BIK & Payments made towards Private Use

[croxsons]

My BIK is quite a bit too high for my liking, and was looking at the BIK calculator.

There are two main ways that I can see to reduce my tax, capital contribution (not worth it in terms of amount paid out to tax reduction), but with payments towards private use, it says that payments must actually be made. Does this include, a reduction in salary for private use of the car.

I could, hyopthetically, get my employer to offer me £5K more a year, but then I choose to pay £5K a year for use of the car, thus reducing my tax exposure?

Anyone with experience with this before I goto our accountants and find out from their point of view?

[smartie]

surely they would pay you £5K pa which you would be taxed on and then you could repay £3K back to reduce your BiK?

[croxsons]

smartie said:

surely they would pay you £5K pa which you would be taxed on and then you could repay £3K back to reduce your BiK?

the point was that the payment towards private use would then be classed as before tax, a reduction in salary, so I wouldn't be eligible for NI or Inc Tax on that amount?

Purely a piece of paper, a contract if you like, so no "actual" money changing hands?

[Eric Mc]

I doubt if it would be viewed that way. You had to have the salary in order to be able to use it to make a contribution against the Benefit in Kind. Whether you get the wages into your hand is irrelevant.

[croxsons]

hhmm, so in order to make contributions for private use, I am getting taxed on the money contributed, yes Mr Tax Man, that really makes sense.

It is a question for the accountants me thinks. My employer will give me a letter on intent with regard to the salary with deduction. It really depends on how the tax man sees it.

[smartie]

Why wouldn't contributions come from taxed monies? Why should you get tax relief on it?

Surely you've just had an accountants opinion?

[wattsm666]

Any contribution has to be from your net salary, not a gross salary sacrifice. Trust me I'm an accountant.....

[smartie]

otherwise, EVERYONE would say

"oh look, £10K BiK", "I know, I'll just get accounts to pretend I earn £10K more than I do and cancel it out - job done!"