Hi,

This is twisting my mellon, but before I call up and roast some poor tax advisor, can I check my logic with the great and good on here?

Company car benefit is £4426 for my bmw 318d (58 reg).

I am in the 40% tax bracket, which means if I have understood correctly I owe the tax man 40% of £4426 or £1770ish for the year, so my tax code should be 810L minus £1770 = tax code 633L. (£8105 personal allowance minus £1770)

However I have just got my tax code through and they have taken the full £4426 off my tax free earnings personal allowance, effectively making me pay 100% of the car benefit, not 40% of it.

So my tax code is going to be 367L (£8105 personal allowance, minus £4426).

To me this is WRONG.

But am I right?

I'll be well miffed if they have stuffed it up!!

Looks correct to me!

Your £8105 is the allowed untaxed income, it's not the tax you save. I.e. £8105 allowance @ 40% band = approx £3200 actual saving.

So the BIK for the car is deducted in full from the £8105.

Sorry

No, unfortunatly they are correct.

They remove the full value from your tax code so that you pay tax on that value equaling the £1770ish it doesn't mean you are paying £4426 in tax just tax on the £4426 (If that makes any sense)

Sure it's correct as this means that you will be liable for tax at £3670 and not £8105 so you pay 40% of the £4426 not all of the £4426 assuming that you are £4426 over the 40% threash hold

cheers guys