Implications Of Keeping A Company Car As Part Of Redundancy Package

Andrew1965_2

I was recently made redundant and received a tax free cash settlement of less than £30k

As part of my severance package I also negotiated to keep my old company car, for the remaining 2 1/2 years of its lease

I now have another job, paying a car-allowance, on which I pay tax at 40%

Can anyone advise if there is a tax laibility on the car. Is it still recognised as a company car even though I no-longer work for the company

Thanks

taxing

Andrew1965 wrote: »

I was recently made redundant and received a tax free cash settlement of less than £30k

As part of my severance package I also negotiated to keep my old company car, for the remaining 2 1/2 years of its lease

I now have another job, paying a car-allowance, on which I pay tax at 40%

Can anyone advise if there is a tax laibility on the car. Is it still recognised as a company car even though I no-longer work for the company

Thanks

Your former employer was required to work out the 'value' of the benefit he was letting you keep and to add that to your redundancy package.

I presume they gave you something in writing? This would have shown what the total value of the settlement was (including the car at value). If it was more than £30,000 in total (with the car) I would have expected them to tax the excess above £30,000. This sort of charge often happens after you have been given your P45 - and, if tax was taken from the redundancy package, you would be told in a letter - the one giving the make up of the cheque you got (or bank payment) to settle the redundancy amount due to you.

You say the car was leased so I assume the ex employer has kept on the lease but you have the car and will need to give it back at the end of the lease period - that being the case, it will have been taken into account when working out the value of the 'benefit' to you.

Check your redundancy paperwork.

Regards.