Car Benefit - Tax implication(s)

[GnuBee]

It would appear that a recent compensation review has decided I should be awarded a car benefit. I've no idea about such things having spent 13 years working as a self-employed stapler.

Can I ignore it? Does the very fact I could have it have radical tax implications?

[Eric Mc]

Yes - it will have tax implications.

Are you actually going to be getting a company car or is your employer just going to pay you additional salary?

[GnuBee]

Eric Mc said:

Yes - it will have tax implications.

Are you actually going to be getting a company car or is your employer just going to pay you additional salary?

I need to clarify, all it states at the moment is Car Benefit, there's no mention of a company car just x amount p/a.

Thanks for the extremely rapid response!

[Eric Mc]

If they are just paying you extra cash, then that just gets treated the same as extra salary - so you will pay more PAYE and Employee's NI on the additional salary received.

On that basis, I expect you will continue to use your own car. If you do, the employer may pay you mileage rates which are tax free as long as they remain below 45p per mile for the first 10,000 miles and 25p thereafter.

If the employer does not pay these rates in full or at all. you can make a seaparate claim to HMRC for tax relief on business mileage.