TT17: Car Benefits
Many of you will have received your notices of coding for next tax year (i.e. to 5 April 2003). Whilst the deductions for benefits might look disappointingly large and the figures for allowances disappointingly small, in all probability you are being taxed too little!
You may have read reports in the press that the Inland Revenue’s computers are failing to calculate car benefits under the new regime correctly.
Our experience is that the benefits being shown on notices of coding are too low – and in some cases substantially too low. This might seem like good news! Not so! You may pay less tax in respect of your benefits now, but there will be a substantial catch-up payment in the January after the end of the tax year. That payment may also influence whether you have to make payments on account.
Find out more
From 5 April 2002 the tax charge on a company car will be based upon the value of your car and its emissions. You can look up your car’s emissions by going to http://www.smmt.co.uk or for new carshttp://www.vca.gov.uk. Please contact your engagement partner if you are unsure how to make the calculations.
Barnes Roffe Topical Tips
- For many people the new car benefit regime will result in increased tax liabilities. Now is a good time to be thinking about whether your car should continue to be provided by the company or whether you should buy it and run it personally. Alternatively, it might be worth considering switching to a car with lower emissions.
- Similar considerations apply to your employees. Remember you are paying employer’s National Insurance on their benefits.
- The calculations can be complex, but in many instances the correct decision can be made relatively easily. Please contact us if you would like us to review your individual situation.