Dangle_kt
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| posted on 9/7/12 at 05:52 PM |
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Company car tax question
Hi,
This is twisting my mellon, but before I call up and roast some poor tax advisor, can I check my logic with the great and good on here?
Company car benefit is £4426 for my bmw 318d (58 reg).
I am in the 40% tax bracket, which means if I have understood correctly I owe the tax man 40% of £4426 or £1770ish for the year, so my tax code should
be 810L minus £1770 = tax code 633L. (£8105 personal allowance minus £1770)
However I have just got my tax code through and they have taken the full £4426 off my tax free earnings personal allowance, effectively making me pay
100% of the car benefit, not 40% of it.
So my tax code is going to be 367L (£8105 personal allowance, minus £4426).
To me this is WRONG.
But am I right?
I'll be well miffed if they have stuffed it up!!
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PSpirine
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| posted on 9/7/12 at 06:03 PM |
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Looks correct to me!
Your £8105 is the allowed untaxed income, it's not the tax you save. I.e. £8105 allowance @ 40% band = approx £3200 actual saving.
So the BIK for the car is deducted in full from the £8105.
Sorry 
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Alfa145
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| posted on 9/7/12 at 06:04 PM |
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No, unfortunatly they are correct.
They remove the full value from your tax code so that you pay tax on that value equaling the £1770ish it doesn't mean you are paying £4426 in
tax just tax on the £4426 (If that makes any sense)
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jabs
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| posted on 9/7/12 at 06:06 PM |
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Sure it's correct as this means that you will be liable for tax at £3670 and not £8105 so you pay 40% of the £4426 not all of the £4426 assuming
that you are £4426 over the 40% threash hold
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Dangle_kt
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| posted on 9/7/12 at 10:17 PM |
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cheers guys
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