Company Car Benefit and Contributions.

pjclar02

Hence the reason the OP needs to take it up with the employer and their tax adviser in order to get the wording of the company car policy amended.

nico11

I have brought this up with my employer when it was first brought to my attention in August without success...its the same line every time so the only way I am going to get anywhere is if I get confirmation from the tax office that these are Capital Contributions or if I declare the payments direct to HMRC and hope they consider them as Capital Contributions as my employer wont put them on my P11d.

Never had a problem with this before, they just went on the P11d....its only the change in employer and recent change in policy. Its weird because anyone who had a car and paid to 'flex up' prior to August the 1st 2011 will continue to have the capital contributions declared on their P11d's.

Thanks for your replies.... doesn't look like I am going to get a clear answer on this one!

ceeforcat

I wonder if your employer had a recent PAYE audit and was advised to introduce these amendments?

BoGoF

I don't think an ongoing regular monthly contribution would qualify as a capital contribution.

See this

http://www.hmrc.gov.uk/manuals/eimanual/EIM24350.htm in particular the timing of the capital contribution.

They may be able to be considered payments towards private use, see attached http://www.hmrc.gov.uk/manuals/eimanual/eim25260.htm

But really depends on what the payments are for per the scheme rules

nico11

BoGoF wrote: »

I don't think an ongoing regular monthly contribution would qualify as a capital contribution.

See this

http://www.hmrc.gov.uk/manuals/eimanual/EIM24350.htm in particular the timing of the capital contribution.

They may be able to be considered payments towards private use, see attached http://www.hmrc.gov.uk/manuals/eimanual/eim25260.htm

But really depends on what the payments are for per the scheme rules

So, if I pay the full 4 year lease, monthly 'flex up' contributions up front as a single payment, then a Capital Contribution applies even though the vehicle is leased and not owned?

Never mind the fact I may not have it for the full leasing term, it could be taken off me at any time and is to be made available for other employees use if required.

If I was Self assessment, would I be able to get any tax relief due to the extra contributions as an expense?

BoGoF

1) Possibly, if it genuinely is a capital contribution. Your 'flex up' just seems a way to get a higher spec car.

2) Not relevant to this situation

3) No

nico11

BoGoF wrote: »

1) Possibly, if it genuinely is a capital contribution. Your 'flex up' just seems a way to get a higher spec car.

'Flex up' is basically the option for me to contribute money to pay towards a car in a higher band. My band of car is say between 300-£350 and I can pay up to £50 to allow me to choose a car in the £350 - £400 band.

Like I said, these payments have previously been declared on P11d's as Capital Contributions but now the company policy has changed where these payments wont be declared. I haven't seen a change in the tax law and if I am contributing towards the car, it should surely be considered for tax purposes.

I'll mention it to HMRC again when I phone to get my over payment back! :beer:

BoGoF

In all honesty, your payment is neither a capital contribution or a private use contribution.

Seems like your employer has been stung for doing it wrong and now been told to do it correctly so your hope of a refund seems rather hopeful.

nico11

BoGoF wrote: »

In all honesty, your payment is neither a capital contribution or a private use contribution.

Seems like your employer has been stung for doing it wrong and now been told to do it correctly so your hope of a refund seems rather hopeful.

Hi,

The refund isn't related to this.

Again, I stress that these contributions have previously been processed as Capital Contributions not only by my current employer (until recently and they are still treating these payments as Capital Contributions for employees who had a car supplied prior to 1st August 11) but also by my last 2 employers so it seems to be common place and an area of confusion.

I don't think the HMRC web site or EIM manual makes it clear as to whether these payments count as Capital Contributions and so I wont treat this as conclusive until I have declared them to HMRC when I receive my new car - I suppose we will know then.

Cheers and thanks for everyone's input.:T

ceeforcat

and so I wont treat this as conclusive until I have declared them to HMRC when I receive my new car - I suppose we will know then.

May I ask how you are going to do this as it is the employer who advises HMRC of your benefits in kind, at the time of issue and at the end of the year on form P11D, a copy of which you should receive?