Company Car During Notice Period

pb1973

Hi.
About to hand in my notice. It's a possibility given the nature of my work that I will be asked not to come to work for that final month.

My employer has been known to try and extract the company cars of employees prior to their last day of notice. In fact usually at the beginning of the notice period.

My company car is provided as a "tool of my job" according to my contract, however I am also taxed for it as a "Benefit in Kind" and am allowed to use it for unlimited private mileage using the business fuel card. I'm charged per mile for that private fuel.

The P11D form from HMRC shows that through the car, I'm receiving taxable benefit in lieu of salary to the value of £7,254 a year. I pay HMRC 20% of that benefit in kind at source each month and have a tax code that reflects this position.

Whilst I'm pretty sure I'm not obliged to return the car early if the firm demands it back, If they do and I decide to give in, I'm assuming before returning it I can ask them to agree to compensate me.

Should that be to the tune of £7,254 / 12 x 1 = £491.66 ?
Unless they pay that as a non-taxable payment, that additional sum would likely be taxed at 20% income tax before it landed in my bank account. So I assume I'd also have to ask them to either have my tax code adjusted prior to my last month's salary being paid, or have them add to my pay the equivalent Benefit in Kind Tax plus the 20% income tax that would also be subtracted from it before it arrived in my bank?

comeandgo

Your tax gets sorted out without employer having to pay you extra. You tell HMRC when the car is no longer available for your use and your tax code gets adjusted.

pb1973

That makes life simpler for sure. So they'd just owe me the loss of benefit at its gross value, which would then be subject to income tax as normal.

sangie595

How do you figure that they owe your any payment. You say that it is clearly stated that the availability of the car is nothing more than a tool of the job. You won't be doing the job, so unless there is a contractual benefit - which appears not to be the case - then there is no reason to expect them to pay you anything. If the firm demands the car back, and you refuse, then (a) that may well constitute the unlawful deprivation of their property; (b) you may be in breach of contract; (c) they might reasonably charge you for the use of the car since you no longer have lawful possession of it; and (d) you may very well be uninsured, and driving it would be illegal.

The fact that HMRC considers the car a taxable benefit does not mean that you have any entitlement to salary as a replacement.

TELLIT01

pb1973 wrote: »

Whilst I'm pretty sure I'm not obliged to return the car early if the firm demands it back, If they do and I decide to give in, I'm assuming before returning it I can ask them to agree to compensate me.

If you are put on 'garden leave' it's possible that the company will take the car back at that point because it is no longer required for you to do the job. If you refuse to return it they could quite simply remove you from the company insurance. If you continued to use the car you would be driving uninsured which is obviously a very bad idea indeed.

Spendless

My husband was put on garden leave about 14 years ago, when he left to go to a competitor. He was allowed to keep his company car for this duration as it was part of his 'package'.

crackerberry

When I had company cars and resigned from past employers I always kept the car until my last official day of working too, and that included when put on gardening leave( which I usually was).
Since a company car is part of your contract if they take the car away early then you should be compensated for that. Where there was the choice of a company car upto say £400 a month or a car allowance of the same value if the car was required to be returned early (it never was) then £400 per month would have been payable, or pro rata depending on how many days without the car. That amount would be taxable through PAYE. The only times I know of that the latter scenario happened with anyone however was redundancy and PILON. The norm was to keep the car until you left.

sangie595

crackerberry wrote: »

When I had company cars and resigned from past employers I always kept the car until my last official day of working too, and that included when put on gardening leave( which I usually was).
Since a company car is part of your contract if they take the car away early then you should be compensated for that. Where there was the choice of a company car upto say £400 a month or a car allowance of the same value if the car was required to be returned early (it never was) then £400 per month would have been payable, or pro rata depending on how many days without the car. That amount would be taxable through PAYE. The only times I know of that the latter scenario happened with anyone however was redundancy and PILON. The norm was to keep the car until you left.

That's your former employer. Not the OPs. The OP says that (a) the employer usually removes the car, and (b) the contract thesays that car is a tool for the job, and therefore private user is a perk, not a contractual right. So it would probably be beret to advise the OP about their circumstances - not what might have happened to you in an entirely different company.

crackerberry

sangie595 wrote: »

That's your former employer. Not the OPs. The OP says that (a) the employer usually removes the car, and (b) the contract thesays that car is a tool for the job, and therefore private user is a perk, not a contractual right. So it would probably be beret to advise the OP about their circumstances - not what might have happened to you in an entirely different company.

Calm down. No need to be so aggressive


The company car is taxed as a benefit in kind, because it is available as a tool of the job yes, and for personal use too. That isn't a perk- the OP pays tax and clearly states so.

I've only had company cars with various employers for over twenty years however, so will bow down to your obviously greater knowledge.

sangie595

crackerberry wrote: »

Calm down. No need to be so aggressive


The company car is taxed as a benefit in kind, because it is available as a tool of the job yes, and for personal use too. That isn't a perk- the OP pays tax and clearly states so.

I've only had company cars with various employers for over twenty years however, so will bow down to your obviously greater knowledge.

Really. And I've only got thousands of members with company cars over 30 years. But your personal and limited experience, to say nothing of lack of knowledge of the law, will obviously be greater. A perk is a non contractual benefit - tax law is entirely different from contract law or employment law. Being taxed on a perk does not give any legal contractual right to receive that perk. You are taxed whilst you receive it. As others have said, when you don't receive it any more, you don't get taxed on it.

So your experience is limited to what your own employers have done, and has no bearing whatsoever on the OP s employers policies or practices. So there is no right to keep the car, nor to be compensated; and according to what the OP had said, this is not a contractual benefit.