Company Car Tax

LisaO131

I handed my company car back In early January this year. It was immediately handed to another employee who is paying car tax on it. I contacted HMRC (when I moved jobs and realised I was still paying tax for the benefit of having the car) to be told I still have to pay for the car until the end of the year. I did not have use of the car, and they were receiving tax from two people due the same vehicle. 

Is this standard practice? 

Just for some background to this: My colleague had written his Company car off a few days before, my car was given to him as a permanent  replacement. 

Thanks in advance. 

Dazed_and_C0nfused

LisaO131 said:

I handed my company car back In early January this year. It was immediately handed to another employee who is paying car tax on it. I contacted HMRC (when I moved jobs and realised I was still paying tax for the benefit of having the car) to be told I still have to pay for the car until the end of the year. I did not have use of the car, and they were receiving tax from two people due the same vehicle. 

Is this standard practice? 

Just for some background to this: My colleague had written his Company car off a few days before, my car was given to him as a permanent  replacement. 

Thanks in advance. 

Yes, but you have misunderstood what it means.

If you have a company car at the start of a tax year (that is isn't taxed via payroll) there will be a tax code deduction for the whole tax year.

But the deduction should reflect the period you had the car.

So if at the start of the tax year then tax code deduction was say £4,800 (because the expectation then was that the car would be available all year)  and the car stopped being available after exactly 10 months a tax code deduction is still needed for the remaining two months but it should be changed to £4,000, to reflect the fact that the car was only available for 10 months.

The deduction can be completely removed form the start of the next tax year.

Was the tax code amended after the car became unavailable?

Exodi

Dazed_and_C0nfused said:

LisaO131 said:

I handed my company car back In early January this year. It was immediately handed to another employee who is paying car tax on it. I contacted HMRC (when I moved jobs and realised I was still paying tax for the benefit of having the car) to be told I still have to pay for the car until the end of the year. I did not have use of the car, and they were receiving tax from two people due the same vehicle. 

Is this standard practice? 

Just for some background to this: My colleague had written his Company car off a few days before, my car was given to him as a permanent  replacement. 

Thanks in advance. 

Yes, but you have misunderstood what it means.

If you have a company car at the start of a tax year (that is isn't taxed via payroll) there will be a tax code deduction for the whole tax year.

But the deduction should reflect the period you had the car.

So if at the start of the tax year then tax code deduction was say £4,800 (because the expectation then was that the car would be available all year)  and the car stopped being available after exactly 10 months a tax code deduction is still needed for the remaining two months but it should be changed to £4,000, to reflect the fact that the car was only available for 10 months.

The deduction can be completely removed form the start of the next tax year.

Was the tax code amended after the car became unavailable?

To add further to this, our payroll/accountant advised that it's far quicker if I (as the employee) if I just logged into my online tax account and update the status of the vehicle myself (previously I had expected them to notify HMRC of the change - but had previous issues in other jobs of delays, or paying tax on two cars at once, etc).

It was a two minute job and my tax code changed the next day.

https://www.gov.uk/personal-tax-account

Phoenix72

What happened with your 23/24 tax code is now irrelevant now we are in 24/25. Once HMRC have your P60 and P11d details they will review the year. As long as the P11d shows the taxable benefit for the period you had the car then it will be sorted.

Albermarle

Exodi said:

Dazed_and_C0nfused said:

LisaO131 said:

I handed my company car back In early January this year. It was immediately handed to another employee who is paying car tax on it. I contacted HMRC (when I moved jobs and realised I was still paying tax for the benefit of having the car) to be told I still have to pay for the car until the end of the year. I did not have use of the car, and they were receiving tax from two people due the same vehicle. 

Is this standard practice? 

Just for some background to this: My colleague had written his Company car off a few days before, my car was given to him as a permanent  replacement. 

Thanks in advance. 

Yes, but you have misunderstood what it means.

If you have a company car at the start of a tax year (that is isn't taxed via payroll) there will be a tax code deduction for the whole tax year.

But the deduction should reflect the period you had the car.

So if at the start of the tax year then tax code deduction was say £4,800 (because the expectation then was that the car would be available all year)  and the car stopped being available after exactly 10 months a tax code deduction is still needed for the remaining two months but it should be changed to £4,000, to reflect the fact that the car was only available for 10 months.

The deduction can be completely removed form the start of the next tax year.

Was the tax code amended after the car became unavailable?

To add further to this, our payroll/accountant advised that it's far quicker if I (as the employee) if I just logged into my online tax account and update the status of the vehicle myself (previously I had expected them to notify HMRC of the change - but had previous issues in other jobs of delays, or paying tax on two cars at once, etc).

It was a two minute job and my tax code changed the next day.

https://www.gov.uk/personal-tax-account

In my experience company payroll departments are not very good at following through things like changes to company cars. So your advice to sort it out yourself sounds like the right way.

LisaO131

I spoke with HMRC directly, and was told that I had to pay for the car for the whole of the tax year. I explained that I no longer had it, but was told  that’s there would be no change. My tax code remained the same and was only changed to reflect no car this month. 

Dazed_and_C0nfused

LisaO131 said:

I spoke with HMRC directly, and was told that I had to pay for the car for the whole of the tax year. I explained that I no longer had it, but was told  that’s there would be no change. My tax code remained the same and was only changed to reflect no car this month. 

There seems to be two possible reasons for this.

1.  You spoke to a trainee who knows nothing about how tax works.

2.  The Car Benefit in the code was wrong and by an amazing coincidence the correct amount, to when the car stopped being available, happened to be the same as the existing amount.  So no change was needed.

My money would be on 1 not 2.

You need to ask your old employer for the P11D (possibly not available until July) and then once you have the actual benefit details ask HMRC to review the tax paid in the 2023-24 tax year.

They will do this automatically but you might want to prompt them if a refund is due.

You cannot progress this now until you have the P11D.