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HMRC Company Car
- Thread starter xnetco
- Start date
Rooster6655
Active Member
Well the person doing the accounts should be able to do it straight away so that the correct deductions are made.
Rooster6655
Active Member
Your accountant probably is using an old system to do it then, if using an online accounting platform its done straight away as tax codes are updated automatically.
Not necessarily. The standard way is that you inform HMRC and they update the tax code and send you a coding notice. You pay the correct amount of tax in the end even if there's a delay - you just get it refunded later.
The alternative is that you do "payrolled BIK" which requires some bureaucracy to set up and also limits the payroll software you can use, but does mean that you do the correct calculation each month. I have switched to doing this despite the hassle (and that I've no other BIKs to streamline the processing of, which is the usual reason companies want to do this) - just because HMRC were always getting my code wrong! Every time they touched my account for any reason, they would issue a new coding notice on the basis that the Tesla is a V12-gas-guzzler with an enormous BIK charge, and I'd have to complain and get it put back. As above, I ended up paying the right amount of tax in the end, but the error could be thousands of pounds if I didn't get on top of it immediately.
LongRanger
Active Member
Agree getting it done on payroll as a deduction to gross salary is the way to go, HMRC shouldn’t have to play around with your tax code for a company car BIK payment to be deducted from your pay.
The extra complexity will then be March > April payroll runs if your employer handles pay part in advance, part arrears - depending on your pay date. Decent software should have the ability to pro-rata calculate any March days at current BIK rate and the remainder on the new Apr rate.
The extra complexity will then be March > April payroll runs if your employer handles pay part in advance, part arrears - depending on your pay date. Decent software should have the ability to pro-rata calculate any March days at current BIK rate and the remainder on the new Apr rate.
Not exactly. HMRC can send out coding notices at any time and employers are supposed to start using them immediately. They usually do so when they receive some kind of new information about you - so when you file a tax return, when the employer files a P11d at the end of the tax year, or in the case we are talking about when the employer files a P46(car).
The employer is required to file the P46(car) every time a car is provided/changed/withdrawn from an employee. They are required to do so at the latest by deadline dates approx 1 month after the end of the quarter, so the employer can bundle them all up and submit them quarterly if they want to, but equally they can just do it straight away when the transaction occurs (as a small business, I find this easier).
P46(car) was historically a paper form; you can now file them via an online web form, or you can file the same data through payroll software and the PAYE-RTI data interchange.
Most other things likely to affect your code (if coming from the company) are either going to come through PAYE-RTI - ie. the weekly or monthly payroll - or else only at the end of year through the P11d which lists all benefits received during the year.
So for the case we are talking about there's two routes:
- Employer has not signed up for the "payrolled BIK" scheme. They file a P46(car) when they get around to it - could be straight away, could be up to 4 months later if you got the car at the start of a quarter. When HMRC get around to processing it, they will send out a new coding notice reflecting the new amount of tax they think you are going to owe for the whole year. If you have been on the wrong code for a while, your next salary payment will jump to either refund the excess tax or take the tax you haven't paid (with a limit on how much they can claw back in a month). All this stuff based on tax codes is just estimated; at the end of the year the employer files P11d with the accurate info on it and the tax for the whole year can be worked out (by you if you file a self-assement tax return)
- Employer has signed up for "payrolled BIK". Tax on the car benefit (and any other benefits that the employer has elected to payroll) is collected directly from your salary and (assuming competent employer and bug-free software) will be correct every time. Employer still files P46(car), but this does not cause a new tax code because HMRC have it on record that this employer is payrolling the benefits. Employer still files P11d at the end of the year, but there shouldn't be any inaccuracy to correct.
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spooksman
Member
arg has covered this well in the post above. Just a couple of extra things to add...
