I'm shortly going to be ordering a new company car, and have decided on the 520d M-Sport.

According to my calculations, this (depending on spec), will put my Benefit in Kind at somewhere between

 

I think the amount of tax will depend on your overall earnings including the BIK i.e. you don't tax the BIK separately. It's a notional amount of additional income which you add to your salary (and any other BIKs) to produce your gross earnings from which any allowances, such as your personal allowance, are deducted to arrive at taxable earnings. So if you already have earnings part of which are taxed at the top 40% rate, then your BIK is going to add to this so effectively it will be taxed at 40%. Of course, if you like to think of your pint as half full rather than half empty you can imagine that your BIK is the lowest part of the your overall earnings and therefore at least partly sheltered by your personal allowance with the balance only taxed at the basic rate. However, it won't make any difference to the tax you pay overall.

Where this analysis becomes relevant is if the receipt of the BIK pushes you over the threshhold into the 40% bracket.

I can't advise you on whether you should take the company car. Is there a cash alternative? In my former firm most of the employees would take the cash alternative unless they had a high business mileage.

 

Thanks Welshman.

I'm already firmly into the higher tax bracket, so that is not an issue. High mileage in the new role means that opt out isnt really an option for me, otherwise I would straight away.

I currently earn

 

I can see where you are going but that's not how the revenue do the sums.

I assume you are on PAYE in which case the revenue do the sum the same way for everybody

Total benefits (including pay and other BIK's, less pension in some cases) - tax free allowance = taxable pay

taxable pay is then taxed according to the rate tables. First bit at 20% etc.

K codes are generally used where you have multiple income sources but only one of them is PAYE. In this case the tax man tried to adjust the tax collected per month by using the K code AFAIK. They will also sometimes do this to recover unpaid tax.

 

Aldfort,

Yes, I am PAYE.

I've tried calculating:

Salary + BIK (Car & Health) - Tax Free Allowance = Taxable income

And after putting the sums in correctly 2nd time round I got an answer similar to my previous attempts, give or take

 

Go here http://www.hmrc.gov.uk/cars/employee-guidance.htm

If there is anything that is still unclear let me know.

 

Nope, all confused again!

Increased the BIK value of the car & ended up earning more each month after tax as a result! I'm sure I'm going wrong somewhere VERY simple here!

Salary

 

MJ2K

Try this link:

http://www.theaa.com/allaboutcars/co...rtax/index.jsp

It's pretty accurately and it will at least tell you the bottom-line of what the car will cost you.

Regards

Mark

 

Thanks Mark, I've already worked out the value of what the car will cost me, I'm struggling to work out where to add it into the salary calculations....I'm feeling extremely simple, as I'm sure its very easy!

So in the previous example:

Salary

 

http://www.digita.com/tiscali/home/calcula...tor/default.asp
This will give you your code.
Do a search for payslip calculator most have the facility to enter your code and will churn out net pay.