Car allowance - tax query

chrmar

Hi,

the MSE calculator keeps erroring when I enter some values into it (145k+15% pension), so looking around the internet at various salary calculators I keep getting different figures. 

I’m at a final stage job offer of £145k + 7k car allowance. 

I’m trying to work out if I’ll be better off negotiating something else other than the car allowance as from what I’ve read on hmrc, the car allowance is taxed alongside my earnings. 

With 15% pension deductions:-

Looking at thesalarycalculator.co.uk, I get figures of

145k = £6,287.45 monthly take home

145k + 7k car allowance (taxable benefit entry) = 6,001.32 monthly take home. 

This seems a bit bizarre to me? 

Whilst other calculators like listentotaxman.com show

145k + 7k car allowance = £6,521.08

monthly take home

as this car allowance (which tbh, I don’t need for a car, as I have my own car already) tips my earnings into the 45% rate, I’m wondering if I’m missing something here with these calculators, or if there’s some other thoughts on how I can keep my earnings within the 40% rate by negotiating other benefits. 

The reason I’m confused is if put a salary of 152k in to both of these calcs, they come out at around 6.5k take home. … which is making me lean towards thinking I’m doing something wrong with the calcs?  

any thoughts here/someone in a similar situation have any words of wisdom?

fwiw my negotiation would be primarily around more holiday allowance (this is super important to me) and further pension contributions as I’ll be losing out on both of these areas if I accept. 

Thanks for any thoughts/advice/pointers

Dazed_and_C0nfused

Car allowance is just another name for salary as far as tax is concerned.

Online calculators can be problematic as they don't all work consistently when it comes to pension contributions.

There are three main method of getting money into a pension and they all work in slightly different ways so unless you understand which method is applicable to you and how the online calculator works you are unlikely to get the right outcome.

Net pay
Relief at source
Salary sacrifice 

[Deleted User]

chrmar said:

Hi,

the MSE calculator keeps erroring when I enter some values into it (145k+15% pension), so looking around the internet at various salary calculators I keep getting different figures. 

I’m at a final stage job offer of £145k + 7k car allowance. 

I’m trying to work out if I’ll be better off negotiating something else other than the car allowance as from what I’ve read on hmrc, the car allowance is taxed alongside my earnings. 

With 15% pension deductions:-

Looking at thesalarycalculator.co.uk, I get figures of

145k = £6,287.45 monthly take home

145k + 7k car allowance (taxable benefit entry) = 6,001.32 monthly take home. 

This seems a bit bizarre to me? 

Whilst other calculators like listentotaxman.com show

145k + 7k car allowance = £6,521.08

monthly take home

as this car allowance (which tbh, I don’t need for a car, as I have my own car already) tips my earnings into the 45% rate, I’m wondering if I’m missing something here with these calculators, or if there’s some other thoughts on how I can keep my earnings within the 40% rate by negotiating other benefits. 

The reason I’m confused is if put a salary of 152k in to both of these calcs, they come out at around 6.5k take home. … which is making me lean towards thinking I’m doing something wrong with the calcs?  

any thoughts here/someone in a similar situation have any words of wisdom?

fwiw my negotiation would be primarily around more holiday allowance (this is super important to me) and further pension contributions as I’ll be losing out on both of these areas if I accept. 

Thanks for any thoughts/advice/pointers

As Dazed has said, your salary is £152000 which includes car allowance of £7000. You are confusing car allowance with company car benefit. 

benbread

On top of this - assuming you have a car allowance because you're regularly doing business travel, you may find with your car allowance you'll then be paid mileage below the 45ppm rate (i.e. these advisory rates: https://www.gov.uk/guidance/advisory-fuel-rates).

In this case, you can claim via your tax return relief on the difference between what you were paid and the normal rate (45p)

e.g.

1000 miles paid at 20p/m - shortfall 25p/m
1000 * 0.25 = £250 "out of pocket" which you can add to your tax return as non-reimbursed job expenses and claim back tax paid.

Just make sure you keep records of these expenses - any business travel mileage excluding normal commuting.