UK Company Car Tax Explained - What is Benefit in Kind?

[@DefinitelyNotAGuru]

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[@anthony-ko8nn]

Genuinly brilliant video. Exactly what youtube should be used for. I am just moving into the 40% and offered a company car, without this i would have just stung myself. Thank you

[@DefinitelyNotAGuru]

That’s made my day, thanks 🙏

[@anthony-ko8nn]

@@DefinitelyNotAGuru thank you! I don't suppose you have it in your plans to talk about claiming fuel back or getting the company to pay for it completely etc. There seems conflicting information with the current fuel costs

[@DefinitelyNotAGuru]

@@anthony-ko8nn that’s a tricky one as no two companies handle it the same. Depending on their p per mile rate it’s often easiest just to take that.

[@kanodelta]

Thanks for the information. By far this Is the easiest breakdown to understand and actually I think you have saved me from possibly making a huge mistake.

[@DefinitelyNotAGuru]

Glad it helped Kano 👍

[@goatsummoner]

Great explanation and examples. Thanks for putting this together. It does show me that the government has some sneaky ways to glean more money from you.

[@DefinitelyNotAGuru]

There is no end to taxation! 😢

[@theredapartment]

great and clear explanation of a difficult subject

[@DefinitelyNotAGuru]

Glad it was helpful! Thank you Sir.

[@PeteParv]

Great simple explanation of BiK. Liked and subbed

[@DefinitelyNotAGuru]

Thanks for the sub!

[@Eddie123uk]

would have liked if you had given EV breakdown too like you gave example of petrol, because I think EV would suit alot of people

[@DefinitelyNotAGuru]

Well I didn’t but I told you how you could do it yourself 👍

[@sanakhan7409]

Thanks for the breakdown. Is there a way to calculate tax using the P11D value?

[@DefinitelyNotAGuru]

www.tax.service.gov.uk/guidance/work-out-company-car-and-fuel-benefit/start/tax-year

[@1abc219]

thank you - explanation was clear.

[@DefinitelyNotAGuru]

Glad it was helpful!

[@jonnyscott6992]

Fantastic video! Thanks

[@DefinitelyNotAGuru]

Glad you liked it!

[@ThePrivateerBiker]

This really helped, thanks

[@DefinitelyNotAGuru]

Thanks for watching Jon Harker and for leaving a comment, really appreciate your support - please tell a friend 🙏👍

[@jimmylittleuk]

Thanks for this. Great video

[@DefinitelyNotAGuru]

Thanks for watching Jimmy Little, really appreciate your support - not the most exciting topic but glad you liked it - please tell a friend and follow me on Twitter @notaguru3 👍

[@DaveSeddy]

Thanks was a really useful video.

[@DefinitelyNotAGuru]

Thanks

[@ambrosiasrecipes6365]

Excellent video, very informative. Don't know if you would consider doing one on a company motorcycle ? - including things like saftey gear etc.

[@DefinitelyNotAGuru]

Thanks very much, unfortunately I know nothing about motorcycles, I would assume that the benefit in kind works in a similar way but have no experience I’m afraid 👍

[@connor25]

Worth mentioning anyone who is paying CMS, they can include this extra i.e. £10K BIK into the pot and you get double stung as taxed at 40% then pay a further 20% for CMS off the top.

[@DefinitelyNotAGuru]

CMS?

[@royalbiscuits8442]

@@DefinitelyNotAGuru I think he means Child Maintence?

[@burdesok]

Could u explain if the Car Cost taken is after depreciation over the years or the price company paid at the time?

[@DefinitelyNotAGuru]

Neither. It's the brand new list price of the car plus any optional extras.

[@-Chunk]

Thanks very much for this. Put a lot of work into the videos, I can tell. I currently have a PCP and the company pays me the monthly cost. Do I have to pay tax?

[@DefinitelyNotAGuru]

I do mate but hopefully it will pay off one day. Good comments on follows helps keep me going so thank a lot. So you are getting a car allowance then which is taxable in the same way as normal income.

[@-Chunk]

car lease? hire purchase? pcp? what's the best way?

[@DefinitelyNotAGuru]

@@-Chunk if it’s a company car then leave it to the company. Makes no difference to you as your tax is based on the car, not how it’s paid for. If you’re getting one yourself a lot depends on your mileage but PCP, in my opinion, is always the worst way of buying a car. Either lease it on a lease deal or get a bank loan. Traditional car finance often sucks. I’ve done a few videos comparing all the different deals so have a deep dive through my videos.

[@-Chunk]

@@DefinitelyNotAGuru yeah understand . With the PCP though, company are paying for it for 3 years but its in my name. i still owe 11k on it, but most “buy car” companies quote me 16k for the car, so thats 5k in my pocket.

