05-30-2016, 03:16 PM | #1 |
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Stupid BIK question!
Please do not roast me for this as I should know, however......
Does income from a secondary source (another company in the form of dividends) count towards income for the purposes of BIK? for example I work for company 1 and earn at the 20% tax rate, my company car is provided by company 1 and I pay tax on the BIK at 20%, combined BIK and salary is under the 40% threshold! I take a dividend from company 2 which is declared on my tax return which puts my overall income in a higher tax bracket! Is my company car from company 1 taxed at 20% or will I owe and additional amount of money in light of my higher overall income? #manmaths!!! Last edited by Richtw; 05-30-2016 at 03:35 PM.. |
05-30-2016, 03:27 PM | #2 |
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I'm no expert but I too have two incomes. One from PAYE and one from my own company.
Now I'm no expert but I declare everything on my self assessment, which includes my P11D (bik stuff) and the nice tax man then tells me how much to pay over and above my PAYE return. What's the 45% rate? Shouldn't this be OFF TOPIC??
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05-30-2016, 03:35 PM | #3 |
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It should be off topic but I can't move it now!! Oops!
Yes I submit my self assessment but that only gives me an amount to pay! My question really is if I buy an M3 am I taxed at 20% BIK or 40%- bearing mind the benefit is derived from company 1 and not my shareholding? My total income would indicate 40% but do HMRC see it that way? Have edited the 45% additional to 40% higher rate for clarity! |
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05-30-2016, 03:39 PM | #4 |
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You will be taxed at your marginal (higher) tax rate on any income over the basic rate threshold I'm afraid. Doesn't matter which part of your income, pay, dividend or BIK, the effect is the same.
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05-30-2016, 03:51 PM | #5 |
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As BnB says, that amount you pay will include the shortfall from your day job tax rate and will include all of the tax payable at the 40% rate over the threshold for your total earnings.
It's swings and roundabouts.
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05-31-2016, 02:56 AM | #7 |
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Don't forget the new £5k nil rate band on dividend income. If your dividend income is less than £5k you won't pay any tax on it at all.
If you are only slightly over the higher rate threshold, some people see that as a reason to make a pension contribution of the difference to get back the tax as higher rate relief. |
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