taxable benefits

New! Taxable cash allowances

For some time now, The Salary Calculator has allowed you to enter the value of any taxable benefits that you receive (such as private health insurance, or a company car). These are things that your employer pays for and you get the benefit of, and therefore you pay tax on the value of these benefits even though you don’t receive any extra cash. I have had a lot of people contact me asking about a similar option, but this time for when your employer pays you extra cash so that you can pay for something yourself – a common one was a car allowance (as opposed to a company car) or a mobile phone allowance.

This option has finally been added to the calculator, on the Taxable Benefits tab. If you receive such an allowance, enter the value of it into the “cash allowances” option, and choose whether you receive this amount annually, monthly or weekly. Cash allowances are treated differently from benefits in kind in two main ways – firstly, they are extra cash so your take-home pay will increase despite the extra tax, and secondly, National Insurance is deducted as well as income tax.

You can also choose, on the Pension tab, whether your employer includes the value of your cash allowances when working out your pension contributions.

If you receive a cash allowance (or have been offered one) and would like to see what difference it would make, try it out on The Salary Calculator!

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New – see the effects of benefits in kind

The Salary Calculator has been updated with new options, to help those who receive taxable benefits, or “benefits in kind”, from their employer. As well as paying you your salary, your employer might offer other benefits, such as a company car or private healthcare. They pay for these benefits directly, but you have to pay tax on the value of the benefit (generally, you do not pay National Insurance on these benefits). Sometimes this extra tax is collected through your tax code – it lowers your tax-free personal allowance so that you pay the extra tax automatically. However, you may not know what your tax code will be with this benefit, or your employer might deduct the extra tax directly.

If this is the case, you can now enter the value of the benefit into the “Taxable Benefit” tab on the calculator, choose whether this amount is weekly, monthly or yearly, and then run the calculations to see how it affects your take-home pay. Since the amount of tax you pay will go up when you receive one of these benefits, your take-home pay will go down – but of course you’ll be receiving the benefit that you’ve paid tax on. This information will help you see how much the benefit will actually cost you each month.

To get started, head over to The Salary Calculator.

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