David Elsey

I receive £6120 pa (£510pcm) as a car allowance. I can elect to take as cash or to use to finance a leased company car through my employer. In March 2022 I commenced a lease for an electric vehicle (0 CO2 emissions) with a P11D value of £41601. There was a trade up value of £272.38 pcm as the cost exceeds my car allowance. My CO2 based BIK < £6120 thus I believe I should be paying income tax (@40% as a higher rate tax payer) on the cash forgone iaw HMRC rules. [The higher value is selected as the relevant taxable value] As such the total monthly cost of the vehicle I would expect to be £272.38 (Trade Up) + £204 (40% of the £510) = £476.38. However, the lease company automatically take 100% of the cash forgone (not 40%) which results in the monthly cost being £782.38. Please advise if the taxation being applied is correct?