Question Regarding Tax

dandy27

Hi There. i hope im in the right place, if not feel free to move the post.

I would really like some advice on this please.

My basic salary is currently £35,000 per year and I have a company car with a benefit in kind of £4304.

I am allowed to earn £6475.00 tax free, but this is reduced by my BIK to £2171.

I have earned a couple of bonuses this year of £750 each occurence.

I made a serious mistake in December 09, by moving over to fully inclusive on the car, to include private fuel. The Inland Revenue sent me a code change and I noticed they had calculated a full year of BIK for the fuel. £3887.

This put me in a negative tax code and the bonus i earned in December was hit at 40%.

I think its wrong that I should have to be charged a full years BIK when there are only 4 months of the tax year left.

After speaking with the IR, they assure me that I may be in for a tax credit as I have paid too much. But im not so sure.

What is the best way to check, and do I have to live with the fact that making this change 8 months into a tax year, has not benefitted me at all.

Cheers Simon

fengirl_2

Its too late now to amend your code for this year so you will need to wait until your employer issues your P11d in May. You will need to send this with your P60 to your tax office to claim a refund.

Mudd14

The BIK as you say should only be calculate on the proportion of the year that it has been recieved. On your year end P11D there is a section that your employer fills out stating that it is only for part of the year.

I suppose you can query it with your employer and ask them to notify IR that the BIK is for only a part of the year or you can wait till the year end for them to submit your P11D and recieve a notification. I would assume that you would have to apply for the tax refund on your own if you wait till the year end.

dandy27

Thanks guys, you have been most helpfull

dandy27

Just received this back from my company accountant, based on what I have learned from your comments today.

Do I assume from this IR now no about the BIK proportion and just wait for the credit. Or should I chase them up in April.

"
I complete P11d form that you normally receive. I do not fill any other forms, however I do advice IR of any change in BIK with a copy to employee, so that they know that I have written to IR & if there is any query, they can sent a copy of the letter."

fengirl_2

You will need to chase as its now too late to amend your code for this year.

dandy27

Hi Fengirl

I now have by P11d, 2 in total as i changed my car around November 2009.

1 says
06/04/2009 - 27/10/2009
Car Benefit £2312
Fuel Benefit £2088

2nd one says
28/10/2009 - 05/04/2010
Car Benefit £1954
Fuel Benefit £1333

I understand there maybe a small proportion of fuel benfit on the 2nd one, but as i didnt swap over to fully inclusive fuel until December 2009, is the first one incorrect.

P60 details shows this employment pay £36749 and tax deducted £7423

from the info i have posted previously and the info above, does it look correct, or do i assume my company have calculated my p11d incorrectly. can you also tell from the info, if i have been paying too much tax?

Its very confussing

Thanks in advance

dori2o

Based on the information above.

Total salary + BIK = 44436
- Personal allowance (6475) = 37961

Tax at 20% on first £37400 = 7480
Tax on remaining £561 = 224.40

Total tax due 09/10 = £7704.40

The reason that you have underpaid is due to taking the fuel benefit part way through the year, even though you did not have the fuel provided by you employer for the whole year, the fact you had a company car for the whole year means that the fuel benefit is also charged for the same period. It is called 'all or nothing' measure, i.e you either have car fuel benefit for the whole period you have a company car in the year, or you do not have fuel benefit at all. This applies only when taking the benefit part way through the tax year.

The only time fuel benefit is apportioned is when :
a) the car(s) is unavailable for a period in the year (i.e you give a car back and have no company car for a week or 2, or give it back permenantly)
b) When the fuel is withdrawn partway through the year and NOT reinstated.
c) if it is a shared car.

dandy27

sorry but i really do not follow your last post. I have not underpaid at all. i have seriously overpaid!! i paid private mileage for 9 months of the last tax year, i understand the fuel BIk is calculated for a year, but i was told by Inland revenue that as i only took the fuel benfit in December 09, my P11d should only calculate the part of the benefit i had.

This should simply be apportioned from December to April. Are you telling me that this can not be done?

dori2o

That is exactly what I am saying.

See the following example

http://www.hmrc.gov.uk/manuals/eimanual/EIM23773.htm

It is this bit you need to concentrate on

Note: the days when fuel was not provided for Car 1 (6 April to 30 April) are not excluded because the statutory conditions are not fulfilled later in the year (see EIM23764).

dandy27

well now thats 4 people telling me 4 different things, one of those being the IR. They said that i am entitled to a reduced BIK.

I will ring them tommorow to firm this all up. If i had known all this, i would have continued paying private mileage until this new tax year.

a change 9 months into a tax year has cost me a fortune. Good old IR