Company Car and Tax

Mr_Fingerz

LE
Book Reviewer
#3
#4
From my understanding the value of the car (or maybe a proportion of the value)*, is added to your salary and you pay you normal rate of income tax on the final figure. Be careful it doesn't take you to just above the 40% bracket though, you may end up really out of pocket!

*Although, deep in my mind somewhere, it is telling me they work this out based on value, emissions and maybe a few other factors.
 
#5
Mr_Fingerz said:
Go to www.hmrc.gov.uk and use the query box.
Cheers.

The tax you pay depends on a number of factors, the main
ones being
• the list price of the car and any optional accessories
• the car’s approved CO2 emissions figure (see the vehicle
registration certificate, V5C).
• the fuel it uses
• whether you pay a lump sum up front for the car or an
accessory (a ‘capital contribution’)
• whether you have to and do make any regular payments for
private use of the car
• whether it was available for the whole tax year.
Nice and simple then eh? Bl00dy hell!

Anyone offer an average charge?
 
#6
My Sis works for HMRC, always told me if you can get car allowance or use your own car and claim the miles/fuel as it is more tax efficient but thats not always an option....

ring your local HMRC office, they should be able to give you advice - whether its in English, Punjabi, Bangladeshi, Polish, Russian are something else is an entirely different matter.
 
#8
ukdaytona said:
My Sis works for HMRC, always told me if you can get car allowance or use your own car and claim the miles/fuel as it is more tax efficient but thats not always an option....

ring your local HMRC office, they should be able to give you advice - whether its in English, Punjabi, Bangladeshi, Polish, Russian are something else is an entirely different matter.
That is what i am currently doing, however it is not working out in my favour (Far from it, im losing money!) and i am going to get a company van for the days that i am on the road, but keep my personal car as it is now not worth much, as it has run far too many miles for the company, hence the van!

It can be beneficial to have an allowance and claim mileage, but make sure that it is in your favour.
 
#9
Or work for a company that does both :D

I currently have the option of a company car, or a car allowance of £4500 per year. In addition to that I claim milage allowance as well.

BTW. In answer to the original question the £4500 is classed as Salary and is taxable
 
#10
Yes thats right, a car allowance is added onto the value of your salary, so it could take you into a higher band.

Bear in mind that if you pay for the fuel yourself or have a fuelcard and claim against personal miles (As i do) then you will pay VAT on the fuel, whereas your company claims it back :x

(I only get a reduced pence per mile due to the allowance, £4000 and £0.16 a mile is pretty carp iMHO)
 
#11
Detonator said:
Mr_Fingerz said:
Go to www.hmrc.gov.uk and use the query box.
Cheers.

The tax you pay depends on a number of factors, the main
ones being
• the list price of the car and any optional accessories
• the car’s approved CO2 emissions figure (see the vehicle
registration certificate, V5C).
• the fuel it uses
• whether you pay a lump sum up front for the car or an
accessory (a ‘capital contribution’)
• whether you have to and do make any regular payments for
private use of the car
• whether it was available for the whole tax year.
Nice and simple then eh? Bl00dy hell!

Anyone offer an average charge?
It varies hugely depending on the car you choose and whether you have the personal fuel allowance/charge as well.

For something sensible, like a diesel Vectra, you £4 K a year from your allowances if you are provided with the car but claim the mileage back at the approved HMRC rates.

That £ 4K off your allowances translates to about £ 900 in actual cash at lower rate, or £ 1,500 if youy are a higher taxpayer.

The best bet is to play about with the calculator and see what figures it chucks out. Ideally, you'll need to know if your company pay for fuel as well.
 
#12
SparkySteve said:
Yes thats right, a car allowance is added onto the value of your salary, so it could take you into a higher band.

Bear in mind that if you pay for the fuel yourself or have a fuelcard and claim against personal miles (As i do) then you will pay VAT on the fuel, whereas your company claims it back :x

(I only get a reduced pence per mile due to the allowance, £4000 and £0.16 a mile is pretty carp iMHO)
This is true, but you can claim the difference between you 16p andf the HMRC rate of 40p as tax relief for the next tax year
 
#13
IT_GEEK said:
SparkySteve said:
Yes thats right, a car allowance is added onto the value of your salary, so it could take you into a higher band.

