Company car affects tax credits

whatdoidonow

]Hi,

If you have just got a company car and dont inform them immediately, be prepared for a tax credit overpayment demand the following year.

In my case I had a car worth £24k, and I immediately paid £136 per month in company car tax, directly from my salary, when my renewal came through the following year I added the P11d info and got an over payment notice which they deducted at £134 per month. so I was paying £269 per month!!!

I see it as double taxation... am I wrong?

Infact I have just remembered that I didnt add private medical care this time is this deductable too?...oops

SuziQ

Are you still better off having the company car though,that's the question. I have a friend who's husband is very well paid in the City. He has always had car allowance but is able to choose a family car-ie people carrier-which his wife and kids enjoy whilst he trugs around to all his high-octane meetings in a battered old ford fiesta
My bil has always had company cars and says it enables him to enjoy a much better car than he could ever afford,despite the tax implications.
I don't know about private medical care. In my opinion,anyone havind this is benefiting the whole country as they are not using the NHS facilities they have already contributed to in general taxation.

[Deleted User]

You are not being taxed double on the company car or health care plan.

Tax Credits is a benefit, a deduction of tax credits is not classed as paying tax.

The company car and private health care cover are both classed as "Company Benefits" which are classed as income for tax credit purposes.

This has always been the case with tax credits and you are made aware of this when you apply for tax credits and every year when you are sent an annual renewal pack.

becky004

SuziQ wrote: »

Are you still better off having the company car though,that's the question. I have a friend who's husband is very well paid in the City. He has always had car allowance but is able to choose a family car-ie people carrier-which his wife and kids enjoy whilst he trugs around to all his high-octane meetings in a battered old ford fiesta
My bil has always had company cars and says it enables him to enjoy a much better car than he could ever afford,despite the tax implications.
I don't know about private medical care. In my opinion,anyone havind this is benefiting the whole country as they are not using the NHS facilities they have already contributed to in general taxation.

I am not better off having a company car, unfortunately it was a condition of getting the job permanently. When I was in temporary post I got around £250-£300 per month mileage (53p a mile). Once I got my job on a permanent contract I was no longer allowed to use my own car and had to have a company lease car, I pay £111 a month out of my wages for personal use, I am also paying more income tax as it is classed as a benefit (about £90 a month more tax). I get 10.6p per mile for work usage which does not cover my actual fuel costs for work. Have just received my first P11D which states that the Benefits In Kind is £1200 a year, how will this affect my tax credits? Will they take another £1200 a year off me because of this?
I would have been allowed to have a "crown car", where I would get my fuel free and it would have no tax implications, but it was impractical. I would have only been allowed to use the car for work purposes, so would have had to have another car for personal use, and due to the extremely limited parking where I live it was not possible.

[Deleted User]

Every £1 of income in the year above the minimum threshold decreases your total award (the yearly amount) by 39p. If you receive the minimum family element (approx £10 p/w) your award doesnt start to decrease until you have an income of £50,000.

It is a benefit and you are obviously better off because you are paying around £200 p/month for a car worth £24k! At that rate without interest it would cost 10 years to pay off and I am sure a company car would be replaced well before that time. And on top of that the company are more than likely paying for tax, mot, servicing etc.

If you had your own car how much more would it cost you?

becky004

subsoniccoyote wrote: »

Every £1 of income in the year above the minimum threshold decreases your total award (the yearly amount) by 39p. If you receive the minimum family element (approx £10 p/w) your award doesnt start to decrease until you have an income of £50,000.

It is a benefit and you are obviously better off because you are paying around £200 p/month for a car worth £24k! At that rate without interest it would cost 10 years to pay off and I am sure a company car would be replaced well before that time. And on top of that the company are more than likely paying for tax, mot, servicing etc.

If you had your own car how much more would it cost you?

The car was actually £17000 brand new not £24k its a peugeot not a porsche! so does that mean that for the £1200 BIK, I will lose 39p again for every pound = £468 for the year, or will I lose 1200 for the year? Maths is my weakest point!
Plus the majority of fuel used for work is not covered by the 10.6p per mile so I am losing money there too!

[Deleted User]

It would be a deduction of up to £468 for the year, don't worry you do not lose £1 award for every £1 earned.

SuziQ

You stated the car was worth 24K so that's why subsonic used that figure. I would imagine that the job was attractive enough for you to overlook the negative aspect of having a company car? It still sounds like a pretty good deal to me-when I was working on the community as a health visitor I had to provide and run my own car,and the wear and tear and extra maintenance needed due to all the short journeys was quite prohibitive,plus the salary wasn't as great as it may be in jobs outside the NHS. I remember what it was like before the tax credit system,and can only say that the current benefit system is far more generous,especially to the employed although it can at times be complicated and in my case difficult to understand!

becky004

subsoniccoyote wrote: »

It would be a deduction of up to £468 for the year, don't worry you do not lose £1 award for every £1 earned.

Thanks for that info, am useless at maths. It doesn't seem as bad to lose another £468 per year but I am still worse off than when I was allowed to use my own car. I don't feel employers should be allowed to impose terms when it leaves the employee worse off. But the prospect of a permanent contract was a better option than temporary when I could have been made redundant at any time.

becky004

SuziQ wrote: »

You stated the car was worth 24K so that's why subsonic used that figure. I would imagine that the job was attractive enough for you to overlook the negative aspect of having a company car? It still sounds like a pretty good deal to me-when I was working on the community as a health visitor I had to provide and run my own car,and the wear and tear and extra maintenance needed due to all the short journeys was quite prohibitive,plus the salary wasn't as great as it may be in jobs outside the NHS. I remember what it was like before the tax credit system,and can only say that the current benefit system is far more generous,especially to the employed although it can at times be complicated and in my case difficult to understand!

Am a community midwife, and providing and running my own car was a cheaper option than the one I was basically forced to take in order to gain permanent employment.

SuziQ

becky I am confused today and mixed up your posts and the op-so if I've annoyed you I'm sorry. Why on earth would the NHS force you to take one of their cars? Sounds bonkers balmy to me. It's been over 20 years since I was a midwife and we were offered lease cars or use our iwn back then-I preferred to keep my own car as it was already paid for,but it had to be serviced more regulalrly and the exhaust went quicker because of the short journeys. Best job in the world though-I am looking into refresher/retraining at the moment. Our local unit is constantly in the news with complaints and near misses,though they state they are fully staffed!