Company Car Tax - Claiming Termination Fee

m_13

My contract with my previous employer stated that if I left the company and handed back my company car, I would have to pay the early termination fee for the vehicle. This is because they are small company and said they would not be able to reassign it. I believe this type of agreement is common in salary sacrifice schemes but this was purely a company car.

When I left they wanted to charge me the full amount but after some haggling I paid £687.60 on my final salary last March. I understand it paid the leasing company for the early termination fee they charged for terminating the lease. However, I never saw any bills from the leasing company. I do have the correspondence and the signed contract saying this is what they could charge.

This amount doesn't appear as a capital contribution on my P11D.

Can I claim this back as expenses on my Self Assessment? It is wholly a cost of using the car and I had to pay it. It appears on my final payslip as "Car Repayment".

Rustypail

I don't think this is covered specifically in HMRC guidance, but I would certainly claim for it on common sense grounds. It is different to a Capital contribution, and also does not really fit as being "necessary" for employment since it only arises when you cease employment.

NordicNoir

The employer has treated the payment correctly, as it should not be offset against the benefit in kind value of your company car and should not be shown on the P11d. It was neither a capital contribution or a payment for private use.

The payment that you have made is to repay some of the extra costs incurred by your employer through you leaving your employment.