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  • FIRST POST
    • Keen_Investor
    • By Keen_Investor 10th Jan 18, 7:16 PM
    • 10Posts
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    Keen_Investor
    Company car tax question
    • #1
    • 10th Jan 18, 7:16 PM
    Company car tax question 10th Jan 18 at 7:16 PM
    Hi,

    Salary 99k

    P11D shows car benefit of 7000

    The company car has been taxed throughout the year by way of reduced Personal Allowance leading to a lower tax code.

    Yet at self assessment stage when this car benefit is entered, it produces even more tax to pay.

    This makes no sense to me, why is it added to total income, when tax has already been paid on it throughout the year?
Page 1
    • Dazed and confused
    • By Dazed and confused 10th Jan 18, 7:20 PM
    • 2,633 Posts
    • 1,260 Thanks
    Dazed and confused
    • #2
    • 10th Jan 18, 7:20 PM
    • #2
    • 10th Jan 18, 7:20 PM
    It's probably because you are losing some of your Personal Allowance due to your income going over the 100k threshold.

    Based on the info provided you could easily owe another 1200 (106000 income means you lose 3000 personal allowance which would add 3000 x 40% to your tax bill).
    • Keen_Investor
    • By Keen_Investor 10th Jan 18, 10:17 PM
    • 10 Posts
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    Keen_Investor
    • #3
    • 10th Jan 18, 10:17 PM
    • #3
    • 10th Jan 18, 10:17 PM
    It's probably because you are losing some of your Personal Allowance due to your income going over the 100k threshold.

    Based on the info provided you could easily owe another 1200 (106000 income means you lose 3000 personal allowance which would add 3000 x 40% to your tax bill).
    Originally posted by Dazed and confused
    That's what I don't understand. The income wasn't actually received, it was used to lease a company car.

    My personal allowance was then reduced so that I paid tax on that company car, so it looks like double tax to me.

    I'm obviously missing something, but it doesn't seem right.
    Last edited by Keen_Investor; 10-01-2018 at 10:22 PM.
    • Dazed and confused
    • By Dazed and confused 10th Jan 18, 11:40 PM
    • 2,633 Posts
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    Dazed and confused
    • #4
    • 10th Jan 18, 11:40 PM
    • #4
    • 10th Jan 18, 11:40 PM
    Your tax code was probably correct for the car benefit but if you were given the full personal allowance before any deduction for the car then you will owe tax because you aren't actually due the full personal allowance.

    You may have a similar problem this year (2017:18) but you can check your details onyour personal tax account and make sure HMRC have an upto date estimate of your current salary for the year to 5 April 2018.
    • Keen_Investor
    • By Keen_Investor 11th Jan 18, 12:05 AM
    • 10 Posts
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    Keen_Investor
    • #5
    • 11th Jan 18, 12:05 AM
    • #5
    • 11th Jan 18, 12:05 AM
    Your tax code was probably correct for the car benefit but if you were given the full personal allowance before any deduction for the car then you will owe tax because you aren't actually due the full personal allowance.

    You may have a similar problem this year (2017:18) but you can check your details onyour personal tax account and make sure HMRC have an upto date estimate of your current salary for the year to 5 April 2018.
    Originally posted by Dazed and confused
    I've never had my full allowance, always a reduced allowance which resulted in tax for my company car, this is why I don't get it. I will call them tomorrow to see why this is.
    • Dazed and confused
    • By Dazed and confused 11th Jan 18, 12:10 AM
    • 2,633 Posts
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    Dazed and confused
    • #6
    • 11th Jan 18, 12:10 AM
    • #6
    • 11th Jan 18, 12:10 AM
    Was your tax code something like this

    Personal Allowance 11000
    Less car benefit 7000
    Net allowances 4000
    Tax code 400L

    If so you had the benefit of the full allowance.

    What it maybe should have been was
    Personal Allowance 8000
    Less car benefit 7000
    Net allowances 1000
    Tax code 100L

    If it was the first then you did get the benefit of the full allowance
    • sheramber
    • By sheramber 11th Jan 18, 11:55 AM
    • 4,782 Posts
    • 3,578 Thanks
    sheramber
    • #7
    • 11th Jan 18, 11:55 AM
    • #7
    • 11th Jan 18, 11:55 AM
    Sounds like you had full personal allowance less car benefit.

    However, you salary of 399k plus cam benefit takes you above 100k.

    As a result you personal allowance is restricted for that as well as the car benefit.
    https://www.gov.uk/income-tax-rates/income-over-100000
    • chrismac1
    • By chrismac1 11th Jan 18, 1:29 PM
    • 2,495 Posts
    • 1,478 Thanks
    chrismac1
    • #8
    • 11th Jan 18, 1:29 PM
    • #8
    • 11th Jan 18, 1:29 PM
    From your P60, or final month payslip, be sure you have entered the Gross Taxable Pay figure and not the Gross Pay figure. Thie difference is anything under salary sacrifice, like pension and car.

    It is also worth sayaing that as an accountant with 150 clients and payrolls covering about 200 staff, I see at least 2 or 3 duff PAYE codes from HMRC per month. And some of those PAYE codes are just miles out, including stuff from 2 or 3 tax years ago and so on.
    Hideous Muddles from Right Charlies
    • jimmo
    • By jimmo 12th Jan 18, 10:39 PM
    • 1,944 Posts
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    jimmo
    • #9
    • 12th Jan 18, 10:39 PM
    • #9
    • 12th Jan 18, 10:39 PM
    I've never had my full allowance, always a reduced allowance which resulted in tax for my company car, this is why I don't get it. I will call them tomorrow to see why this is.
    Originally posted by Keen_Investor
    A tax coding is, in effect, a provisional arrangement intended to produce the correct tax deductions based on the latest information that HMRC had at the time of issuing the coding.
    Your coding should have included:
    Your personal allowance (10,600 for 2016/17):
    The estimated car benefit and:
    Possibly, a deduction to restrict your personal allowance because it was known that your taxable income would exceed 100,000.
    Your employer will then have recorded your taxable pay and the tax deducted.

    Self Assessment is the formal determination of your tax liability for the year concerned.
    It therefore includes:
    Your gross taxable pay (from your P60)
    The tax deducted by your employer (from your P60)
    Your personal allowance* and
    The final figure for benefits From your P11d).

    *not aware whether SA shows the full personal allowance and a restriction or the restricted personal allowance.

    Therefore everything included in the make up of your coding is included (updated)in the self assessment.
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