Salary sacrifice car tax

Kirkmain

Have recently recieved a message from HMRC saying I owe them £2000 in unpaid tax for a salary sacrifice car I took out 4 years ago. They have calculated the value of the lease and charged me tax on this.

 I don't understand, I thought the whole point of having a salary sacrifice car is to reduce my tax liability. If they are going to charge me tax on the "value" of the benefit, then I might as well have not taken the salary sacrifice and just shopped around for a lease elsewhere. Literally all I have saved is NI, and pension contribution, and if I were liable student loan repayments (which have long been repaid)

When I returned the car they charged me about £200 for scuffs and wear.

What a complete scam

Dazed_and_C0nfused

What made you think there was no benefit arising from a company car (which is what it is)?

https://www.nhsfleetsolutions.co.uk/faqs/

Penguin_

You still have to pay BIK tax based on the P11d value.

Kirkmain

Dazed_and_C0nfused said:

What made you think there was no benefit arising from a company car (which is what it is)?

https://www.nhsfleetsolutions.co.uk/faqs/

a company that I paid market rate for through salary sacrifice? But then i have to pay tax on the value of the car that I am already paying for. Wheres the benefit?

DullGreyGuy

Kirkmain said:

Have recently recieved a message from HMRC saying I owe them £2000 in unpaid tax for a salary sacrifice car I took out 4 years ago. They have calculated the value of the lease and charged me tax on this.

 I don't understand, I thought the whole point of having a salary sacrifice car is to reduce my tax liability. If they are going to charge me tax on the "value" of the benefit, then I might as well have not taken the salary sacrifice and just shopped around for a lease elsewhere. Literally all I have saved is NI, and pension contribution, and if I were liable student loan repayments (which have long been repaid)

When I returned the car they charged me about £200 for scuffs and wear.

What a complete scam

If you saved NI then that would mean the sacrifice was made from your Gross salary and as such you had a company car. 

A company car is a benefit in kind and attracts tax as such. It was nothing to do with the value of the lease but what the list price of the car was, its fuel type and CO2 emissions. 

If you pick a very low emissions car, or better still an electric then its likely the BIK is massively less than what financing a car from your net salary would be... can be the opposite if you choose a gas guzzler. 

Veteransaver

Did your employer not charge the BIK via payroll each month? If not then I presume they issued a P11d which you would have needed to declare on a self assessment return.
The tax could have been collected via your tax code though.
How long did you have the company car? Did you leave the company within a year so didn't get a P11d or something?

mybestattempt

The benefit position here is explained in the HMRC Employment Income Manual:

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim23215

Not sure why it's taken HMRC 4 years to be made aware.

Just a guess but perhaps the employer, as well the OP,  did not understand a P11d was required and has just recently informed HMRC about the car benefit?

norsefox

Kirkmain said:

Have recently recieved a message from HMRC saying I owe them £2000 in unpaid tax for a salary sacrifice car I took out 4 years ago. They have calculated the value of the lease and charged me tax on this.

 I don't understand, I thought the whole point of having a salary sacrifice car is to reduce my tax liability. If they are going to charge me tax on the "value" of the benefit, then I might as well have not taken the salary sacrifice and just shopped around for a lease elsewhere. Literally all I have saved is NI, and pension contribution, and if I were liable student loan repayments (which have long been repaid)

When I returned the car they charged me about £200 for scuffs and wear.

What a complete scam

What vehicle was it - when did you get it - when was it handed back?

If we know the vehicle, it's fairly easy to work out what the BIK % would be against the vehicle value, then taxed at your marginal rate(s).  Only your salary at the time would be needed to ensure accuracy.

I presume it must have been a hybrid as a) you can't SS a ICE vehicle, and b) BIK values for EVs were 0% 4 years ago, and only recently increased to 1%, and then 2%, so wouldn't incur a £2k taxable liability unless you had a very expensive car, and/or in a high rate of tax.

Kirkmain

norsefox said:

Kirkmain said:

Have recently recieved a message from HMRC saying I owe them £2000 in unpaid tax for a salary sacrifice car I took out 4 years ago. They have calculated the value of the lease and charged me tax on this.

 I don't understand, I thought the whole point of having a salary sacrifice car is to reduce my tax liability. If they are going to charge me tax on the "value" of the benefit, then I might as well have not taken the salary sacrifice and just shopped around for a lease elsewhere. Literally all I have saved is NI, and pension contribution, and if I were liable student loan repayments (which have long been repaid)

When I returned the car they charged me about £200 for scuffs and wear.

What a complete scam

What vehicle was it - when did you get it - when was it handed back?

If we know the vehicle, it's fairly easy to work out what the BIK % would be against the vehicle value, then taxed at your marginal rate(s).  Only your salary at the time would be needed to ensure accuracy.

I presume it must have been a hybrid as a) you can't SS a ICE vehicle, and b) BIK values for EVs were 0% 4 years ago, and only recently increased to 1%, and then 2%, so wouldn't incur a £2k taxable liability unless you had a very expensive car, and/or in a high rate of tax.

It was a BMW 330E plug in hybrid. I am a higher rate tax payer

Penguin_

Kirkmain said:

norsefox said:

Kirkmain said:

Have recently recieved a message from HMRC saying I owe them £2000 in unpaid tax for a salary sacrifice car I took out 4 years ago. They have calculated the value of the lease and charged me tax on this.

 I don't understand, I thought the whole point of having a salary sacrifice car is to reduce my tax liability. If they are going to charge me tax on the "value" of the benefit, then I might as well have not taken the salary sacrifice and just shopped around for a lease elsewhere. Literally all I have saved is NI, and pension contribution, and if I were liable student loan repayments (which have long been repaid)

When I returned the car they charged me about £200 for scuffs and wear.

What a complete scam

What vehicle was it - when did you get it - when was it handed back?

If we know the vehicle, it's fairly easy to work out what the BIK % would be against the vehicle value, then taxed at your marginal rate(s).  Only your salary at the time would be needed to ensure accuracy.

I presume it must have been a hybrid as a) you can't SS a ICE vehicle, and b) BIK values for EVs were 0% 4 years ago, and only recently increased to 1%, and then 2%, so wouldn't incur a £2k taxable liability unless you had a very expensive car, and/or in a high rate of tax.

It was a BMW 330E plug in hybrid. I am a higher rate tax payer

So, you're looking at 12% BIK then based on 30-39 CO2 emissions & a range of <40 miles of electric driving.