Bear in mind that if you pay for the fuel yourself or have a fuelcard and claim against personal miles (As i do) then you will pay VAT on the fuel, whereas your company claims it back :x

(I only get a reduced pence per mile due to the allowance, £4000 and £0.16 a mile is pretty carp iMHO)
This is true, but you can claim the difference between you 16p andf the HMRC rate of 40p as tax relief for the next tax year
The 40p per mile is for wear and tear, of which the car allowance ofsets this, as i understand it i cannot claim for the remaining 24p per mile?
 
#14
I dont claim to be an expert sparky, and am simply giving you my experience here...... but my company drafted a letter on my behalf, whicgh they then forwarded to me with a simple coverign letter saying "Sign this and send it to the tax office". It certainly looks like a scheme that is open to all workers who claim milage from "Normal place of work" to "additional Place of work" (I am a contractor, all be it a permanent one, and so my "official" place of work is my home, and I calim milage to every site I work at.)

I did type up the letter for others to copy, just a few weeks ago.... it is on this thread here. Hope this helps

http://www.arrse.co.uk/cpgn2/Forums/viewtopic/t=76061.html

PS. You can only claim retrospectively i.e that letter was only for my milage in the last tax year, to offset against this years code (Not bad considering I only started working for the company 29th March lol) so next years should be a lot lot more
 
#15
Not having a pop, feller :)

Although you letter describes a situation which is not having an allowance, is that right?

Im changing the situation anyway. Im fed up of spending my own money and running my own car into the ground! I bought the thing with an eye for it to last 3 years (Being the length of the finance deal), and i have put almost 30,000 miles onto it in the last 7 months. Of which, she is starting to run funny, for some reason....
 
#16
Lol, sorry I wasnt having a pop either, What I meant by "I am not an expert" is that I havent read up on it widely, and was just giving you my own personal experience. Yes it is for an allowance. My company pays me £4500 car allowance annually (over 12 months) In addition I claim 20p per mile. The letter is to claim tax relief for the difference between my 20p per mile and the 40p the government allows. This is how it was explained to me in the covering letter the company sent me. I must admit I was impressed with my Admin section doing this for me
 
#17
Im trying to coax my finance team into giving me the offset and let them claim the difference. Not working as yet, i shall try biscuits tomorrow.

Althought the company gets free money in the form of claiming back all of the VAT from the fuelcard, of which i pay back personal miles + VAT. So they get paid twice from it!
 
#18
SparkySteve said:
Im trying to coax my finance team into giving me the offset and let them claim the difference. Not working as yet, i shall try biscuits tomorrow.

Althought the company gets free money in the form of claiming back all of the VAT from the fuelcard, of which i pay back personal miles + VAT. So they get paid twice from it!
If the company pays for your petrol, whether or not you contribute for personal mileage it is an extra benefit for you to be taxed on. (Based on your company car mileage on £14,400).
 
#19
HMRC approved mileage rate - 40ppm for the first 10k, 25ppm thereafter. If your employer pays less than the above, you can claim the difference as tax relief.

If you go the company car route, BIK = list price when new inc VAT, accessories, options, delivery and plates (excluding VED and First Reg fee) multiplied by a percentage which depends on the CO2 emissions. Multiply this figure by your tax band to give your liability.

Also beware the fuel card! Has a 'list' price for taxation purposes somewhere around £13k. Depending on useage, may be better to pay for your squirt up front and claim back as normal expenses.

Bear in mind that you can claim home to site mileage but not home to permanent office (33k home to office for me - pants).

A very very rough rule of thumb is '15/15'. If the list is below £15k, and you're doing less than 15kpa, company car is usually beneficial. ABove this, take the allowance. Bear in mind this is very rough as it doesn't take into account CO2 emissions etc but cheap runabout = company car, shiny passionwagen = private car and take the cash.
 

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