Originally posted by BoggyMcCBoggyFace
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If her BIK for 2016/17 is £4,600 and no other benefits, adjustments etc. then a tax code of 640L is correct and this should ensure that the correct amount of tax is deducted thorough her salary (in this case SMP). If it turns out that for 2016/17 she doesn't received more than £6,400 in salary/SMP etc. then there shouldn't be any tax deducted from this. In effect both the salary and the car BIK are tax free.
If her salary exceeds £6,400 then she'll pay tax on the amount over this at 20% (assuming she won't hit £43,000) and possibly some NI depending on the frequency and amount of payments.
Hope this helps.
Martin
Contratax Ltd
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