Does your PAYE code include a figure of more than £3,000 for car benefit?

If it does, and you're a 40% taxpayer, the car is costing you at least £100 per month in tax, and in addition to the capital and other costs, it's costing your employer at least £32 per month in employers' national insurance contributions.

The fuel benefit multiplier is currently £16,900 (previously £14,400).

This change will affect employees with company cars and who receive free fuel for private use from their employer. An increase in cost will also be incurred by the employer who will have to pay Class 1A national insurance contributions.

How this affects you?

The cost in tax of this increase in the fuel benefit multiplier at the higher rate is as much as £350, while the company has a cost of up to £112. Consider the alternative of buying a car yourself and avoiding the tax/NIC costs - especially if you cover a high business mileage each year. Even if your employer reimburses you at the maximum HM Revenue & Customs rates, both you and your employer can benefit.

We can help you put together the comparative costs and explain where savings could occur.