Company Car Tax Question?

emeraldbugle

If I earn £32k pa, if I wanted a company car, list price £18000, emissions 150g and also the company pays for private fuel.

Do I pay 22% or 40%?

scope

You might get away with 22%, as the limit for 40% has been raised to 36k this coming tax year.. Probably some of it 22%, and some of it 40%.. From memory when I had a company car I was taxed about £4000 on the car, £2000 on petrol..so add that on to your £32k and do the math.

edit: actually,it seems they are reducing the 22% tax bracket to 20% this year, and dropping the 10% bracket.. Can they not make up their mind?

http://www.hmrc.gov.uk/rates/it.htm

Henners10101

If you have no other significant income the tax rate on the taxable benefit of the company car will almost certainly be taxed at 20%. Although Scope is right that the higher rate limit has increased to £36k this year, he doesn't mention that this means £36k of taxable earnings in addition to your tax free personal allowance of (for most people) £5,445. So for 2008/09 you need to earn 41,445 before paying higher rate tax at 40%.

Bean_Counter

Assuming the car is petrol, the car benefit is £18,000 x 18% = £3,240. The fuel benefit is £16,900 x 18% = £3,042. Total benefit £6,282.

Total salary plus benefits £38,282.

Hence as stated above, depending on any other income, you are taxed at 20% on the benefit.