Co. car/income tax assistance please...

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Co. car/income tax assistance please...

11 posts & 7 voices | Started 4 months ago by mattp | Latest reply from ScottChegg

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mattp - Member

Following on from the Mini Countryman thread - it strikes me that some of you may be able to assist me in my search for information on this subject. So here goes:

I start a new job in a couple of day's time and the company want to provide me with a car. I have my own car which is on hp and I have asked to go on to allowance for the duration of the loan period and they have agreed. So at the moment I will get £500 p/m gross towards expensing my car with a mileage rate paid through expenses [non taxable].

I haven't had a co. car for over eight years so wanted some help in understanding the tax liabilities this tax year and any changes that are in the pipeline over the next few years. The company are proposing a car up to a value of £35k and I do pay higher rate tax...

Any advice will be greatly appreciated.

mattp

Posted 4 months ago #
bi6 al - Member

google co car tax calculator, its calculated on value of car p11d and emmisions, but all cars are based on full purchase price, you cannot buy a pre reg for 20k and claim its value is 20k it has to be p11d value (list price) i have an octavia vrs and it works out at about 70 a month tax for personal use, it costs 22k new but i believe there are certain cars that are tax beaters like the bmw 320ed and certain volvos as they have such low emmisions.

Posted 4 months ago #
ScottChegg - Member

Mileage expenses are not tax free; but they are low tax up to certain limits.

Currently 45p/mile for the first 10,000 miles, then 25p after

Posted 4 months ago #
ChrisA - Member

You'll be taxed on the allowance but I'm not sure if you have declare which car you have or not to the tax man? I would have thought so though as your tax is based on list price and co2.

I'm not sure that's correct about the fuel allowance though, I don't think you get the allowance per month and then 40p per mile for the first 10,000 miles. I think it's straight to the 12p rate that's applicable was my understanding if your taking the allowance?

If you take a company car, your tax liability is based on list price and co2 emissions plus any extras. If you take a fuel card, this is also taxable. Depending on how many private miles you do depends on if it's worth having, I have a company car and fuel card, it works for me but depends on your circumstances.

I also work on the basis if anything changes with my employer, I can give them the car back and I'm not liable like I would be if I took the allowance and bought my own (not that I expect anything to change job wise but you never know!)

Posted 4 months ago #
cheshirecat - Member

The £500pm car allowance is just treated as salary from a tax point of view, so taxed at 40% (ouch).

Company can still give you the full 45p per mile tax free (just went up from 40p) for business miles. If you get lower than this, you can claim tax relief on the difference between what you get and the 45p per mile rate.

Not a tax accountant etc, etc. Just what I do with my car.

EDIT: 45p for first 10k miles of course. 25p thereafter

Posted 4 months ago #
mattp - Member

i have an octavia vrs and it works out at about 70 a month tax for personal use, it costs 22k

This car for me would be £153 per month [figures taken from the back of what car] as i'm a 40% tax payer!

On balance if I take the £6k pa, take of the 40% ish I'm left with £3,600 in my pocket. Add this to the difference in the mileage allowance taken as a rebate at the end of the year c£1,800 for 25k miles and then add £1,800 from the vRS above I'm left with £7,200 to run my car start to finish.

Is the advantage of not having to worry about maintenance repairs etc really worth it? Honest question...

Posted 4 months ago #
b r - Member

You'll be taxed on the allowance but I'm not sure if you have declare which car you have or not to the tax man? I would have thought so though as your tax is based on list price and co2.

I'm not sure that's correct about the fuel allowance though, I don't think you get the allowance per month and then 40p per mile for the first 10,000 miles. I think it's straight to the 12p rate that's applicable was my understanding if your taking the allowance?

There is very little that is correct in the above..., in fact easier just to discount it.

As for a company car, since they are taxed on RRP+co2 choose on this.

My last company car (2006) ended up been a 2.2i Vectra auto, as it was the lowest net-cost to me for a family-sized auto. And while I could've had a 530d/i, taking the Vectra also gave me additional (taxed) cash-back from not spending my allowance.

Posted 4 months ago #
mattp - Member

There is very little that is correct in the above..., in fact easier just to discount it.

As for a company car, since they are taxed on RRP+co2 choose on this.

So - should I be using the values from what car and similar as the total amount that is deducted "in addition" to my normal tax?

Posted 4 months ago #
mattp - Member

And yes I can absolutely say that the mileage rate paid by the co. is not taxed...

Posted 4 months ago #
wallop - Member

So - should I be using the values from what car and similar as the total amount that is deducted "in addition" to my normal tax?

Company car tax is calculated as follows:

Say you have a car with a list price of £20k. Say it's a diesel and the "Benefit in Kind" is 18% (this figure is determined on a car by car basis by its CO2 emissions).

£20k x 18% = £3600

£3600 is deducted from your personal allowance (£7475) to give you a revised tax free income of £3875

Posted 4 months ago #
ScottChegg - Member

Same with free fuel if that's included. I can't remember what the figure is now it was £16000-ish when I had a Co Car. So as above 18% of this figure, It's probably gone up since then.

I opted out. I've never regretted it for one moment.

Posted 4 months ago #

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