Comp car scheme opt out
#1
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Comp car scheme opt out
If you have a company car scheme and opt out, do you usually get the allowance paid basically as extra salary and taxed in the usual way? Does this allowance usually include business mileage?
Alternatively, if you just claim business mileage, does this get taxed?
Wanting to avoid the wife ending up with a $hit Vectra and paying a fortune in tax when you might be able to buy a pokier used BMW or Audi and keep your own maximum NCB going.
To my mind, company scheme = Vectra diesel and lots of tax
Private = used V8 saloon fun
Please educate me so I don't have to drive a Vectra now and again
Alternatively, if you just claim business mileage, does this get taxed?
Wanting to avoid the wife ending up with a $hit Vectra and paying a fortune in tax when you might be able to buy a pokier used BMW or Audi and keep your own maximum NCB going.
To my mind, company scheme = Vectra diesel and lots of tax
Private = used V8 saloon fun
Please educate me so I don't have to drive a Vectra now and again
#2
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I opted out and got what amounts to a salary increase to cover the cost of buying/servicing/tyres, etc. This is treated as taxable income. In addition, I get 10p per mile to cover petrol.
However, the revenue allow 40p per mile for the first 10k miles and 25p per mile after that to be received tax free so I can claim a tax rebate on the mileage allowance that I don't get. (this is done on the annual tax return)
As an example, on 20k business miles I would receive 10p x 20,000 (ie £2000). The Revenue would allow 40p x 10,000 plus 25p x10,000 (£4000 + £2500 = £6500). I reclaim tax on £6500 (Revenue allowance) minus £2000 (which I actually received), so 40% of £4500 means that I get a cheque for £1800 from the Revenue.
However, the revenue allow 40p per mile for the first 10k miles and 25p per mile after that to be received tax free so I can claim a tax rebate on the mileage allowance that I don't get. (this is done on the annual tax return)
As an example, on 20k business miles I would receive 10p x 20,000 (ie £2000). The Revenue would allow 40p x 10,000 plus 25p x10,000 (£4000 + £2500 = £6500). I reclaim tax on £6500 (Revenue allowance) minus £2000 (which I actually received), so 40% of £4500 means that I get a cheque for £1800 from the Revenue.
#3
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I had no choice but to opt out (company no longer do company cars)
I get 500 a month, and just appears as extra salary (IIRC), you still get the full tax & national insurance to pay on it
But then I claim back 12.5p per mile for all business miles, and at the end of each year I complete a tax return to claim back the difference as Douglasb mentions above
This year I got 1600 back from the IR
I get 500 a month, and just appears as extra salary (IIRC), you still get the full tax & national insurance to pay on it
But then I claim back 12.5p per mile for all business miles, and at the end of each year I complete a tax return to claim back the difference as Douglasb mentions above
This year I got 1600 back from the IR
#4
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Another example - I opted out of the company car scheme for which I get a cash sum instead (about £500 a month). They also gave me a fuel card (bless 'em ), but I'm not allowed to claim any expenses for business use - although I do use my fuel card for both private and business mileage.
On my P11D each year there is the sum I've spent on the fuel card. This is effectively untaxed income and I'm liable to pay 40% of that as tax. However, I can offset what business mileage I do using the IRs figures as quoted by douglasb above. I'm normally left with a tax bill for about £400 which is collected via PAYE - so it's not too painful.
In the grand scheme of things, I'm winning big time, when I look at how much fuel goes on my card
On my P11D each year there is the sum I've spent on the fuel card. This is effectively untaxed income and I'm liable to pay 40% of that as tax. However, I can offset what business mileage I do using the IRs figures as quoted by douglasb above. I'm normally left with a tax bill for about £400 which is collected via PAYE - so it's not too painful.
In the grand scheme of things, I'm winning big time, when I look at how much fuel goes on my card
#5
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Another option (if your wife has a good idea of what her business mileage will be) is to tell the Inland Revenue what the mileage will be and what the mileage allowance is in advance. They can then change her tax code so that she gets the tax rebate monthly. At the end of the tax year, she completes the tax return as normal and any adjustment in either direction is made then.
Like *Sonic*, I opted for the "once a year" rebate as it would be too easy to spend an additional £140 per month rather than save it to offset any unexpected costs. The lump sum goes straight in the bank.
Like *Sonic*, I opted for the "once a year" rebate as it would be too easy to spend an additional £140 per month rather than save it to offset any unexpected costs. The lump sum goes straight in the bank.
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