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Statutory Maternity Pay + Company Car Benefit what tax code ?

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    Statutory Maternity Pay + Company Car Benefit what tax code ?

    General question for the misses who is permy.

    She went on Maternity leave on April 7 2016, her employer only pays the statutory maternity leave so it was 90% of her salary for 6 weeks then the £139 per week for the remaining time, she does however get a company car and she has been allowed to keep that during maternity leave the car is approx £4.6k benefit in kind. When she has been earning her normal salary before maternity leave her tax code has been reduced to reflect car benefit so her code was 640l approx, I noticed though on her pay sleep for June the tax code is still the same though in reality her total income for tax year 2016-2017 including car benefit + maternity pay will be about £12k so only tax due on the 1k, should I be getting her to call up HMRC to get them to change the tax code / recaculate or is a company car benefit still taxed no matter if you income doesn't hit the lower tax threshold ?

    thanks

    #2
    I'd start with getting her to talk to her HR department about it - they will need to feed the information to HMRC at some stage, so make sure it's correct now so you don't get any unpleasant surprises down the line.

    Comment


      #3
      Originally posted by missinggreenfields View Post
      I'd start with getting her to talk to her HR department about it - they will need to feed the information to HMRC at some stage, so make sure it's correct now so you don't get any unpleasant surprises down the line.
      Its a small firm they don't have an HR department and tbh mess most things up over the years so I generally have to check over things, the main issue I'm not sure about is whether tax is still due to be paid on a company car if the benefit in kind of it + salary still doesn't not hit the lower rate tax threshold ?

      I rang HMRC and they said 'yes' tax is still due on the company car even if lower than tax threshold not reached, so her income for year tax yr 16-17 will be £5k total + £4.6k company car benefit, so they reduce her tax code to 640L based on the company car. I'm not sure whether that is right or not as most info HMRC have given me over the years has been wrong, I have zero confidence in there help lines.
      Last edited by BoggyMcCBoggyFace; 29 June 2016, 10:47.

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        #4
        You realise this is a contractor forum?
        'CUK forum personality of 2011 - Winner - Yes really!!!!

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          #5
          Originally posted by northernladuk View Post
          You realise this is a contractor forum?
          Yes but no harm asking in this section of the forum though as I can't get a straight answer from HMRC, I've rang them twice now and got 2 different answers one told me tax is due on a company car even if lower tax threshold is not met by salary + car benefit, the other person said no tax is due, I'm forced to ask as question as HMRC are incompetent.

          Comment


            #6
            Originally posted by BoggyMcCBoggyFace View Post
            Yes but no harm asking in this section of the forum though as I can't get a straight answer from HMRC, I've rang them twice now and got 2 different answers one told me tax is due on a company car even if lower tax threshold is not met by salary + car benefit, the other person said no tax is due, I'm forced to ask as question as HMRC are incompetent.
            Hi Boggy!

            If her BIK for 2016/17 is £4,600 and no other benefits, adjustments etc. then a tax code of 640L is correct and this should ensure that the correct amount of tax is deducted thorough her salary (in this case SMP). If it turns out that for 2016/17 she doesn't received more than £6,400 in salary/SMP etc. then there shouldn't be any tax deducted from this. In effect both the salary and the car BIK are tax free.

            If her salary exceeds £6,400 then she'll pay tax on the amount over this at 20% (assuming she won't hit £43,000) and possibly some NI depending on the frequency and amount of payments.

            Hope this helps.

            Martin
            Contratax Ltd

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