HELP!! Company Car Tax

Iwillresolvemydebt

Hi,

I am starting a new job on 3rd June:j and already understand that there will be tax implications :(due to a company car being part of the package.

Question is this; I realise I need to now complete a tax return in April (I think) to declare this extra benefit. However, am I able to notify the taxman as soon as I start in order to correctly deduct this from my monthly income rather than having a huge tax bill come new tax year?

In addition, it will be fully expensed (inc. fuel) but will only be used for driving too and from work (no other private use). How would I go about finding out the tax implications? I have the vehicle reg and know the mileage roughly, to and from work...

Any help would be greatly appreciated to avoid a tax bill of any description next year if at all possible.

Thanks in advance,

Paul

Skint_yet_Again

Hi Paul, if you do not already have criteria to complete a tax return the company car in itself does not mean you need to complete a tax return. Its only if your taxable salary plus taxable car/fuel benefit plus other income take you above £100k a tax year.

To calculate car and fuel taxable benefit you need to know the list price of the vehicle when it was first registered, any accessories, co2 emission amongst other things. There is a calculator here
http://cccfcalculator.hmrc.gov.uk/CCF0.aspx

Once you know the amount of taxable benefit this is the amount you will need to pay tax on

It is usually down to your employer to report the company car to HMRC but I would advise you to contact HMRC as soon as you take delivery of the car and once you have all the details listed on the calculator so they can adjust your tax code asap.

Your employer will send a P11D to HMRC at the end of the tax year (5 April) and should give you the same details. If you are not liable to complete a tax return HMRC will automatically review your tax paid once they have the P11D and copy of your P60,which your employer should send them

Hope this helps

Iwillresolvemydebt

Hi SYA,

Many thanks for your prompt and informative response. This helps a lot. No, I won't meet that criteria, so by following your instructions, my monthly salary will be deducted of any benefits tax rather than completing end of year tax return?

For the first six months of my employment (probation), I will be using an ex reps car (which I will need to collect - ball ache!!) - presumably I will still need to declare this just the same?

I note your comment on the new company reporting the car to HMRC but they have specifically said that I am responsible for dealing with the tax, do you think this is just to cover them?

I have used that calculator - it isn't the simplest!

I think I have entered everything correctly though and at 20% tax, it comes up with a liability of circa £1900.

I understand that travelling to and from a single place of work constitutes private use (am I right so far?), with this in mind, when the calculator asks if my company pay for private use (I am only using it for this sole purpose), presumably I need to click yes?

Thanks again,

Paul

Skint_yet_Again

Iwillresolvemydebt wrote: »

Hi SYA,

Many thanks for your prompt and informative response. This helps a lot. No, I won't meet that criteria, so by following your instructions, my monthly salary will be deducted of any benefits tax rather than completing end of year tax return?

Once your tax code is amended you should pay "as near as possible" the correct tax. However changes in your code and changes of car during the tax year may mean you might not pay the exact amount due

For the first six months of my employment (probation), I will be using an ex reps car (which I will need to collect - ball ache!!) - presumably I will still need to declare this just the same?

You are correct. Each time you change the car details of the new vehicle will need to be provided to HMRC

I note your comment on the new company reporting the car to HMRC but they have specifically said that I am responsible for dealing with the tax, do you think this is just to cover them?

Your employers also has responsibility if you are a PAYE employee... see link below. However to ensure you start to pay the correct tax asap you can phone HMRC to update your own tax code... its also your responsibility to keep HMRC updated

http://www.hmrc.gov.uk/payerti/exb/p46car.htm

I have used that calculator - it isn't the simplest!

I think I have entered everything correctly though and at 20% tax, it comes up with a liability of circa £1900.

You might be liable at higher than 20%. You need to add together your total taxable income for 13/14 including your car and fuel benefits and then check what rate of tax will be due

I understand that travelling to and from a single place of work constitutes private use (am I right so far?), with this in mind, when the calculator asks if my company pay for private use (I am only using it for this sole purpose), presumably I need to click yes?

Home to normal place of work is private use so you should tick yes .... unfortunately the charge is not based on the mileage travelled

Thanks again,

Paul

Replies above in blue ...Hope this helps again

Iwillresolvemydebt

I was about to say that is all but I have something else; -
You mention adding up the taxable income inc. car and fuel, what figures do I use for the car/fuel?

Skint_yet_Again

Assuming you don't yet have the details of the new car you will receive in 6 months time you will have to estimate the car and fuel benefit using the calculator, based on the ex rep car until 5/4/2014. Once you have the new car details you can recalculate using the ex rep car for actual dates available and then new car from date received.

ILW

If you are PAYE employed, sounds rather dodgy if they say you will need to sort company car tax yourself.

basill

ILW wrote: »

If you are PAYE employed, sounds rather dodgy if they say you will need to sort company car tax yourself.

Always wise to advise the taxman of changes like a new company car, the company may not inform the revenue until the first P11D is issued. Its nice to pay no tax on the car in the first year but a bit of a pain to pay double for the next year while you catch up!

(done that!)

B

Iwillresolvemydebt

I see, so I add my salary to the car and fuel benefit charges... This takes me to £41980 (not entirely accurate I know)... So am I right in thinking that I will pay 10% tax to a point, then 20% up to £32500 and 40% thereafter?

ILW, I don't believe they are dodgy in any way... It is more likely that I got the wording wrong as I don't have the offer letter/contract to hand

Thanks,

Paul

Iwillresolvemydebt

Basill... That is exactly what I aim to avoid and thankfully, I have received some help/advice on here for which I am very grateful.
I will notify HMRC as soon as I know all details for definite.

Thanks,

Paul

00ec25

Iwillresolvemydebt wrote: »

I see, so I add my salary to the car and fuel benefit charges.. This takes me to £41980 (not entirely accurate I know)...

.
correct
tax charge is based on the benefit value of the car (based on its list price and CO2 levels) plus the benefit value (a fixed sum) for the fuel and you do indeed add those 2 amounts to your gross salary to give your total taxable salary

Iwillresolvemydebt wrote: »

So am I right in thinking that I will pay 10% tax to a point, then 20% up to £32500 and 40% thereafter?

Not quite right, 10% tax rate abolished years ago, what you may have seen listed refers only to where income above 9,440 up to approx 12,000 total pa is derived wholly from savings interest. If you have earned income above 9440 then its all at 20&% and none is at 10% i

The benefit charges will be offset against your tax code and therefore you will end up with a lower code than if you did not have a company car. You will then pay tax on everything over that code

the standard code everyone gets for 13/14 is 944 ie you pay no tax on the first 9,440 earned. Above 9440 you pay 20% tax on the next 32,010 and then pay 40% on everything above 41,450 (9440 +31010). where you have a car then your code will be less than 9440 (it may even be negative) so you adjust the maths accordingly , ie in simple terms you add 31.101 to your tax code and pay 40% on everything above that figuire

so in your case if the total value you have arrived at is 41980 using the standard tax code of 944 then you pay 40% tax on £530

http://www.hmrc.gov.uk/rates/it.htm