Redundancy, PILON and company car

Groove

Hi All,

After 18 years I've been told last week they are shutting our office and we are all to be made redundant.

After conversations Ive been told I will be getting the following -

1) Statutory redundancy pay
2) 3 Months Payment In Leiu ( tax and NI free due to the clause not being in our contract regarding PILON )
3) Full use of my company car , including private fuel benefit for the 3 months.

Im actually quite pleased with all that , and to be honest really needed to move on anyway.

However im a but confused what happens regarding paying the company car tax and private fuel tax I've obviously been paying whilst in normal employment.

Does anybody know if it still applies ? If so how will/should this be handled ??

Thanks

Andy

fengirl_2

You should currently have a restriction in your code number to collect the tax due on your car and fuel for this tax year. Your employer will advise HMRC the date on which this benefit is withdrawn and your code will be adjusted to include only the benefit from 6 PAril to the date the car is given up.

Groove

Morning....thanks for the reply.

Excuse my ignorance , but will this mean I will be effectively underpaying tax for the 3 months I have the car but will not be paying tax on it. Which will then be picked up and recalculated and collected in next years tax year ?

Andy

fengirl_2

No, you will effectively be paying tax for the final 3 mths over the months you are working, or over the rest of the year if you get another job. If you dont work for the rest of the year, you are more likely to overpay tax.

Groove

Im sorry im not sure i understand.....probably because ive never really fully understood tax.

This was what I though ( but is obviously wrong ) , could you point out where im going wrong understanding this....

Tax code calculated and applied for car and fuel for the year April 2009 - April 2010 gives me a monthly tax amount that i pay over the 12 months to effectively pay the years tax for the benefit.

I will only be effectively working for 7 months of this tax year as it stands now.

December , January and February I will still have the car and assuming im not working will be paying no tax on it. ( these 3 months I have been paid PILON without Tax and NI )

So as im seeing it ive only paid 7x the monthly tax figure even though i will have had the car for 10 months.

I understand that the yearly cost will be less as it was initially calculated over 12 months and I will only have had it for 10.

Am I over complicating this in my head ? Obviously it will get even more confusing when I start a new job , depending on the timing.

Sorry to bug you about this....i hate not understanding things like this in case i get caught out.

Thanks

Andy

fengirl_2

You are overlooking the fact that you also have a tax free amount every month. BY only working for part of the year, you are only getting the benefit of part of your tax free allowance, therefore you are 'owed' some tax free allowance which will cover the liability on the car.
It might help if I can give you some actual figures. Do you want to PM me with some estimated pay and tax figures to the date you are leaving and also the car benefit figure in your code number at present. Also, will you be claiming JSA this tax year, or will you be going into another job this tax year?

Groove

PM sent......