Benefits In Kind - Lease Car

welshman10

In June 2017 I was offered the opportunity to lease a Range Rover Evoque from my employer (a large NHS Trust) at a cost to me of £184 per month.

I was told by the car leasing department that the tax on top would be around another £76 per month.

The tax hasn't been taken out by HMRC until now and they've taken more than I expected. I called them up and they said the tax is actually £141 per month, so almost double.

I spoke to the car leasing department again and they said that HMRC have frequently been ignoring the employee contribution when working out the tax. The advice is to take it up with HMRC.

It's the first time I've had a car from work. Is it that HMRC is charging me tax based on having a company car for free, but I am actually paying work to use the car and so they've taxed me at the wrong rate?

I want to have some idea of what I'm talking about before I ring HMRC again.

Savvy_Sue

One possible explanation is that the benefit should have been taxed from when you received it. If they've only just started taxing you for it, they are playing catchup, and trying to get all the tax due before the end of the tax year. If that's the case, you'll pay less tax on it from April onwards.

But you'd probably get a more accurate answer on the Cutting Tax board.

Dazed_and_confused

Savvy_Sue makes a very good point.

You need to differentiate between the tax which might be being deducted at the moment and the actual real cost to you.

Remember a tax code is just a provisional attempt to collect the correct tax during the year, the correct amount of tax is sorted once the tax year ends and you could have more to pay or be due a refund.

And I would be very wary about any tax information provided by a car leasing department. Their job is to deal with car leases not tax. You might have been a basic rate (20%) payer without the car but if you were on the cusp of paying higher rate tax it might be you are going to have to pay 40% tax on most of the car benefit. This could be why the tax is nearly double what you were expecting.

But without a lot more information it's all speculation really.

nicechap

welshman10 wrote: »

In June 2017 I was offered the opportunity to lease a Range Rover Evoque from my employer (a large NHS Trust) at a cost to me of £184 per month.

.....

I suspect you're going to have a bigger shock when lease company charges you the proper rate (over £500 per month).

System

Is this a company car or salary sacrifice?

A RR Evoke on company car tax is around £250-300 per month BIK based on 40k...more if a fuel card is included.

RR Evoke on salary sacrifice is £500 plus...plus you miss out on pension contributions.

welshman10

Got to the bottom of this. HMRC had put an estimated CO2 figure as it was left off the form, which was substantially higher than the real figure.

gardenflower

Hello everybody. I have a question regarding BiK. In January my client sent me new amounts of benefit and when determining cash equivalent instead of deducting the employee contribution from cost of the benefit, I added it. I prepared BiK letters and sent them, and only after this I was informed about the mistake. Does any of you know how to correct this mistake?:(

jobbingmusician

gardenflower wrote: »

Hello everybody. I have a question regarding BiK. In January my client sent me new amounts of benefit and when determining cash equivalent instead of deducting the employee contribution from cost of the benefit, I added it. I prepared BiK letters and sent them, and only after this I was informed about the mistake. Does any of you know how to correct this mistake?:(

You are unlikely to get much of an answer in this particular location! Could I (very gently, as I can see you are new! :beer:) encourage you to start your own thread - probably on the cutting tax board rather than this one? (Although people on here do regularly surprise me with the breadth of their knowledge!)

System

I agree - your question is quite hard to decipher as is!