Company car BIK anomoly

[RicksAlfas]

Looking at Comcar, it seems someone earning £7,200 would pay no BIK on a small car (Honda Jazz in this example).

Is it because the salary and the taxable value of the car are (just!) below the £12,500 personal allowance?

[stumpage]

Correct.

[RicksAlfas]

Ta.

[arguti]

Every day's a school day!

does that only apply if salary, relevant earnings or gross income are below personal allowance ie if one paid a small salary and larger dividend?

[Sheepshanks]

arguti said:

Every day's a school day!

does that only apply if salary, relevant earnings or gross income are below personal allowance ie if one paid a small salary and larger dividend?

Dividend counts towards the tax threshold and most dividend it taxable now - it's not the benefit it once was. And it's the total including the BIK value of the car - you can't earn just under the threshold and get the car "free".

[C350Akra]

IIRC the car BIK gets added to the 'salary' before the dividends so you would end up paying dividend tax rate on the total dividends and getting the car free rather than paying dividend tax on less and paying standard tax on the car BIK.