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Company car


davy_fulla
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Does anyone on here drive a company car?  I'm wondering because I'm going for a job where I would have to accept a company car - this would be for personal use as well.  I've been on the HMRC website and used the calculator and it's came up with the following info.

 

According to the details you have provided, the results are:

 

Car benefit charge (2008/2009) £2,640.00

 

Car fuel benefit charge (2008/2009) £3,718.00

 

 

In order to calculate the tax due on company car benefit and company car fuel benefit, the amounts calculated above need to be applied to an employee's other income and tax information.

 

Without the additional information it is not possible to give the actual amounts of tax liability, however the following examples provide an indication of the tax that would be due if the full amount(s) of benefit are charged at the basic (20%) and higher (40%) rates:

 

Tax Liability indicator: 20% 40%

 

Company Car Tax (2008/2009) £528.00 £1,056.00

 

Company Car Fuel Tax (2008/2009) £743.60 £1,487.20

 

At the 20% tax rate does that mean I would pay £1271.60 tax per year for the car or do I also pay the car benefit charge of £2640.00 and the fuel benefit charge of £3718.00?  I'm just worried that taking this job would leave me worse off.

 

Cheers

 

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You only pay the 20% charge - assuming you earn less than £40k overall for the year (including the car benefit and car fuel benefit charges).

 

The 2640 and 3718 benefit charges are guesstimate amounts that are added to your overall taxable income for that year. Tax is then paid out of that overall taxable income. So if you earn £30k, according to HMRC youve actually earnt £36,358 because of having the benefit of a company car, and therefore they'll tax that at 20% (although they'll remove the personal allowance first from this taxable amount, which is £6k, and is essentially the amount everyone can earn in a year without being taxed on it, so you effectively pay 20% x £30k).

 

If you'll earn more than £34k beyond this £6k personal allowance, and the benefit charges count as income over the "basic rate" band, then you'll effectively pay the 40% "higher earner" rate, which according to the benefit charges would be £2.5k.

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You only pay the 20% charge - assuming you earn less than £40k overall for the year (including the car benefit and car fuel benefit charges).

 

The 2640 and 3718 benefit charges are guesstimate amounts that are added to your overall taxable income for that year. Tax is then paid out of that overall taxable income. So if you earn £30k, according to HMRC youve actually earnt £36k because of having the benefit of a company car, and therefore they'll tax that £36k at 20% (although they'll remove the personal allowance first from this taxable amount, which is £6k, and is essentially the amount everyone can earn in a year without being taxed on it).

 

If you'll earn more than £34k beyond this £6k personal allowance, and the benefit charges count as income over the 34k "basic rate" band, then you'll effectively pay the 40% "higher earner" rate, which according to the benefit charges would be £2.5k.

 

Nice one mate,  that clears things up a bit.  It's just I was talking to someone who works in the same position for the same company the other day.  I was asking him how much he pays for the car (he'll have a better car as he's been there a few years) and he reckoned it was £9k.  I thought that would mean £9k a year was taken straight off my pay - have I understood him wrong?  I'll be loads worse off if that's the case.  The way I've read your reply I'm now thinking he means his car and fuel benefit totals £9k so he would pay approx £1800 a year tax on that?

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D

Do they not offer an opt-out scheme where they pay you an allowance to get your own car? It might be a much better deal (like mine is).

 

Don't think so Dave.  I've got my final interview with them tomorrow so I'll have to get things confirmed if I get offered the job.  There's gonna be a lot of travelling involved so I would assume that I'd be better off running one of theirs into the ground.  Did they pay you so much towards a new motor like and do they pay for your fuel or give you an allowance towards it?

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You only pay the 20% charge - assuming you earn less than £40k overall for the year (including the car benefit and car fuel benefit charges).

 

The 2640 and 3718 benefit charges are guesstimate amounts that are added to your overall taxable income for that year. Tax is then paid out of that overall taxable income. So if you earn £30k, according to HMRC youve actually earnt £36k because of having the benefit of a company car, and therefore they'll tax that £36k at 20% (although they'll remove the personal allowance first from this taxable amount, which is £6k, and is essentially the amount everyone can earn in a year without being taxed on it).

 

If you'll earn more than £34k beyond this £6k personal allowance, and the benefit charges count as income over the 34k "basic rate" band, then you'll effectively pay the 40% "higher earner" rate, which according to the benefit charges would be £2.5k.

 

Nice one mate,  that clears things up a bit.  It's just I was talking to someone who works in the same position for the same company the other day.  I was asking him how much he pays for the car (he'll have a better car as he's been there a few years) and he reckoned it was £9k.  I thought that would mean £9k a year was taken straight off my pay - have I understood him wrong?  I'll be loads worse off if that's the case.

 

Dunno about your pay and how having a company car affects it. But for tax purposes, they'll calculate the benefit that that company car provides you, then tax you a percentage of that benefit. They'll never tax the entire benefit itself.

 

As for £9k, the guy must be a high earner, i.e. he'll get taxed at 40%, and therefore it sounds about right if hes driving an expensive car and/or high fuel emissions.

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D

Do they not offer an opt-out scheme where they pay you an allowance to get your own car? It might be a much better deal (like mine is).

 

Don't think so Dave.  I've got my final interview with them tomorrow so I'll have to get things confirmed if I get offered the job.  There's gonna be a lot of travelling involved so I would assume that I'd be better off running one of theirs into the ground.  Did they pay you so much towards a new motor like and do they pay for your fuel or give you an allowance towards it?

 

If there's loads of mileage then you're probably right. Worth asking the question though for future reference, and you still might find it more attractive to get your own rather than be limited in choice.

 

I get a yearly allowance to do what I want with, which is paid monthly. The car must be under five years old though, and obviously I pay for all upkeep and insurance etc. I also have a fuel (& oil) card, so just pay tax on the allowance and the non-business mileage I do. I get a corking deal tbh, because as the sites I work at are generally less than 12 months in duration, all of my home to work miles are classed as business mileage. So I get tax relief on every mile I do. When my boss got promoted and given a desk in the office it actually cost him money on the car side as a result of losing out on that particular tax-free loophole. :lol:

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Well that wasn't too bad.  It would cost around £150 a month for the car which is quite a bit better than the £9k I thought I was gonna have to fork out.

 

The interview went well and I hear back in the next 7 days.  Just got to work out now whether I want the job or not.  The money and perks are good but the hours are long.  I love my job at the moment but the chances for promotion are rare.  I also don't want to miss the bairn growing up but this would give him a better future.  Me head's done right in  :undecided:

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