Hi everyone,
I've been a contractor with a limited company for five years. I am paid through salary and dividends but I have quite a risk averse accountant (which suits me) and I pay a fairly low salary but not stupidly low..and obviously dividends as well.
My question is around company car P11D 'earnings'. I dont have a car yet but Ive been looking into leasing one. I understand how it all works and I think it'll mean I can have a new car for the same 'price' as buying a three year old one privately.
Now I underand that will incur a P11D value..lets say for arguments sake its 5k. And lets say I pay myself a salary of 11k a year. My question is..if I declared the 5k on my P11D and reduced my salary down to 6k..thus making 11k in total would HMRC just see it as 11k's worth of income (the same as it is now without the car)? OR, would they ignore the 5k and think to themselves that the 6k is a very low salary just like they would if there was no 5k on the P11D and it was just the 6k salary. I hope I'm being clear??
The reason i ask this question is..I need a car..and i'll probably go ahead with the lease option..however, it'll be an even better financial move if I dont have to increase my total income by 5k (by reducing the salary by 5). So in summary what I'm saying is will the low salary fugure (6k) flag up with the tax man?
Any help appreciated. Please no lease vs buy vs use private car and claim the 40p a mile debates as its been done a million times
Thanks
John
I've been a contractor with a limited company for five years. I am paid through salary and dividends but I have quite a risk averse accountant (which suits me) and I pay a fairly low salary but not stupidly low..and obviously dividends as well.
My question is around company car P11D 'earnings'. I dont have a car yet but Ive been looking into leasing one. I understand how it all works and I think it'll mean I can have a new car for the same 'price' as buying a three year old one privately.
Now I underand that will incur a P11D value..lets say for arguments sake its 5k. And lets say I pay myself a salary of 11k a year. My question is..if I declared the 5k on my P11D and reduced my salary down to 6k..thus making 11k in total would HMRC just see it as 11k's worth of income (the same as it is now without the car)? OR, would they ignore the 5k and think to themselves that the 6k is a very low salary just like they would if there was no 5k on the P11D and it was just the 6k salary. I hope I'm being clear??
The reason i ask this question is..I need a car..and i'll probably go ahead with the lease option..however, it'll be an even better financial move if I dont have to increase my total income by 5k (by reducing the salary by 5). So in summary what I'm saying is will the low salary fugure (6k) flag up with the tax man?
Any help appreciated. Please no lease vs buy vs use private car and claim the 40p a mile debates as its been done a million times
Thanks
John
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