P11D - Personal Contributions

swanny65

Hi

I have company car for which i pay a monthly payment to my employers approved supplier. I receive the usual £0.11 a mile for business use.

My employer allows my wife and I to use the vehicle for personal use for which they pay an insurance premium which i then pay monthly. This premium is included within the monthly payment. e.g i pay £85.00 pcm of which £30.00 pcm is my private use insurance premium.

Historically when i receive my P11D the deduction for personal contributions is the total payments made. i.e. 12 x £85.00 in the above example.

Today all employees received a notice stating the P11D calculation issued previously were incorrect and personal contribution deductions should have been exclusive of the private use insurance premium. i.e. 12 x £55.00.

The employer is covering the tax liability up to 2009/10 and the under payment of Income Tax is only about £50.00 for 2009/10.

However questions are being asked amongst employee's whether this is correct. I thought i had seen the answer, indicating 12 x £55.00 is correct, in a recent posting but cant find the posting.

Can anyone confirm for me please?

Thanks

ceeforcat

Only my opinion here but I simply do not get this one! The benefit in kind for a company car covers the car itself, repairs, tax and insurance. The reason that you have a benefit in kind is because this car, which belongs to the company, is used personally in some proportion. If you pay £85 per month I would regard this as your personal contribution because you are, in your benefit in kind, being taxed on the personal element of your insurance. Anyone else agree?

amf

Only contributions for the private use of the company car reduce the benefit in this scenario. Any contribution towards the costs of insurance is not a contribution for the private use of the car.....it is simply a contribution towards the insurance costs.

Looks like your employer has found this out the hard way!

John_Pierpoint

Alice in Wonderland will be along in a minute ?

swanny65

Thanks for your assistance - someone help the mad hatter

amf

John_Pierpoint wrote: »

Alice in Wonderland will be along in a minute ?

Don't know if this was aimed at my comments. Just in case it was I'll give the relevant link to HMRC's EIM http://www.hmrc.gov.uk/manuals/eimanual/EIM25255.htm

ceeforcat

amf - that's news to me - learn something new everyday!

BoGoF

It seems that what you have been paying in not a payment towards personal use but for the insurance. As has been said this should not be deducted from the taxable benefit of the car. If your employer had been completing the P11D's correctly in the past the insurance would have shown as an other taxable benefit with the amount made good against it.

amf

BoGoF wrote: »

If your employer had been completing the P11D's correctly in the past the insurance would have shown as an other taxable benefit with the amount made good against it.

Not quite, I'm afraid. All expenses paid by the employer in relation to the car provided to the employee, are included within the car benefit. That being the case the insurance (or RFL or maintenance costs) would not be separately shown on the P11D.

amf

ceeforcat wrote: »

amf - that's news to me - learn something new everyday!

Yes, this is one area where there are a few popular misconceptions. There is, of course, an easy way round the issue by making the employee's payment for the private use to be based, inter alia, on the insurance costs. That would reduce the quantum of the car benefit.

swanny65

Interestingly a colleague has contacted their local HMRC office and been advised the insurance premium is allowed as a personal contribution.....

Thanks for your time i will wait and see what happens in due course with my colleagues enquiry.