Advice please. I have just given back my company car. Still showing car benefit in my new tax code

Dolmandaniel

I changed jobs on the 1st of August. I gave back my company car on the 29th of July. I was paying through salary sacrifice and was a 40 % tax payer.
My new rax code 995 is based on over 2000 pounds worth of car benefit. Can someone explain why if I paid company car tax for all the months I had the company car why I should still be taxed on it now I don't have it in my new job. 

Dazed_and_C0nfused

I think you've misunderstood how tax on company cars works.

If you have had a company car in this tax year then you will have a company car  tax code deduction for the whole tax year.

But the deduction will be adjusted to reflect the fact the car was only available for ~4 months not 12 months.

Or did you think giving the car back meant you don't have to pay tax on it at all for this tax year 🤔

Dazed_and_C0nfused

If you have had a car for ~4 months why wouldn't you have to pay tax on it?

You will almost certainly get a tax refund in your wages the first time your new employer operates the 995(L) tax code but you cannot avoid paying tax on the 4 months worth of company car benefit just by giving the car back part way through the year.

prowla

The OP said:

Can someone explain why if I paid company car tax for all the months I had the company car why I should still be taxed on it now I don't have it in my new job.

They're clearly saying they're expecting to pay the 4 month's worth.

Dolmandaniel

I have paid tax on the car at the correct rate during the months I was employed in the previous company. As I then no longer have the car in the new job. My understanding was that the tax would have been paid during those four months. That was what I was trying to understand. 

Dazed_and_C0nfused

No, in those four months you were paying tax as though you would have the car for the whole tax year.

Your tax code has seemingly been revised to reflect the fact you will only have it for ~4 months.

You have to pay tax on the car for the whole tax year.  But instead of it being a benefit of say £7,500 it will be just £2,500, for the ~4 months.

SiliconChip

It may be easier to understand it if you compare your tax code when you did have the car to what it is now, if what Dazed_and_C0nfused has stated is what's happened then the new code should be higher than the old one so in fact you're likely to be getting some overpaid tax back now.

chrisbur

The important thing to check is how the tax code is being applied.
Is it cumulative (usually shown as cumulative or an abbreviation of that or 0) or non-cumulative (non-c..etc X NC 1 wk1 mt1)

[Deleted User]

Dolmandaniel said:

I have paid tax on the car at the correct rate during the months I was employed in the previous company. As I then no longer have the car in the new job. My understanding was that the tax would have been paid during those four months. That was what I was trying to understand. 

Let’s say that the car benefit for the whole year was 9000 - your tax code would be based on having a taxable benefit of 9000 for the whole year. 

However, you only had the benefit for one third of the year. Your tax code would be amended to reflect a taxable benefit of 3000 for the whole of the year. 

If a 20% taxpayer your tax for the whole of the year would reduce by £1200 or £100 per month and you will be refunded through your payroll for the months where you were taxed as if the car was to be a benefit for the whole year.