Company car tax - How can this be legal ?

Disrupto

Hi all,

Just hoping someonelse has experienced this and can put me out of my misery. After talking to people for over 3 hours at HMRC I think I understand - but when I spell it back to them I get a politicians answer...

Essentially I recently started a new job in November with a company car. They h e done a 'in year' adjustment and now I have to pay the tax going forward per month (makes sense ) but now have to pay back pay on the car from the start of the financial year. I was basically told even if I owned the car for 1 month, my in year tax benefit would reflect owning the car for a year!

This can't be the case surely ? Because it's roughly 6 months into the year my payments for my company car have doubled until April next year when they will settle.

Is it just me being stupid for being disgusted at this; or am I being fed crap to keep my money ? I took a new job of 5k more per year and will only come out with an extra 40 quid a month due to company car tax (car is only 89 a month on comcar and isn't a luxury model -23k list price diesel) so you can see how nearly 200 a month doesn't seem right...I could probably get it on a PCP for a little bit more... Seems like a company car is not really a perk.

Appreciate your thoughts!

Linton

Does this help ?
http://cccfcalculator.hmrc.gov.uk/CCF0.aspx

Dazed_and_confused

Either something has gone drastically wrong or you have completely misunderstood the UK tax system.

If you have a company car you are taxed on the benefit arising in each year.

So if the benefit for a full year was £8000 and the car was available for you to use for 6 months you would be taxed on benefit of £4000.

If you had a car at the start of the year and it was given up part way through the year your tax code would have to include the benefit for the whole year but when you have the car back it would be reduced from £8000 to £4000.

When the tax year changes your new year's tax code wouldn't need to include any benefit.

Likewise when you get a car during the year your tax code should include the benefit for the applicable period for the rest of the year.

As the tax on the benefit should have been collected over the full year you will owe tax for the period when there was no benefit in your tax code.

I guess you think you are overpaying but you are almost certainly not.

Using the example above if your benefit is £4000 (for part of a year) you will only be paying the tax on that for 3-4 months because you will be on an emergency tax code basis. If this emergency tax code basis wasn't used you would suffer a large tax deduction the first time the new tax code was used by your employer.

Do you actually know what the annual car benefit amount is?

And what car benefit entry is included in your new tax code?

Disrupto

Wish I could comment but the site is down... So im going to have to say no. This is my problem. Where do you go for help when 'the man' doesn't have a god damn clue.

I would trust comcar over that... Would not trust anything endorsed by those to$$ers. [HMRC]

Dazed_and_confused

It won't be perfect but a simple check you could do is to compare the extra tax you will pay between now and your final payslip before 5 April 2018 and the tax due on the company car.

For example if you are a higher rate payer (after taking into account your car benefit) it would go something like this.
All figures rounded for simplicity.

Annual car benefit £6000
Car benefit applicable for period November 2017 to end of tax year £2000
Tax due on £2000 is £800 (2000 x 40%)
Estimate the extra tax payable in tax month 8 (payday between 6 November and 5 December), 9, 10, 11 and 12

Compare the tax due and extra tax you think is being deducted and this will give you an idea how much you are overpaying.

I think you will likely find you aren't overpaying, or certainly not by as much as you think you are..

BoGoF

"The man" being you?

What is CO2 emissions of the car? Is private fuel provided?

What is the BIK figure in your tax code?

Is the code on a week/month1 basis?

00ec25

Disrupto wrote: »

Wish I could comment but the site is down... So im going to have to say no. This is my problem. Where do you go for help when 'the man' doesn't have a god damn clue.

I would trust comcar over that... Would not trust anything endorsed by those to$$ers. [HMRC]

the site is not down, the previous poster copied the link after he had opened the calculator, hence the session he had thus started has now "expired"

rather than getting all aggressive over "legal" and "!!!!!!" why not invest some effort in understanding how company car tax works yourself?

- read the HMRC explanation
https://www.gov.uk/calculate-tax-on-company-cars

- then click on the link on that page which will take you to the start of the calculator. The calculator is spot on and will give you the answer you seek once you have the correct data to populate it with.