[@DefinitelyNotAGuru]

@@-Chunk the company are paying your pcp but it’s in your name??? You need to get some advice on that mate, sounds highly irregular and possible tax evasion. Just get some advice on it mate.

[@TheJNB93]

Thanks for the video. As the tax is very low for an EV how much would a Charge Card work out to? At 2% assume this would be worth while

[@DefinitelyNotAGuru]

Hi, soirry, I don't quite understand the question? is this a benefit in kind? if it's 2% BIK for free charging and you're not just going to charge at home 90% of the time it's probably a great deal - if that was your question. Sorry, it's Friday and my brain is slowing up :)

[@struanmills5710]

Great video. If it can be proven that a vehicle is only used for business miles would it be exempt from tax? Or does this not matter is the vehicle is in your possession and insured for personal use?

[@DefinitelyNotAGuru]

Nope, you're damned either way.

[@davidboyd4090]

Great video!!, I earn a basic wage plus I pay myself dividends of 40k approx, how does this work? Does it take dividends into account?

[@DefinitelyNotAGuru]

Hi David, I assume you have a LTD company but not sure about your VAT situation. Best advice to you is that you need to speak to your accountant before taking on a company car - simple as that really. Depending on your tax situation there are "right ways" and "wrong ways" of doing things so speak to your accountant to find out the best way for you. They get asked this almost every day so should have all the answers to hand and will understand your circumstances.

[@waynetopping1143]

Is the tax you pay only on that one income stream. For example the job which provides the Company Car I earn 38000. Let's say the BKI is 10000. Total 48000. So in theory 20% tax. I also have a military pension which is 11000. Would this contribute. I put all my personal allowance on the Company Car wage.

[@DefinitelyNotAGuru]

Your tax bracket is defined by your total earnings rather than per income stream I’m afraid. Thank you for your service 👍

[@harshjain3915]

Can we do same for used cars? If my company pays me x amount as car allowance can I buy used car or it has to be new?

[@DefinitelyNotAGuru]

Thanks for watching Harsh Jain, you need to check with your company, some let you do whatever you want with your car allowance but if you’re client facing they may say the car needs to be less than X years old 👍

[@harshjain3915]

@@DefinitelyNotAGuru they mentioned its paid with salary and do whatever you want.

[@DefinitelyNotAGuru]

​@@harshjain3915 Brilliant news, just find out how much per mile they will pay you for business trips to make sure you're happy with it. If you're on a car allowance you probably will be getting much less than the normal 45p per mile for business trips so make sure you're happy with what they would pay. Great that you can do what you want with the money though.

[@Russh88]

Hello. Great video. Really helpful. I have a question please. If my wage is 45k per year. And i get a car with a 10k bik, that will take my yearly earnings to 55k. From your replies to others it would apper that i will be charged 40% tax in the car but my question is will i also be charged 40% on my 45k wage or will that stay at 20%? Thank you

[@DefinitelyNotAGuru]

You will basically be taxed as if you’re earning £55k. Your employers accountant or HR should be able to tell you exactly how it will affect you. You could try and find an online tax calculator too. 👍

[@Ryanbolts]

hi mate, quick question, would the employer take out the tax from your monthly pay pack?

[@DefinitelyNotAGuru]

Yes, your tax code gets changed so it’s adjusted in PAYE, it can take a few months though which means you may have to pay some back tax if so

[@Onkarr]

👍top content, are Toyota hybrids classed as an EV?

[@DefinitelyNotAGuru]

Thanks bud. An EV is when it’s 100% electric generally. Hybrids are just that 👍

[@Onkarr]

@@DefinitelyNotAGuru Topman, keep up the great work 🙌🏅👍

[@daveblunt]

what happens when you pay a personal usage charge? do you know how this impact the tax and if its worth it? ( example pay £60 a month for a standard Vauxhall Astra )

[@DefinitelyNotAGuru]

For the personal petrol do you mean? it can have a big impact, again it doubles if you're a 40% taxpayer. There is a calculator on the government website which will help you judge it.

[@nagromat]

Does the P11D value change year on year with the same car? Say I get a car with 30k p11d, is it still 30k for year 2? and year 3? Thanks for the clear video, and sorry if you already cleared this up and I missed it!

[@DefinitelyNotAGuru]

Honestly Tim, I'm not 100% sure but THINK the P11D valie is fixed at the time of purchase as it's the Purchase Price of the car + options etc and not a current value.

[@timbrown1452]

Sorry, probably a silly question - are there 2 tax increases from having a company car - income tax and the additional car tax based upon the P11D value? Or is the BIK value only added to the income figures for the purpose of calculating the tax band (20%/40%)?

[@DefinitelyNotAGuru]

The BIK value is added to your income which then may push you into the 40%, I.e 45k salary + 10k bik puts you into 40%. Once you’re at 40% even by £1 you pay 40% tax on the car.

