Company car tax for a permy question

[ELBBUBKUNPS]

Asking a question on behalf of a family member.

They get a company car as they have to drive a lot for work, should the tax due on the company car be deducted each month or do you pay it at the end of the tax year ?

I ask because my family member keeps getting letters saying they have under paid tax and looking at the letter its the tax due on the company car from the prior year. Looking at her pay slips she is on the standard tax 810 tax code so it doesn’t look like her tax code was adjusted to reflect the car ?

Should her employer be telling HMRC at the start of the tax year that she has this car and then they adjust her tax code ?

[Clare@InTouch]

The company car gets declared on a P11D each year, and then the tax code should be adjusted for the next year to collect any tax. Sometimes the code isn't adjusted enough, or earnings aren't enough to collect all that was due, leading to an underpayment. HMRC effectively use the code to guess what tax will be due based on the prior year, and sometimes it's not enough.

HMRC aren't always right though, so it's always worth getting the underpayment notices checked along with the P11D and P60, just to make sure.

[malvolio]

Asking a question on behalf of a family member.

They get a company car as they have to drive a lot for work, should the tax due on the company car be deducted each month or do you pay it at the end of the tax year ?

I ask because my family member keeps getting letters saying they have under paid tax and looking at the letter its the tax due on the company car from the prior year. Looking at her pay slips she is on the standard tax 810 tax code so it doesn’t look like her tax code was adjusted to reflect the car ?

Should her employer be telling HMRC at the start of the tax year that she has this car and then they adjust her tax code ?

She's an employee, surely her tax affairs are down to her employer? But basically it's a BIK and so should be included in her Tax Code and the employer should either be telling HMRC directly or advising her what she has to declare on the annual return (assuming she does one). It's possible that didn't happen for last year, but then again HMRC seem to have a history of c***king up tax coding notices then issuing claims against incorrect assessments.

First step is the employer to work out what - if anything - has gone wrong. It's possible that HMRC are right.

[ELBBUBKUNPS]

Thanks Claire and Malvolio appreciated

The company she works for is small I’m not entirely convinced the person doing the pay roll there is any good at it, for example petrol expenses for visiting clients have been shown as a ‘benefit in kind’ which is wrong.

[Clare@InTouch]

Thanks Claire and Malvolio appreciated

The company she works for is small I’m not entirely convinced the person doing the pay roll there is any good at it, for example petrol expenses for visiting clients have been shown as a ‘benefit in kind’ which is wrong.

Is it in section N? If so it's not actually taxable, it just needs to be claimed as an employment expense. That's usually done on a tax return, but you can make a claim if you don't file a return via a separate form: http://www.hmrc.gov.uk/forms/p87.pdf

The company should be paying mileage not petrol, then it wouldn't even touch the P11D.

[Craig at Nixon Williams]

When the car was first provided to her, the employer should have completed a P46(car) to inform HMRC that a car was being provided and to enable them to adjust the tax code for the year.

The car will be reported on a P11d at the end of each year and the following years tax code adjusted accordingly.

If you are unsure whether the correct amount of tax is being collected in respect of the car, you can check it here HM Revenue & Customs: Company car and car fuel benefit calculator and if necessary contact HMRC and ask them to adjust the tax code.

Hope you find this useful!
Craig

[northernladuk]

Any chance of her getting cash rather than a car if it is a small company? I believe the days that company cars were good perks were long gone and don't suit everyone anymore? Get the cash and buy your own if you are not bothered about a new one? Makes it easier for the company to manage as well?

[Craig at Nixon Williams]

Any chance of her getting cash rather than a car if it is a small company? I believe the days that company cars were good perks were long gone and don't suit everyone anymore? Get the cash and buy your own if you are not bothered about a new one? Makes it easier for the company to manage as well?

Company cars are brilliant for a permie... Employer pays for the car/lease, tax, insurance, servicing etc. The employee pays a bit of tax on the BIK, the cost of which will be far less than the above.

Craig

[northernladuk]

Company cars are brilliant for a permie... Employer pays for the car/lease, tax, insurance, servicing etc. The employee pays a bit of tax on the BIK, the cost of which will be far less than the above.

Craig

Oh! I remember many moons ago being told they were not the perk they used to be. My apologies.

[TheFaQQer]

Company cars are brilliant for a permie... Employer pays for the car/lease, tax, insurance, servicing etc. The employee pays a bit of tax on the BIK, the cost of which will be far less than the above.

Craig

Until the employee gets made redundant and finds that they now have to take on the lease themselves.