company car tax

[MGYoung]

Hello,

I have been offered a company car as I'm doing over 10K company miles each year. Can sometell me how the tax is calculated? Is this generally paid monthly or annually.

Thanks

Martin.

[softtop]

MGYoung said:

Hello,

I have been offered a company car as I'm doing over 10K company miles each year. Can sometell me how the tax is calculated? Is this generally paid monthly or annually.

Thanks

Martin.

The car becomes a perk and so it appears on your PAYE notice. They calculate the amount and spread it over the year. Since you are likely to have just had your PAYE statement, I would let the tax man know about the new car since you do not want to be clobbered for two years tax if you leave it a year for the company to inform them.

[530dTPhil]

The HMRC website gives the explanation of the tax liabilities. It varies according to the on the road price of the car and the CO2 output.
www.hmrc.gov.uk/employers/ebik/ebik3/car-benefit.htm

[Eric Mc]

Employers are SUPPOSED to notify HMRC of new company cars or changes to current company car details on a calendar quarterly basis using a form called a P46(Car). This should allow the Revenue to amend the employee's PAYE Notice of Coding BEFORE the end of the tax year. This in turn should mean that the employee is showing the correct Car Benefit in Kind on his PAYE Coding and pays the correct PAYE tax in the correct tax year.

After the tax year-end, the employer informs the Revenue AGAIN about all company cars (and other benefits) on the annual P11d. This does not have to be submitted to the Revenue until THREE MONTHS after the tax year has ended.

Unfortunately, many employers seem to only notify the Revenue about company cars using the P11d. This means that the employee's PAYE Notice of Coding will be wrong because the car information shown will be based on the car details for the previous tax year.

The best way to ensure you are paying the correct tax on the company car in the current year is to insist that the employer submits the P46 (Car) and then chase up the Revenue if there is no sign of your PAYE Coding Notice being amended.