Nigel Morris from FLEET INNOVATIONS™ looks at the issues – and the consequences – surrounding the recent Autumn statement and interaction of company car benefits in kind and the new child benefit rules
Not many drivers out there with children will have missed last years announcement about the withdrawal of Child Benefit from those earning more than £50,000. For those earning between £50,000 and £60,000 there will be a phased withdrawal.
This will impact a large number of households, but there may be something that company car drivers can do to help themselves and protect their household income from this change.
In the Autumn statement the Chancellor gave some more detail out how this might work and how earnings will be assessed. This included the use of Adjusted Net Income (ANI), previously mainly used to assess restrictions for pensioners!
Basically ANI looks all the value of all income and benefits less pension and charity contributions. So, the value of benefits i.e your company car benefit in kind and the cash allowance or salary sacrifice might make a big difference to the numbers.
The example below illustrates the position with 2 cars and very different benefit in kind charges.
Car A Car B
List Price £28,000 £28,000
|Car A||Car B|
So, plenty to weigh up as making the right decision can make a big difference. Maybe not child’s play, but beating the system can feel like taking candy from a baby, at least!Assuming the employee had a cash alternative of £450 per month (£5,400 per annum) or this was the amount of salary sacrifice they gave up to get the car, you can see that Driver A is better to keep the car. However Driver B should consider changing the car or taking the cash, as the current BIK of £7,000 counts towards his ANI and could keep him in the bracket where he loses some or all of the Child Benefit. However taking the cash or a different car could reduce his ANI and mean that he qualifies for some or all of the Child Benefit as well.