Hi,
My current job role is changing and it looks like I may be eligible for a company car. Quite an exciting prospect, as the list is pretty broad and within reason (and budget!) there don't appear to be many constraints. Clearly if I am going to accept a 'traditional' company car, I need to be aware of the tax position and I am aware of the benefits of choosing a car with CO2 emissions of 120g/km or below, to minimise the damage to my pocket.
Still getting to the bottom of the details of how the scheme operates, but it seems that I am given a monthly allowance and will then have the monthly operating cost of the car deducted from my pay, together with the company car tax. The details/'benefits' of our scheme include the phrase 'deduction for monthly operating cost are from gross pay'. This implies to me that this is a benefit, rather than something that is going to cost me more than it needs to! There is then a link to a KPMG 'Car Wise' website, which seems to imply that tax and NI can be excluded from the cost of the car. An example:-
Say the monthly operating cost of the car in question is £400 and I am a 40% tax payer. The website implies that the cost from my monthly salary will be £400, less 40%, less a further 2% for NI, which means the amount deducted from my salary will be only £232 and not £400 (obviously with company car tax being deducted in addition).
There must be somebody out there that can verify this 'deduction from gross pay' aspect, so that I can gauge what I can afford and what Mrs Moo will be prepared to sanction!!
Cheers
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Here you go, just follow the menus. Tap in the car/s you're thinking of and then your salary and it'll work it out for you.
www.comcar.co.uk/
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Your tax free allowance is adjusted based on the benefit in kind figure for the car (emissions based). Not checked Humphs's link.
BIK figure reduced your tax free allowance and is based on list price x the BIK tax rate.
Don't forget in 2012/2013 the rates change again and to be on the lowest BIK rate the car would need to omit less than 100g/km CO2.
Last edited by: rtj70 on Thu 3 Feb 11 at 00:44
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>> There is then a link to a KPMG 'Car Wise' website, which seems to imply that tax and NI >> can be excluded from the cost of the car. An example:-
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Be careful here - KPMG 'Car Wise' is a scheme designed to minimise the cost to both employers of providing, and employees being provided with, a company car.
You can't apply the normal company car rules without understanding exactly how the scheme they run for your new employer works.
It may well be an "eco" Employee Car Ownership scheme, where you legally own the car which means you don't actually pay any BIK tax, but they take back the tax you would have paid and use that towards the running cost. If it is an eco scheme, then these are of questionable legality, but that's not your problem and you should take advantage of it while they last.
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Company Car - Deduction from gross pay - Runfer D'Hills
