contributors to this forum (who are answering based on limited information).

I assume you are employed PAYE for an employer, not your own Ltd Co.

Hi, its my own car and i only use it for personal use, the accountant is the accountant that sits in our office that looks after the tax and payroll.    And yes im PAYE. 

Grumpy_chap

pete1975 said:

Hi, its my own car and i only use it for personal use, the accountant is the accountant that sits in our office that looks after the tax and payroll.    And yes im PAYE. 

Then, yes, the fuel card BIK is exactly what you spend on fuel.