nick205
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| posted on 14/1/08 at 03:59 PM |
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comapny car tax question
Using the various online tax calculators for company cars they list 1 figure for 22% income tax and a 2nd (almost double) figure for 40% income tax.
Am I right in assuming that the moment you go over the threshold for 40% income tax even by a penny or 2 then you're liable for the full whack
co. car tax?  
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ditchlewis
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| posted on 14/1/08 at 04:13 PM |
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You got it in one
the tax man takes £4500 a year in tax off me for a car in the emissions 18% tax bracket
if you are doing a lot of business miles it may pay you to run your own car and claim every thing you can off the tax man.
ditch
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Paradoxia0
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| posted on 14/1/08 at 04:18 PM |
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No.
The way it is calculated is fairly complicated and I cannot remeber the full insand outs, but in essence only the amount that is over the 40% tax
bracket will be taxed at 40%...
Edit:
As an example (using www.comcar.co.uk), a Honda Accord 2.2CDTI Sport will cost:
At 22%
Car - £803 per year
fuel - £602 per year (if you get this too)
At 40%
Car - £1459
Fuel - £1094
So for car only, best case it will cost £67 oer month, worse case £122 per month!
Mark
[Edited on 14/1/08 by Paradoxia0]
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ditchlewis
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| posted on 14/1/08 at 04:29 PM |
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i'm sure that is only for income tax. company car tax is different.
beware that optional extras are also are not calculated the same way and add to the tax burden.
the value of my car is £26500
with an 18% emission based tax liability.
£26500 divided by 18% = £4770
therefore i'm liable to tax on a sum of £4770. I'm a 40% tax payer so my tax is 4770 divided by 40% = £1908 divided by 12 months = £159
per month which it is......
company cars are treated as a perk but where else can you get an insured, taxed and maintained 3 series estate for under £160 per month.
ditch
if you are a 40% tax payer then all the benifit in kind will be taxed at 40%. if you take a car allowance that is taken at 40%, but being a smaller
amount that the B.I.K. the tax is less. If you do a lot of business miles say over 12K it may well pay to own your own car. on one car i owned i did
37k Business miles in that car and claimed almost £1000 per month.
[Edited on 14/1/08 by ditchlewis]
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Humbug
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| posted on 14/1/08 at 04:31 PM |
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I think it is the taxable amount that has a fairly complicated calculation, not the tax itself, i.e. depending on the value, cc, CO2 emissions,
etc. the car has a taxable amount of £X. That £X gets added to all your other taxable income, then it's the normal tax calculation: up to the
threshold is 0% tax, then a band at 10%, a band at 22%, the rest at 40% (not sure if the rates are still current but the principle is the same)
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Thinking about it
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| posted on 14/1/08 at 04:36 PM |
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I think the benefit in kind value of the car also counts as income. So could push you into the 40% even if the salary is below.
An accountant will be along soon to explain. All I know mine costs more and more each year. I am about to choose a new one. This time I will look at
the cost to me not so much the car. All those goodies I never use cost me every month.
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NeilP
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| posted on 14/1/08 at 04:43 PM |
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'Thinking about' it has it right - The car determines a benefit in kind which is treated in tax terms no differently than income.
Therefore if your Co car takes you over the 40% bracket then the proportion over the threshold will attract tax at 40%.
Death and taxes, folks...
If you pay peanuts...
Mentale, yar? Yar, mentale!
Drive it like you stole it!
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nitram38
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| posted on 14/1/08 at 04:46 PM |
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That is why I am self employed.
I get tax relief for my car, not Tax Grief.
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r3nuf
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| posted on 14/1/08 at 05:17 PM |
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A company car (or van) and fuel supplied is treated as a benefit in kind. Therefore the benefit to you (which is calculated using the co2 emissions
/percentage X car value) is deducted from your personal tax allowance.
With less personal allowance you hit the 40% tax threshold sooner, at which point any income above this threshold, incurs the higher rate.
Also note that the benefit in kind value for "free" company fuel is increasing in April by approx £2000.
Drive Fast....Brake Late....Take Chances
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MikeRJ
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| posted on 14/1/08 at 05:50 PM |
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quote:
Originally posted by ditchlewis
£26500 divided by 18% = £4770
That certainly doesn't work out using the maths I was taught
£26500 + 18% = £31270
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Thinking about it
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| posted on 14/1/08 at 06:21 PM |
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It's 18% of £26500 not plus 18%.
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MikeRJ
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| posted on 14/1/08 at 06:42 PM |
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quote:
Originally posted by Thinking about it
It's 18% of £26500 not plus 18%.
You know what, I read the value as £47700 (extra zero). Should have gone to spec savers I suppose
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Ian D
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| posted on 14/1/08 at 07:27 PM |
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If your looking one of the best cars for the new financial year is the BMW 1 and 3 serries. the 2.0l diesels will be only 13% tax with the diesel
surcharge.
Dont forget with the company car you dont pay for tyres, insyurance, repairs servicing and if it breaks down you get a free hire car. It would take a
lot to leaver me out of mine.
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Ian D
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| posted on 14/1/08 at 07:27 PM |
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If your looking one of the best cars for the new financial year is the BMW 1 and 3 serries. the 2.0l diesels will be only 13% tax with the diesel
surcharge.
Dont forget with the company car you dont pay for tyres, insyurance, repairs servicing and if it breaks down you get a free hire car. It would take a
lot to lever me out of mine.
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Thinking about it
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| posted on 14/1/08 at 07:52 PM |
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Diesel surcharge ?
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ditchlewis
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| posted on 14/1/08 at 08:59 PM |
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i work in the office so the milage i do is not enough to warrent running my own car.
as pointed out, it means free tires, free servicing, free insurance, no depreciation
etc. it is a big perk and worth the tax
ditch
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Dangle_kt
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| posted on 14/1/08 at 09:32 PM |
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I only got a company car about 6 months ago. No body told me I had to phone the tax office to pay for the company car, as my company does not view it
as their responsibilty to sort it. But I'd been in the car for 6 months when I heard someone talking about it and started asking questions. Now
I have a HUGE bill waiting for me. I am currently in a pool car though, so I'm thinking of waiting till I'm allocated a new company car
and THEN contacting the tax office and play dumb about the 8 or 9 months I havn't declared....
I hate to think the number of people in our place that dont declare and dont know any better!
Oh and if the tax man reads this then I am writing about a friend of mine, in first person.
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nick205
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| posted on 14/1/08 at 11:44 PM |
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quote:
Originally posted by Dangle_kt
I only got a company car about 6 months ago. No body told me I had to phone the tax office to pay for the company car, as my company does not view it
as their responsibilty to sort it. But I'd been in the car for 6 months when I heard someone talking about it and started asking questions. Now
I have a HUGE bill waiting for me. I am currently in a pool car though, so I'm thinking of waiting till I'm allocated a new company car
and THEN contacting the tax office and play dumb about the 8 or 9 months I havn't declared....
I hate to think the number of people in our place that dont declare and dont know any better!
Oh and if the tax man reads this then I am writing about a friend of mine, in first person.
Tell me abot that little gem
Still paying for company miles driven many moons ago in the current car. Finance dept at my work seem to know (and care) less than me about this
issue
On the upside as has been mentioned above co. cars do have the benefit of no other costs incurred. Try 6 punctures in 3 years at £180+ per tyre, 4
seperate cases of serious vandalism requiring new body panels and paint and numerous trips to the dealer for other bits and pieces. Also currently on
my 3rd windscreen too. At least this is all taken care of and not directly out of my pocket.
On balance, it's still worth if for me.
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