Company Car BiK (Benefit in Kind) is still good, but not as good as I thought…

[Goaty]

Hi all,

Just had my ‘22 ~ ‘23 Tax Code through, and it appears the Enyaq will cost me £846 in tax, during that period.

So not around £200, which a lot of us at my company understood the tax will be.

Still a lot less than a diesel rep-mobile (nearly £5k for my last car, every year) but not quite the almost ‘free car’ dream I thought I was having !!! I’m not expecting any sympathy by the way !

So apparently for tax year ‘22 ~ ‘23, the amount UK EV company car drivers have to contribute (through a direct deduction against our tax free allowance) is 2% of the value of the car, including options etc. HMRC told me it was 1% last year (which is actually still higher then I thought).

Worth bearing in mind if you’re a company car driver

[concorde1987]

I'm probably wrong, but this seems off to me.

My understanding is you'd pay either 20% or 40% (depending on salary of course), of 2% of the vehicle value? I cannot find any reference online to this change to a flat 2% of the vehicle value.

Will be interesting to see what others have to say...

Thanks,

Andy

[metalmadhammer]

According to my company car scheme I will pay £60 month for Tax in years 2, 3 and 4.

[NeilJG]

I don't believe this is correct.

My tax code has been reduced by £800 which means I'm now taxed from £11770.

Therefore my tax liability is an extra £160 per year, £13.33 per month. (20% of £800)

[ComicGeek]

Hi all,

Just had my ‘22 ~ ‘23 Tax Code through, and it appears the Enyaq will cost me £846 in tax, during that period.

So not around £200, which a lot of us at my company understood the tax will be.

Still a lot less than a diesel rep-mobile (nearly £5k for my last car, every year) but not quite the almost ‘free car’ dream I thought I was having !!! I’m not expecting any sympathy by the way !

So apparently for tax year ‘22 ~ ‘23, the amount UK EV company car drivers have to contribute (through a direct deduction against our tax free allowance) is 2% of the value of the car, including options etc. HMRC told me it was 1% last year (which is actually still higher then I thought).

Worth bearing in mind if you’re a company car driver

That's not correct. As noted above, the tax free personal allowance is reduced by the 1% value for 2021/2022 and 2% for 2022/2023 - so it's the tax on the £846 (£42300 car value) that you pay, either at 20%, 40% or 45% depending on income level.

My car tax is £196 for 2021/2022 (but adjusted to £34.80 to reflect that I only got it last month), and will be £392 for 2022/2023. So yours would be £169/£338/£380 depending on tax rate.

[Goaty]

/\ Thanks for the clarity - my tax code notice has a tax free personal allowance of ‘X’, “less car benefit of £846”

I have spoken to two different people at HMRC and they both told me in simple terms (which is what I need!) that I will pay £846 in tax for having the Enyaq in tax year 22-23.

They mentioned nothing about how my tax bracket actually reduces this impact ‘on my wallet’. What a couple of you have said above, would mean the cost to me is more in line with my expectations (albeit I’d forgotten the rate will rise to 2% from this April).

I’ve been driving company cars for over 25 years but this is the first time I’ve paid attention to the figures (I know, more fool me).

Thanks - looks then like my initial assessment at the start of this thread is wrong. Luckily

[GavinT]

Similar sounding terminology is easily misinterpreted and/or misused. By reducing your tax free personal allowance, your "taxable income" will be increased by £846. You will therefore pay tax on £846, not pay tax of £846.

As others have said, the tax rate to apply to the £846 (to work out the 'impact on your wallet') depends on your overall tax situation which determines which tax bracket you will fall into. Most of the time most people will know which of the tax rate brackets they fall into (20%, 40% or 45%), which is sufficient for this sort of purpose. There are rare situations, if someone wants to get really technical about it, that your marginal tax rate may not be exactly one of the three rates mentioned - but that is a topic for a very different forum.

(Others have used their engineering backgrounds to make very good contributions to various threads in this forum. As a chartered accountant, I feel a bit more confident in putting in my two cents in this case )

[Goaty]

/\ Thanks - it’s much clearer now, and your description adds to the clarity.