Company car

amber1982uk

My husband has had the use of a company car for a couple of years but in dec the company took away the cars and replaced them with vans for work purposes only. My husband informed the tax office of the change then a few days later got a letter saying he owes the tax office money. I thought having no company car would save him more with not having to pay for a company car as a benefit. Could this be a mistake or not?

Geforce

Company vans are taxed much differently to that of cars;
Vans are usually a set figure (ie. £3000 for tax year 2012/2013), so if your OH's company car was less than this, then he'll obviously owe more tax.

Put his old company car in to my spreadsheet here, and it'll tell you how much in the 2012/2013 tax year he should pay for the company car he had.

https://forums.moneysavingexpert.com/discussion/4429289

Example; If your OH had a BMW 320d Efficient Dynamics (15% BIK) as a company car, and he falls in to the 20% Income Tax Bracket, he'd pay £120.70/month, assuming no extras, just for the car, multiplied by 12 for the year, which is £1448.40. Therefore his new van tax is more than twice than that of his car.

Further information about company van tax:

http://www.hmrc.gov.uk/incometax/codes-company-benefits.htm

Any questions, just drop me a line!

Regards.

amber1982uk

His company car was £21,000 with personal use and the new van is only about £7,000 for work use only.

Geforce

amber1982uk wrote: »

His company car was £21,000 with personal use and the new van is only about £7,000 for work use only.

So, the list price of his company car was £21,000?
What's his Income Tax Rate? 20%/40%/50%?
What car was it? (I need the Co2/km)

Irrespective of how expensive the van is, it's a £3,000 flat fee.

amber1982uk

It was an insignia 2009, 20% rate.

Geforce

amber1982uk wrote: »

It was an insignia 2009, 20% rate.

I'm going to assume that's a CDTi EcoFlex?
So that's 139g Co2/Km.

So, that means he was paying approximately £74 for the car and £71 for fuel per month.
Multiply by 12, that gives a figure of £1740 for the year. A van is £3000 for this tax year with no fuel benefit.

So, you're OH's going to be £145 worse off each month now with his company van, hence why the HMRC thinks he owes tax.

Unless I've got this wrong (I'm starting to doubt myself now)..

The HMRC say:

Van benefit
You have to pay tax on the value to you of using your employer's van privately. A standard charge - currently £3,000 - normally applies. From 6 April 2010 the current standard charge will be reduced to nil for electric vans.

So, does that mean your tax rate x £3,000 set value, over the 12 months, which is £600 for the year - or £50/month?

That'd mean that HMRC would owe him...?

amber1982uk

Oh my!! His company said he would be better off, and it sounds right for how much they said he owes, £300 since Dec. Thank you for your help, he isnt a happy man at the moment so will be getting in touch with head office asap.

Geforce

amber1982uk wrote: »

Oh my!! His company said he would be better off, and it sounds right for how much they said he owes, £300 since Dec. Thank you for your help, he isnt a happy man at the moment so will be getting in touch with head office asap.

I'm thinking he would be better off also.

£3,000 is the taxable figure, either at 20%, 40% or 50%.

If it was just a fixed flat fee, then anyone who's in a higher percentage income rate tax wouldn't be any worse off.

I think his company is right....

Edit:

Scrap everything I've said above, the £3,000 is a taxable figure.

see here:

http://vantax.co.uk/newcar/companycar/vancalc/g1select.cfm?clk=3

So, his van should cost him £600/year out of his salary, which is substantially LESS than the car. HMRC must have got it wrong then.
(Apologies in advance! :eek::eek::eek:)

amber1982uk

Ok then lol, maybe a call to the taxman is needed instead then.

ian103

Yes its £3000 at your notional tax rate for the van and £500(this may have increased) at your notional tax rate for the fuel.

A van is loads cheaper than a car as in my last job I was lucky enough to be given a Landrover Discovery Commercial and I paid very little tax, OH was well annoyed as I was paying well under half of what she was paying for her car.

I'd speak to the tax office to get them to explain.

Geforce

ian103 wrote: »

Yes its £3000 at your notional tax rate for the van and £500(this may have increased) at your notional tax rate for the fuel.

A van is loads cheaper than a car as in my last job I was lucky enough to be given a Landrover Discovery Commercial and I paid very little tax, OH was well annoyed as I was paying well under half of what she was paying for her car.

I'd speak to the tax office to get them to explain.

Yea, that's what I figured after comparing figures.

The Fuel benefit is now £550.

http://www.hmrc.gov.uk/incometax/codes-company-benefits.htm