Car Allowance - earnings calculation

satish.pand · Post by **satish.pand** » Tue Dec 30, 2008 2:36 pm

Hi,

I get car allowance as part of my salary package. I pay tax and national insurance for this car allowance and this car allowance is declared in the pay slips.

I am planning to apply for Tier 1 and would like to know whether this car allowance can be taken in to consideration for the total earnings calculation.

Cheers
satish

T_mahmood · Post by **T_mahmood** » Wed Dec 31, 2008 8:56 am

hi

I am in the same boat. If the car allowence is declared in the payslip, part of your salary package and you are paying tax on it, then you should include it in your earnings.

Hope this helps.

satish.pand · Post by **satish.pand** » Mon Jan 05, 2009 2:24 pm

Thanks.

Is it a vaid point that all type of allowances for which we pay tax constitutes gross salary and can be taken in to consideration for calculating earnings.

apply4hsmp · Post by **apply4hsmp** » Mon Jan 05, 2009 2:27 pm

satish.pand wrote:Hi,

I get car allowance as part of my salary package. I pay tax and national insurance for this car allowance and this car allowance is declared in the pay slips.

I am planning to apply for Tier 1 and would like to know whether this car allowance can be taken in to consideration for the total earnings calculation.

Cheers
satish

What's ur tax code on your salary slips ? It will not be 603L.
From this the HO will infer you are paying car tax allowance, but no harm in explicitly mentioning it.

But yes all earnings and allowances as long as they are mentioned on salary slip are allowed.

satish.pand · Post by **satish.pand** » Mon Jan 05, 2009 3:27 pm

My Current tax code is 603L . It was initially 543L.

Whats the significance of this 603L?

republique · Post by **republique** » Mon Jan 05, 2009 3:34 pm

satish.pand wrote:My Current tax code is 603L . It was initially 543L.

Whats the significance of this 603L?

thats the deduction
this year it is 6030
couple years back is 5430

apply4hsmp · Post by **apply4hsmp** » Mon Jan 05, 2009 3:41 pm

satish.pand wrote:My Current tax code is 603L . It was initially 543L.

Whats the significance of this 603L?

If it is 603 L u r not paying any car tax allowance or the HM revenue and customs does not know about it.

satish.pand · Post by **satish.pand** » Mon Jan 05, 2009 5:03 pm

apply4hsmp - Are you sure about this 603L?

The reason being that I am sure that I pay tax for car allowance.

satish.pand · Post by **satish.pand** » Mon Jan 05, 2009 5:08 pm

apply4hsmp - Additional point.

In my offer letter, they have seperately specified basic salary = x amount and car allowance = y amount. I will pay tax and NI for both these components.

Also I started this new job in June/2008 and no sure whether this has an impact.

tvn_ramesh · Post by **tvn_ramesh** » Mon Jan 05, 2009 5:13 pm

satish.pand wrote:apply4hsmp - Are you sure about this 603L?

The reason being that I am sure that I pay tax for car allowance.

The tax code can vary because of the P11d benefits you get like if you have Medical insurance, Mobile phone facilities from your company due to which the tax allowance can vary...

hope this is useful...

moneypenny · Post by **moneypenny** » Mon Jan 05, 2009 5:14 pm

satish.pand-

I agree with you. I get a car allowance as well and I have the same tax code. I looked into this on HR Customs and Revenue website and I don't quite get what apply4hsmp means.
On my payslips my basic salary and car allowance (and occasionally a bonus) are added together, this is my gross pay, which is also my gross for tax. So I don't see how I couldn't be paying tax on my car allowance when my payslip clearly shows that I am. I imagine you are in a similar situation and your payslip would look relatively similar.
I think it is only taxed differently if it is a company car, in which case you wouldn't be getting an allowance.

Hope that helps.

Regards,
moneypenny

satish.pand · Post by **satish.pand** » Mon Jan 05, 2009 5:25 pm

In my payslip, there are following entries

Payments
----------
REFERENCE SALARY 3750.00
CAR ALL 379.00
PRIVATE MEDICAL 46.75

Deduction
----------
TAX PAID 889.20
EES NI CONT. 325.16

Summary
----------
Payments =4175.75 (3750.00 +379.00 + 46.75 )
Deductions =1214.36 (889.20 + 325.16 )
Net Pay = 2914.64

In this scenario, I guess I should be able to consider 4175.75( sum of REFERENCE SALARY, CAR ALL, PRIVATE MEDICAL) for earnings. please correct me if Iam wrong.

satish.pand · Post by **satish.pand** » Tue Jan 06, 2009 10:56 am

Any comments please?

moneypenny · Post by **moneypenny** » Tue Jan 06, 2009 10:58 am

It looks fine to me! I don't know about medical insurance but I if you pay taxes on it then it should count.

satish.pand · Post by **satish.pand** » Tue Jan 06, 2009 11:43 am

Thanks moneypenny.

I would appreciate if some seniors like push_hsmp give their comments as well on my payslip.

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Car Allowance - earnings calculation

Car Allowance - earnings calculation

Re: Car Allowance - earnings calculation