Self assessment and Company Car tax?

[Mr Obertshaw]

Hopefully Someone can offer some advice.

I've just filled in my self assessment tax return for 17/18 as I have a buy to let with a small income- I usually pay around £300 additional tax as I am a 20% taxpayer on my PAYE employment.

When I went through this year the calculation came out around £500 more than I expected which was a bit of a surprise. When I've gone back through this appears to be down to a company car benefit that HMRC has automatically taken from my employer and added into the calculation.

I got the car end of November 2017 (NHS lease car) so would this benefit not already have been taken into account with my PAYE and tax, as the only reason I fill out a self assessment is due to buy to let income.

I don't have access to my most recent payslips as their at work, however a payslip from a year ago (had the car 3 months) has a tax code 1150L. Would this suggest I've not being paying any BIK tax at that time?

[Eric Mc]

Have a look at the last detailed coding notice in operation for 2017/18. Any adjustment for a company car should have been incorporated into that coding. That is how HMRC attempts to collect the correct PAYE on a salary if there are benefits in play - such as a company car.

They are not always correct.

[jonttt]

I’m guessing your tax code has not been adjusted in the tax year for the company car. If it had you would have noticed a drop in your net pay for the company car from November (as well as the tax code change notice in the post lol).

I presume you’ve had your P11d for the benefit in kind due on the company car in the tax year ? Assuming that does not take you over the 40% earning threshold then is the £500 about 20% of the benefit in kind ?

Ps you do know that your property tax liability is also higher in 17-18 as you only get 75% relief on any mortgage interest payments (previously 100%, 50% this year, 25% next year) AND your rental income is now classed as earnings so can push you up a tax bracket ?

I’m guessing is you have a morgage on your rental property that your extra tax bill is company car tax on the BIK AND extra tax on your rental property ;-)

[Mr Obertshaw]

Thanks both for your replies.

" Presume you’ve had your P11d for the benefit in kind due on the company car in the tax year ? Assuming that does not take you over the 40% earning threshold then is the £500 about 20% of the benefit in kind ?"

I suspect the above is correct. I'll dig all of this out tomorrow and check.

From another site" When you are first provided with a benefit, there can be a time lag while HMRC process the relevant information. For example, HMRC are unlikely to be able to deal with benefits first provided to you in 2018/19 in your 2018/19 tax code. You are therefore likely to receive a P800 calculation showing an underpayment for 2018/19, which HMRC will try to collect by adjusting your tax code during a later year".

So I guess their just getting the shortfall back now rather than spreading it on my paye tax.

Edited by Mr Obertshaw on Wednesday 16th January 23:37

[Eric Mc]

If you are in the Self Assessment system, it is sometimes better to have any under or over payments sorted through Self Assessment rather than have HMRC mess about with future tax codes as they try to play catch-up (which they hardly ever manage).