Casual Car Allowance

ladymarmalade222

Hi

I have a query with my partners tax that I hope you knowledgeable people can help me with.

He works for Local Governement and receives a Car Allowance (which I think is called casual) which is less than £100 pm for using his car when he goes to meetings at different offices.

We received notification from HMRC late last year to say that he had underpaid tax and they would claim it back by changing next years tax code, they stated it related to car benefits.

I always understood car allowance to be taxed at source with his salary so could not understand how this had happened.

On speaking to his local tax office they have stated that his employer have now changed the way they tax the allowance from last year they do it via the tax code rather than adding to his salary so as his tax code had not been changed this is how the underpayment occurred.

Does anybody know whether this is correct and Local Government have changed the way they tax car allowance?

Many thanks in advance for your help.

x

DCodd

Most LA's casual car users allowance facts and figures are available on the net. Which ever LA it is, try Googling their casual car users allowance. If no luck, phone them and ask.

ladymarmalade222

Hi

The name of the allowance is Essential Car Allowance which I believe is different than casual allowance for Local Governement workers.

I still cannot find any information on if they have changed the way it is taxed though.

Thanks

x

DCodd

Hi
Which LA is it?

ladymarmalade222

Manchester city council

DCodd

I couldn't find any thing from Manchester either but HMRC describes the process.

http://www.hmrc.gov.uk/manuals/nimmanual/NIM05850.htm

follow the links to the relevant information.

Does your O/H get a lump sum plus a mileage allowance? if so he may have recieved more than is allowable to be tax free (there are limits to the tax free elements of car allowances), in which case HMRC will adjust his Tax coding to recoup the underpayment of tax.

ladymarmalade222

He only gets 80.25 car allowance in his wage slip and is supposed to claim his mileage back also. Due to the way they make him fill out the mileage reclaim and how longwinded it is he hasn't been doing it (I know I have tried to get him to do it), so up to now has not claimed mileage. He does around 100 miles a week.

I pressumed by the way it is listed on his wage slip he was being taxed at source but on speaking to HMRC yesterday they have told him that his employer last year changed the rules on how they taxed it so hence the underpayment. I still get the niggly feeling this is not right though as he has had all different advice from each phone call at both his employer and HMRC.

He is not great at sorting these things out so just thinks it must be correct as they are HMRC and it is their job.

Thanks for help so far!

x

DCodd

ladymarmalade222 wrote: »

He only gets 80.25 car allowance in his wage slip and is supposed to claim his mileage back also. Due to the way they make him fill out the mileage reclaim and how longwinded it is he hasn't been doing it (I know I have tried to get him to do it), so up to now has not claimed mileage. He does around 100 miles a week.

I pressumed by the way it is listed on his wage slip he was being taxed at source but on speaking to HMRC yesterday they have told him that his employer last year changed the rules on how they taxed it so hence the underpayment. I still get the niggly feeling this is not right though as he has had all different advice from each phone call at both his employer and HMRC.

He is not great at sorting these things out so just thinks it must be correct as they are HMRC and it is their job.

Thanks for help so far!

x

The lump sum payment (if it meets the NJC agreed rate) should be tax free but I have been seeing that a number of Councils are moving away from the NJC (National Joint Council) rates and using HMRC Mileage rates.

I would get your O/H to ring his payroll / HR dept again and askthem what HMRC mean by "they have told him that his employer last year changed the rules on how they taxed it so hence the underpayment"