Tax code query

[XDA]

Looking for some clarification regarding company car and tax code.

I left my old job on the 24th of December and handed back my company car on that day. I started my new job on the 3rd of January where I'm driving a hire car, until my company car arrives.

I handed my P45 to my new employer when I started which gives the tax code I was on, in my last job based on my old company car. I have just received my first pay slip from my new employer and I'm still being taxed on my old code.

Is this correct?

Should I not be on the 647 (??) code as a hire car isn't taxable? Should I have informed HMRC that I'm not in a company car at the moment?

Help!!

[Eric Mc]

Are you paying for the hire car yourself or is your employer paying for it?

[XDA]

Eric Mc said:

Are you paying for the hire car yourself or is your employer paying for it?

My employer is paying for it - I guess that makes it taxable then?

[Eric Mc]

Yes - it is just another company car. As far as HMRC are concerned, they are not bothered about the fact that the employer is hiring the car rather than owning it outright. For Benefit in Kind purposes, the important thing is that your employer is providing you with a car

Obviously, the BIK charge on THIS car may be different compared to BIK on the car you had with the previous employer.

Your new employer is supposed to notify HMRC that -

a) you have commenced employment with them and the date you commenced

b they are providing you with a comnpany car

c) the list price and CO2 rating of the company car and the date it was first made available to you


Once HMRC has this information, they can amend your PAYE Tax Coding appropriately. Make sure that your employer has carried out all their notification obligations.

Of course, if you subsequently change company cars, your employer are also obliged to notify HMRC of the changs.

[XDA]

Great, that's cleared that up!

I have the hire car until March, then I get my company car.

My employer should therefore be notifying HMRC of the BIK charge of hire car then?

[Eric Mc]

XDA said:

Great, that's cleared that up!

I have the hire car until March, then I get my company car.

My employer should therefore be notifying HMRC of the BIK charge of hire car then?

I'd wait until after 5 April to change cars. That should simplify matters as 5 Apriil is the end of the tax year and it would push any further amendements to your coding into tax year 2011/12.

The employer is supposed to notify HMRC about car changes during the tax year on a Form P46 Car. After the tax year ends (i.e. 5 April), the details of all the cars made available to an employee - as well as details of all other benefits given to the employee - and expenses paid to the employee - are submitted to HMRC on a Form P11D.

Many employers wait until the P11D to notify HMRC about car changes. This is technically incorrect as HMRC want to know about car changes DURING the tax year in which the changes occured. P11Ds are only sent in after the tax year is over. Most problems caused by incorrect tax coding in respect of company cars is down to the fact that employers fail to submit the correct Form P46 Car when they should,

From 6 April 2011, the details that used to be sent in on the Form P46 Car MUST be submitted by the empoyer ELECTRONICALLY.

[XDA]

Thanks Eric, your help is much appreciated.