Hi
If a director of a limited company reduces their salary from £10k per annum to say £2k per annum so that even by adding the company car tax charge on their income was still under the £10,000 personal allowance would this mean that they would effectively not pay any tax on the co car ?
Replies (3)
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Tax etc. on company car
The company will still be liable to Class 1A NIC and if fuel is provided, to VAT. Care should be taken not to breach NMW rules. PAYE tax might be due depending on the director's PAYE code.
The director may be liable to tax if he his total income exceeds personal allowances.
Employee NI
At a salary of £2k, the director would no longer be receiving credit for a NI contribution, unless he is also employed elsewhere, which may be a factor.
Yes
The answer to your question is yes provided the taxable benefit plus any other income is not more than £8,000.