Conpany Car BIK Query

[750turbo]

I posted a question over in GG, but it died a death....

I am struggling to calculate the correct tax due on a potential Co Car, I have used a few websites but am struggling to get the correct answer. Issus is Scottish Tax Rates...

Simple example is:

Salary 40,000
BIK 11.500, petrol, 2.0litre

Comcar.co.uk website is stating that the BIK is added to wages, therefore taking me into the 40% tax bracket, which makes the car expensive. Does this sound correct? I was under the impression that if my wages were in the 20% (or similar up here) I would only be charged 20% on the BIK value? (11% x 11,500 = 2,300)

Have I lost the plot?

[martinbiz]

deleted

Edited by martinbiz on Monday 12th April 20:18

[stuthemong]

If you can get an electric car the BIK is basically nothing - try persuade your employer to go green & save yourself cash in the process!!

[750turbo]

stuthe said:

If you can get an electric car the BIK is basically nothing - try persuade your employer to go green & save yourself cash in the process!!

It's not about getting a cheaper car though - I am happy to pat the going rate of BIK up here (Bloody NATS!), I just need to get my head around the BIK calculation and work backwards from that.

[Sheepshanks]

750turbo said:

I was under the impression that if my wages were in the 20% (or similar up here) I would only be charged 20% on the BIK value? (11% x 11,500 = 2,300)

If only! The BIK value is added on just as if you were being paid another £11,500 so it's taxed as such.

As you can see from the calc, £3K is under the higher rate theshold so you pay a lower rate of tax on that amount. But you blow through the threshold by £8K so you pay higher on the £8K.

[AndyAudi]

Sheepshanks said:

If only! The BIK value is added on just as if you were being paid another £11,500 so it's taxed as such.

What he said!

Not meaning to get personal & pry if you used the £40k as an example or if real Salary but it’s added onto your taxable income which is not necessarily your salary.

If say you made 5% pension contributions depending on your scheme that might take a bit of the sting out of the 41%

[750turbo]

Thanks for the replies - Not what I wanted to hear, but I get it now.

[alistair1234]

I thought 40% tax kicked in at £50k. So if adding £11.5k BIK to £40k salary, would only leave the 41% (Scottish) tax due on £1.5k of salary and a small pension contribution would take the 41% away completely?

Edited by alistair1234 on Tuesday 13th April 09:49

[750turbo]

alistair1234 said:

I thought 40% tax kicked in at £50k. So if adding £11.5k BIK to £40k salary, would only leave the 41% (Scottish) tax due on £1.5k of salary and a small pension contribution would take the 41% away completely?

Edited by alistair1234 on Tuesday 13th April 09:49

Scottish 41% kicks in at £43,663 - https://www.gov.uk/scottish-income-tax

This has been a sore point for a very long time

[PorkInsider]

Company car tax (other than on electrical appliance type vehicles) is a killer.

Can you get an allowance instead?

[alistair1234]

750turbo said:

alistair1234 said:

I thought 40% tax kicked in at £50k. So if adding £11.5k BIK to £40k salary, would only leave the 41% (Scottish) tax due on £1.5k of salary and a small pension contribution would take the 41% away completely?

Edited by alistair1234 on Tuesday 13th April 09:49

Scottish 41% kicks in at £43,663 - https://www.gov.uk/scottish-income-tax

This has been a sore point for a very long time

F4ck! Can't you get an EV? I'm just about to get a Tesla 3 long range as mine and the cost as a higher rate is £16 a month.