Q. I have just started a new job and have been provided with a company car (Audi A4). Whilst I have had company cars in the past, I have been advised that I will also benefit from free fuel for private use, which I was delighted with. However a friend of mine has suggested that it might actually cost me money!  – Is she right?

A. It really depends upon your personal circumstances, but she could be correct! Although it appears generous to receive free fuel, it could end up costing you more in additional tax than the fuel would have cost had you simply bought it yourself. For example, if we assume the model you drive is a mid range A4 and you are a basic rate tax payer, the amount of additional tax you would pay for receiving free fuel will be around £1,000 per year or £83 per month. Or to put it another way if you did less than approximately 750 private miles per month it would cost you money to receive the free fuel. The situation gets worse if you are a higher rate tax payer and the additional tax would be nearer £2,000 per annum! The more private miles you do, the more likely it is that the free fuel benefit will actually be a benefit!

The figures above are only an example and should not be relied upon for any purposes. For an accurate assessment of the additional tax payable, you can access the government Company Car Tax Calculator using the following link: https://www.gov.uk/calculate-tax-on-company-cars

Q. I currently earn the national minimum wage and understand this is increasing and changing soon, can you give me some more details please?

A. The National Minimum Wage is a minimum amount per hour that most workers in the UK are entitled to be paid. National Minimum Wage rates increases come into effect on 1 October 2015.

From this date the following applies:

  • the adult rate will increase from £6.50 to £6.70 per hour
  • the rate for 18 to 20 year olds will increase from £5.13 to £5.30 per hour
  • the rate for 16 to 17 year olds will increase from £3.79 to £3.87 per hour
  • the apprentice rate will increase from £2.73 to £3.30 per hour.

In addition from April 2016, we will see a new mandatory National Living Wage for workers aged 25 and above of £7.20 per hour, with the National Minimum Wage continuing to apply for those aged under 25.

 

If you have a question you would like Trevor to answer, please email it to: yourmoney@rwpfg.co.uk or post it to Your Money, Rutherford Wilkinson Ltd, Northumbria House, 21-23 Brenkley Way, Blezard Business Park, Newcastle upon Tyne, NE13 6DS.

0191 217 3340