- Tax changes mean hike in some company car driver costs
- As the 40% tax threshold is breached child benefit stops
- Some people will lose up to £2,500 each year
Thousands of company car drivers could lose thousands in child benefit by 2014.
Company car drivers face forfeiting child benefit payments totalling thousands of pounds as tax changes push many people into the higher 40% tax bracket.
For a company car driver with three children, up to £2,500 each year could be lost as the threshold for the higher tax bracket drops from £37,400 to £35,000 this year and BIK CO2 bands drop from a lower threshold of 120g/km to 100g/km in 2012/2013.
Mark Norman of used car pricing firm CAP warns that this issue will be the real financial burden for many company car drivers. He states that unless there are changes in future budgets, even where somebody crosses into the 40% threshold by just £1 they will lose £20.30 per week for the first child and £13.40 for each subsequent child.
Norman continues: "It will have a devastating financial impact on many drivers who will have no opportunity to change their car in time. And the lack of information on the basis of BIK rates from 2013 means it is impossible for anybody to order a new company car today which will help them to avoid this issue."
To best illustrate the problem, consider the following example:
Car: Audi A4 2.0 TDI 136 SE
Taxable benefit in 2010: £3,498.95
Taxable benefit in 2012/2013: £4,844.70
So the increase is £1,300 - more than 38% in taxable benefit - and this is bound to tip some drivers over the 40% tax bracket meaning they won't be eligible for child benefit payments.