[@timbrown1452]

@@DefinitelyNotAGuru thank you. So effectively a double hit, ouch!

[@duckman5642]

I get Cabs everywhere. Am I saving?

[@DefinitelyNotAGuru]

I doubt it

[@tabbytabster81]

Do you add Bik value of the car on top of your annual salary?

[@DefinitelyNotAGuru]

Yes

[@tabbytabster81]

@@DefinitelyNotAGuru thanks :)

[@tabbytabster81]

@@DefinitelyNotAGuru Hi I wanted to ask if someone's salary is over £37250 per year, will they pay 40% tax or is it 40% tax for someone earning over £50271 per year. Hope that makes sense!

[@sh4f660]

Please can you help me. My company car scheme states 0.5%+BIK. The '0.5%' states the contribution I must pay and decreases by 0.1% each year you stay at the company. For example, first year you pay 0.5%, second year 0.4% and so on and so forth. This is the contribution I must pay, including BIK. I'm not sure what this means. Does anyone have the same structure or could shed some light, please? Thank you

[@DefinitelyNotAGuru]

I’ve never seen that before but seems fair enough. That should be plus BIK though as BIK rules may change and it’s taken as part of PAYE.

[@hundly]

@@definitelynotaguru, can an employee ( not a ltd director but a paye employee) obtain 2 company cars if she is ready to shoulder the tax implication and top up the charge from salary. Reason for asking: i would like to secure 2 cars for me and me and my spouse?

[@DefinitelyNotAGuru]

I don’t see why not but check with your accountant

[@lewisgibson8486]

Can I just ask. With your example. £7,500 is that the figure to come off you tax code allowance? Or is it the figure after you apply your 20% or 40%?

[@DefinitelyNotAGuru]

Yes, two ways to look at it I guess but basically you lose £7500 of your £12500 allowance, this means you pay tax earler and, in theory, move up the company income tax bands earlier.

[@lewisgibson8486]

@DefinitelyNotAGuru Thnak you! Great video!

[@trf3298]

Sorry just to clarify then the 20% tax I’d pay on a £7,500 BIK would be £1,500 per annum?

[@DefinitelyNotAGuru]

That’s it

[@Lee22sas]

£1 into the next tax bracket the. You pay higher tax on the amount In The higher bracket. Not the whole amount of car?

[@DefinitelyNotAGuru]

No, it’s on the whole amount.

[@Lee22sas]

@@DefinitelyNotAGuru why is that? If you earn say 50k you only pay 40% on the amount in that tax bracket?

[@DefinitelyNotAGuru]

@@Lee22sas Because HMRC don't play fair. It's as simple as that. Most people assume it works the same as standard income tax but it's pretty close to theft as far as I'm concerned.

[@umennadipaschal2853]

Good evening sir. I'm Pascal Ndubuisi Umennadi from Nigeria base in Dubai. I work in car polish company in Dubai and this is my 4 years experience in car polish . How I wish I can work with you sir

[@DefinitelyNotAGuru]

Hi

[@umennadipaschal2853]

Good afternoon sir.

[@umennadipaschal2853]

I want to work for you sir

[@DefinitelyNotAGuru]

@@umennadipaschal2853 I make almost no money on here mate so can't take on any staff I'm afraid.

[@umennadipaschal2853]

Okay sir but please sir, can you please help me , with any car polish company name where I can apply or send an email to them.

[@iptrust7985]

I BOUGHT USED CAR £15K CASH, TROUGH MY LTD(I am 100% share holder of the company). CAN I RENT or lease TO ME AS A SOLE TRADER(uber porpose)? AND PAY MONTLY RENT +% BACK TO THE COMPANY TILL I REFUND THAT £15k+%? Thanks

[@DefinitelyNotAGuru]

You need to speak to your accountant mate

[@dukevera4216]

Is vehicle maintenace costs included in the initial car value? or included in any calculations?

[@DefinitelyNotAGuru]

No

[@stuarttranter4353]

Still dosnt make bit of sense.give me some figures I will be paying per month for a car.

[@DefinitelyNotAGuru]

Between £1 and £5000 per month.

[@stuarttranter4353]

@@DefinitelyNotAGuru so can I get a car for around 150 to 200 a month all in?

[@DefinitelyNotAGuru]

@@stuarttranter4353 you can pay about £200 per year if you get an EV., Watch the video again maybe.

[@stuarttranter4353]

@@DefinitelyNotAGuru electric vehicles will never take off.there crap.half the population live in houses with no drives to have charging points

[@stuarttranter4353]

@@DefinitelyNotAGuru how much for a medium size family car like a Ford focus petrol per month any rough prices?

[@thewpew6806]

Frickin tax on everything

[@DefinitelyNotAGuru]

Yep