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Thread: Fringe Benefit Tax

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  1. #1
    Join Date
    May 2005
    Location
    Somerset, UK
    Posts
    29

    Red face Fringe Benefit Tax

    Can anyone explain to me (in simple terms!) how to calculate the income tax I would pay on a company vehicle?

    I've had a look at the IRD website but don't think I have sufficient information to use the calculator.

    Does anyone undersatnd the basis of FBT.........

    or is it just me being a bit dim?

  2. #2
    Join Date
    Nov 2004
    Location
    Kaiapoi
    Posts
    452

    Default

    Don't know but will be interested in the answer. Anyd given the impression that the jobs he is going for will give company car and other benefits.

  3. #3
    Join Date
    Jul 2005
    Posts
    1,521

    Default

    Not sure if this is any help, but some companies seem to get round it by giving a cash lump sum (which you pay normal income tax on) and then its up to you to sort out a vehicle with that money.

    OH knows the dateils on the FBT, so ill check and mail it later.

  4. #4
    Join Date
    Jul 2005
    Posts
    1,521

    Default

    Ok, so apparently - if you get a company car - you pay "company rate tax" (33%) on the value of the car. Im not sure how this is worked out on a yearly basis -

    I assume they do not charge on the whole of the car in 1 year because that would be truly scary.

    On top of this -

    the COMPANY pays Fringe Benefit Tax.

    So the company, as well as forking out for your car -

    has to pay the government 30%(ish) on the value of the benefit to you.

    Consequently - not many of them do it!

    Thats why many will go for a cash lump sum. You still pay the tax (at the prevailing rate - so 39% if you earn over 60K, but they dont have to cough up the extra money.

    Hope that helps

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