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Where Taxpayers and Advisers Meet


Joined:Thu Jul 15, 2021 3:36 pm

Postby fletchdirect » Thu Jul 15, 2021 3:44 pm

Thanks in advance for your help. My question is as follows:
Years ago I used to have a company car allowance in lieu of a car - say £300 added to your pay each month, and taxed along with the rest of my income just as additional income. Nothing more, nothing less.
Now in a new job - I face 2 options
a) Take a car off the company car list - I can have anything from a Ford Focus to a BMW 320d
b) Take a cash allowance instead (on the assumption that I would have probably buy a car to use, although I already have one).
HR are telling me that the company car allowance would not be taxed like it used to be - but differently. Given that I have a lot of flexibility on cheap or more expensive cars - I am told that the tax on that cash allowance would be to the same value as the most expensive BIK heavy option on the list. So, not taxed at 40% like the rest of my income and that's it.
Is this true? Its seems a crazy rule.
I checked with HMRC and the said the same but I am not really sure they understood me, but I cannot find any info online about it at all. Most online advice is saying 'just taxed normally as income'. It seems suspect.
Anyone know the truth?

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