Many employers permit an employee to make a financial contribution towards the lease cost and thereby upgrade their company car.
Surprise surprise, the employee still pays tax based on the P11D value of the enhanced car.
Therefore, the employee pays tax because of the benefit of the "free" use of a nice car, even though he/she himself/herself is paying part of the leasing cost!
Can the Insland Revenue not devise some form of apportionment or adjustment to compensate for employee contributions towards the cost of any benefit?
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Lewis,
Any payments made by the employee are taken into account when calculating the amount of taxable benefit. There is a leaflet on how this is calculated here:
www.inlandrevenue.gov.uk/pdfs/ir172.htm
There will be a major change to how company cars are taxed beginning next year. There is an Inland Revenue FAQ for this:
www.inlandrevenue.gov.uk/cars/carfaqs.htm
Rod.
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Lewis
Rod has pointed you in exactly the right direction to find the information you require.
If you believe your employer has made a mistake with your P11D, you should contact both your payroll department and your Tax district. There is a proceedure for correcting errors and this can be retrospective for up to six years.
If you are finding it difficult to understand the adjustments for contributions towards company cars, visit any local tax enquiry centre and staff will help you. In my experience they are very user friendly.
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Details of this major change in company car benefit tax are in the appropriate FAQ answer at www.honestjohn.co.uk You can hop straight to it from here. Lots of drivers of big, flash company cars are going to get stiffed if they keep the cars. Also there will be no more cuts in benefit tax for company drivers who do high mileages. All starts April 2002.
HJ
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