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Good afternoon
The question that I have is whether a NRP's CSA obligations will be reduced by opting to receive a company car instead of receiving a cash allowance.
I would like to think that the answer is a 'yes', but I have not been able to find anything on the CSA's website.
Consider this very simple example (random figures used). Gross salary of £2k per month, income tax & NIC £1k per month (i.e. net after tax is £1k per month)
A. Car allowance paid as cash salary of £1k per month
Net income goes up by £1k to £2k. NRP pays CSA at 20% = monthly CSA liability of £400.
B. NRP opts for company car, so does not receive the car allowance of £1k per month
His income is gross £2k less tax & NIC £1k = £1k. However, he has to pay income tax because the company car is a taxable benefit, say £500 of tax on company car.
His net income after company car tax is £500. NRP pays CSA at 20% = monthly CSA liability of £100.
Would anyone care to comment / confirm?
Many thanks!
Hi Donkey,
My recent experience is that CSA/CMS will only calculate on your gross income after pension is deducted so I would expect that if you get the car rather than the allowance then the calculation will be less.
Regards,
Dave
Thanks Dave.
And I don't believe that the CSA can say that NRP is manipulating the figures because I do not think that the rules allow them to substitute a cash element back into the calculation simply because NRP now opts for a company car.
Cheers!
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