tax code reduced from 522L to 222L help !!!

emmaBZ

hi wonder if someone can help... OH is an electritian and uses a works van for work only not personal only to and from work.... he recieved a letter today saying his tax code for 07/08 has been reduced to 222L from the basic 522L i dont understand how this works anyone know please im worrying about being able to meet all bills if this is correct then it would be cheaper for him to buy a runaround and give work the van back...and get his code back to 522L


and also that he underpaid tax because his employer provided details of his company benefit ( THE VAN I GUESS AS THATS ALL HE GETS ) on form P11D but it wasnt included in the tax code... total of around £300 and that they are collecting this by restricting his allowance for april 08 im so confused i dont know where to start

fengirl_2

if he has a van which is provided for private use (home to work is private use), then there is a tax charge as shown in his code number. HIs code will have been put on a week one basis for the rest of the year so that only the tax due on the van for the rest of the year will be collected this year. The tax due for the period 6 April to date has, as you say, been carried over to the 08/09 tax year.
The only way to not pay tax on this benefit is to give the van back or else leave it at work overnight and get the employer to restrict use to work only.

Bean_Counter

I agree with jimmo that the first port of call is the employer.

If they can be satisfied that the van is available for ordinary commuting then the van benefit for this year and last year should be nil. Before the start of this tax year, we undertook a series of consultations with our van drivers to see who wished to be exempt from the private use tax charge or not. For those who wished to be exempt, we wrote to HMRC to advise them of this. In addition, these drivers complete mileage logs so that in the event of an HMRC visit, the logs can show there is no private use.

When we first wrote to HMRC, they ignored our letters and adjusted everyone's code for the £3K charge anyway. The cynic in me thinks this is just a method of getting some tax in early. However another round of letters have resulted in the appropriate tax codes being adjusted to the right amount.

Hence get the employer to be pro-active if you are sure there is no private use and get the tax code changed sooner rather than later.

For the £300 charge for the earlier years, if I recall the basis for the charge was if the van was 'available' for private use, regardless as to whether there was any private use or not.

Again any employer worth their salt should be able to advise in more detail and in more clarity. The changes were widely reported. I certainly get more calls from site guys on this subject than anything else.

mickey69

Hi

My tax code is 522L and my girl friend 's code is 522L/1. I am earning twice as much than her. Does it sound correct or not???
We are a bit confused!!!!

Thanks

jem16

Your tax code has nothing to do with how much you earn. The 522L is normal tax code for a person under 65. It means you have a personal tax-free allowance of £5225.

The only problem I see with your girlfriend's tax code is that it is 522L/1. The 1 usually means it's a non-cumulative code and although she would get her tax-free allowances, if she is due any rebate for any reason it would not automatically go through.

Did your girlfriend start a new job recently?

sweetchilly

I have received two different letters from HM Revenue & Customs on same date regarding my tax code changed to 238L and another letter tax code is 418T.

I have just resumed my work after 8 months maternity leave.

How will affect my pay?
Could you please help me? I just panicked

scoobs02

This looks like your tax code (pa 6475) has been split between 2 jobs. Have you 2 jobs?? If not you need to call the contact centre asap.

System

sweetchilly wrote: »

I have received two different letters from HM Revenue & Customs on same date regarding my tax code changed to 238L and another letter tax code is 418T.

I have just resumed my work after 8 months maternity leave.

How will affect my pay?
Could you please help me? I just panicked

Are they both for the same tax year?

John_Pierpoint

fengirl wrote: »

if he has a van which is provided for private use (home to work is private use), then there is a tax charge as shown in his code number. HIs code will have been put on a week one basis for the rest of the year so that only the tax due on the van for the rest of the year will be collected this year. The tax due for the period 6 April to date has, as you say, been carried over to the 08/09 tax year.
The only way to not pay tax on this benefit is to give the van back or else leave it at work overnight and get the employer to restrict use to work only.

Is this now out of date?
Company vans – guidance for employees

You will pay tax on a company van made available to you for private use as follows:

• until 5 April 2005, if it is available for private use (including commuting)
• from 6 April 2005, only if you actually use it for private journeys other than commuting.

This page provides links to information to help you understand when tax will be charged if you use a company van and how the charge is calculated.

• Employee fact sheet (from 2005/06 only)(PDF 34K)
• Income tax and company vans (to 2004/05 only)

The notes go on to define "Insignificant" private use as "dropping your child off at school on the way to work &.
making a visit to the dentist on the way back".

However "doing the supermarket weekly shop" is private use.
The van must be a work tool not just an occasional convenience; ie used daily.

The employer must be able to demonstrate compliance with this ruling by time/mileage sheets, spelling it out in the contract of employment etc.

Also:

v) In 1993-94 a scale charge of £500 was introduced for private use of company vans (or £350 for a van that is 4 or more years old at the end of the tax year). The charge also includes any private fuel provided. Since 2005-06 a nil charge has applied to employees who have to take their van home and are not allowed other private use. Where private use is unrestricted the existing £500 or £350 scale charge will apply dependent upon the age of the van. From April 2007 the discount for older vans will be removed and the scale charge for unrestricted private use will increase to £3,000. Also from April 2007, an additional fuel charge of £500 will apply if the employer provides fuel for unrestricted private use;

More creeping stealth tax

John_Pierpoint

.we have heard that revenue officers have been monitoring supermarket car parks to seek out potential offenders who may be trying to evade the tax. Also, as details of the van's registered keeper can now be easily sourced from the DVLA database, officers need not depend on the employer's details being noted on the van.

The key point is that regardless of how little private use is made of a van, if there are insufficient records available to satisfy HMRC that it has not been used for any other private purpose, a £3,000 penalty can be imposed
for each P11D that they consider to be incorrect.

In practice, the £3,000 penalty may be lifted, however, in return HMRC would usually expect the employer to pay the tax that has already been incurred on a "grossed up" basis, together with the Class 1A National Insurance that should have been paid on the van and fuel benefit.

For example, if HMRC asserts that a taxpaying employee has received van and van fuel benefit throughout the 2008/2009 tax year and the benefit has not been reported on the P11D, the cost to the employer of settling the tax and National Insurance could amount to as much as £2,804.66.

A good accountant should advise appropriately in order to ensure that a P11D penalty is not imposed and the employer and employee are not liable for settling the tax and National Insurance. we would advise that employers take the following steps:

- Ensure comprehensive mileage logs are kept

- Amendments to staff handbook / expense policies are kept

- Employees are provided with guidance on legislation

- Insurance restrictions should be considered

- Instigate employees to sign declarations - on an annual basis

- Establish structures for checking mileages

- Establish structures for 'Random' checks

- Consider 'Trackers' option in extreme cases

So being deputised as "tea boy" to go and get the site nosh could cost someone £2,804.66. !

sweetchilly

sweetchilly wrote: »

I have received two different letters from HM Revenue & Customs on same date regarding my tax code changed to 238L and another letter tax code is 418T.

I have just resumed my work after 8 months maternity leave.

How will affect my pay?
Could you please help me? I just panicked

the tax code is for the year 2010-2011. I work with NHS, and had a bank contract with them as well in 2008-2009, but never worked as bank contract in 2009-2010 as i was on maternity leave.