- As stated, a P46(car) is sent by an employer when a car is provided, withdrawn or replaced, and can be done 'immediately' should the employer so choose. However, just note that if you had the car BEFORE the 6th of April 2020, no P46(car) will be sent (as the car hasn't changed), so you will be reliant on HMRC making the tax code change, but that should be automatic.
- A P46(car) tells HMRC the contributory information involved in the calculation (price, CO2, fuel type, availability, capital contributions etc), the cash equivalent is derived from the information provided at that stage.
- As an individual you can make a personal representation to HMRC via the website to trigger changes. However once again, if you had the car before April 6th 2020 you are still in the position where your car hasn't actually changed, it is only the appropriate percentage that has changed (which is not part of a P46(car) submission), so you will be telling them information they already know.
- As stated in the other posts, even if your tax code doesn't change instantly, it will catch up and you shouldn't miss out (long term).
- Payrolling a car benefit effectively replaces a P46(car) and ensures that HMRC have the correct vehicle information on a monthly basis.
- For those not payrolling, the P11D at the end of the year will sort matters out, but that is a year down the line, so I'd take action before then via a personal representation (a phone call!).
I don’t think the replies above are quite correct as my understanding is that there is now no longer a requirement for an employer to complete a P46(car) form for a change of vehicle, only when a car is first provided or removed.
I told HMRC of the change to my car when I got my Tesla using my online personal tax account. My tax code was updated fairly soon after. You are under no obligation to do this but if you don’t then HMRC will only know about the change once your P11d goes in later in the year. This will likely result in an overpayment of tax assuming the Tesla benefit is smaller than your previous vehicle.
I told HMRC of the change to my car when I got my Tesla using my online personal tax account. My tax code was updated fairly soon after. You are under no obligation to do this but if you don’t then HMRC will only know about the change once your P11d goes in later in the year. This will likely result in an overpayment of tax assuming the Tesla benefit is smaller than your previous vehicle.
spooksman
Member
Agreed, there is no 'requirement' for an employer to submit a P46(car) - there never has been, but HMRC recommend employers do this to update tax codes as quickly as possible - they suggest quarterly, but more frequently is becoming standard practice. A P46(car) on paper can only supply information about a provision or withdrawal, but an electronic P46(car) can also deal with a direct replacement (a replacement is when a vehicle is replaced the next day - if the gap is longer than a day a withdrawal and provision is required even if electronic).
It is always best to make a personal representation (as the above poster has), it is faster and means you aren't reliant on your employer - HMRC will reconcile this with employer provided information at a later stage.
Just to highlight again, if you had the car before 6th April 2020, you are really waiting on HMRC making the change to appropriate percentage and altering your tax code accordingly. My guess is that as the new Finance Act has not officially been given Royal Ascent as yet, HMRC won't take account of the new percentages until after the Budget, which I believe is on March 11th..
It is always best to make a personal representation (as the above poster has), it is faster and means you aren't reliant on your employer - HMRC will reconcile this with employer provided information at a later stage.
Just to highlight again, if you had the car before 6th April 2020, you are really waiting on HMRC making the change to appropriate percentage and altering your tax code accordingly. My guess is that as the new Finance Act has not officially been given Royal Ascent as yet, HMRC won't take account of the new percentages until after the Budget, which I believe is on March 11th..
curmudgeon
Member
The online P46(car) form is so much simpler and quicker than the old paper version. I did this (as employer) after I took delivery of my M3 in August and HMRC issued a new tax code a few weeks later. I always like to update HMRC of such things as early as possible.
So today I received my 2020/21 coding notice and it includes company car tax calculated at 2% BIK from April, not the promised but yet to be implemented 0% rate. I wonder if HMRC will issue another coding notice at 0% BIK before April?
So today I received my 2020/21 coding notice and it includes company car tax calculated at 2% BIK from April, not the promised but yet to be implemented 0% rate. I wonder if HMRC will issue another coding notice at 0% BIK before April?
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You only need it by the end of April and they can't print/issue them until the 0% rate is in law.
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