company car 22%- 40%

[tali122]

in company car tables it shows how much you will pay as a 22% taxpayer and also 40% - but surely 40% figures are somewhat largely irrelevant on say an everday fiestafocus/ mondeo, but likewise what purpose is there giving a 22% figure for a ferrari/bentley/porsche - surely it would be impossible for a 22% taxpayer to have such expensive cars?- and also wouldn't the inland revenue be highly suspicous of a ,say, a porsche/ferrari owner declaring 22%?

[Buenchico]

Example 1: Fred is a senior employee of a charity dedicated to promoting environmental awareness. His senior position gives him a salary which puts him in the higher tax bracket. The nature of his job involves a good deal of travelling, so the charity provide him with a company car. However, because of the charity's stance on CO2 emissions, they won't provide him with a 'gas-guzzler'. He's told that he'll have to drive a more environmentally friendly car and he opts for a Fiesta.

Example 2: Mary is a fairly well-paid freelance IT consultant. She runs her business as a limited company although she's the only employee. Mary has always wanted to own (or, at least, lease) a Ferrari. She considers paying herself, as managing director, a high salary (which will take her into the higher tax bracket) and then using part of her income to buy (or lease) a Ferrari. She realises, however, that it would be better to pay herself a lower salary (below the threshold of the higher band) and run the Ferrari as a company car.

Both scenarios are 'unlikely' but not 'impossible'. The people who compile the tables are simply allowing for all possibilities.

Chris

[gastwo]

Good examples Chris - and I bet there are a lot more of example 2's going on than you would expect!