Company car tax (trading up)?

[DuFFmAn]

Hi all,

I have a new job which comes with a company car. Unfortunately, the car scheme is different to what I am used to so I am trying to work out what my costs will be.

I know how company car tax is calculated but how is it calculated when you 'trade up'? I can contribute towards the cost of the car by way of a monthly salary deduction after tax.. My question is, how much company car tax will I have to pay?

Let's use an example...

I want a Mercedes C300h worth £40,000.
CO2 emission is 100 and thus 17% for BIK purposes.
My contribution is £200 per calender month.
Lease is 36 months.
I am a 40% tax payer.

So, the taxable amount is £6,800 (£40,000 x 17%) and therefore, the company car tax is £2,720. But, I will be contributing £200pcm towards the car. How does my contribution reduce the amount of the company car tax?

I can't seem to find a definative answer to this... I am hoping it is...

Taxable amount is £6,800 less £2,400 annual employers contribution which equals £4,400 x 40% (company car tax = £1,760).

But some sites seem to suggest that my contribution of £2,400 is deducted from the P11d value of the car and therefore, the revised calculation would be, ((£40,000 - £2,400) x 17%)x40% = £2,556.80.

Thank you for your responses in advance.

Duffman

 

[geraldrobins]

I would say £1760, as on the self assessment form if asks if a contribution is made by the employee and how much. Best to call the Tax Office. I've found them helpful.

 

[flango]

I think the annualised contribution by yourself is deducted from the p111d price and then the tax calculated on that.

I can tell you definitely when I'm back after the weekend as this was also my position when I used to run company cars but that's a few years ago but don't think rules have changed.

 

[Bewva]

There are some websites that will do the calculation for you and you can include a personal amount. Google 'Company car tax' and try a couple. I think Parkers does have it. I think you can even add personal on the HMRC website.

 

[flango]

There are some websites that will do the calculation for you and you can include a personal amount. Google 'Company car tax' and try a couple. I think Parkers does have it. I think you can even add personal on the HMRC website.

That's a good point I used to do all my calcs on ComCar website numbers it gives were spot on.

 

[Rory]

Taxable amount is £6,800 less £2,400 annual employers contribution which equals £4,400 x 40% (company car tax = £1,760).

This ^.

 

[DuFFmAn]

Thank you to everyone that has contributed. I did come across Comcar and also HM Revenue & Customs: CCF-Session Ended

Sadly, it does not become clearer for me.

Both of the above state that tax is reduced in 2 scenarios (See HM Revenue & Customs: CCF-Session Ended) , either by:-

Scenario 1
A capital contribution - Capital contributions made by an employee towards the cost of the car and/or accessories reduce the price of the car for tax purposes up to a limit of £5000.

Scenario 2
Payments made to the employer for the private use of a company car are deducted from the car benefit charge after taking into account periods of unavailability.

To qualify as a deduction

• there must be a requirement in the tax year to make payments as a condition of the car being available for private use
• The payments must be specifically for that private use
• The payments must have been paid in the year.

The payments for private use must be agreed with the employer before the car is used by the employee, and the payment must be for private use and nothing else.


Payments for petrol, road tax and insurance (and other similar supplies and services don’t count even if they are a condition of using the car for private use). Lease payments are also not private use payments (and they are also not capital payments).



So I don't qualify under scenario 1 as I am not making any upfront payment. The car will be leased by the company and all I am doing is contributing towards the lease on a monthly basis. See also the very last sentence in italics above clarifying 'Lease payments are...also not capital payments'.

Under scenario 2, I am not making a payment to make my car available for private use because I can take any car within the company's budget and use it privately. I am only contributing to get use of a better car.

Does anyone have any thoughts?

It is annoying because what is effectively happening is I am being taxed on my income at 40% and I then pay £200 pcm towards a car which will then be subject to full company car tax again.