Company Car BIK

HowardC

Novice Member
Hope someone can help me! I have a company car and thought it was responsible of my employer or the car lease company to inform HMRC I have a company car. Anyway I had a Citroen C hire car first 3 months then was given a permanent car which was a Astra 5 door hatchback. 67 plate. I have had this car since August 2019. Having checked my HMRC PAYE they still had me down with the Citroen car. Will I in effect owe HMRC tax? I just wondered how much tax I owe.
 

crepello

Active Member
If your tax code is already adjusted for the Citroen, then at least any money owed shouldn't be too bad (or certainly a lot less bad than if you'd been paying nothing). However, to work out the exact figures, you need to know a bunch of information about the fuel type, engine size, CO2 ratings etc. for both cars

You can have a go at it here - http://cccfcalculator.hmrc.gov.uk/CCF0.aspx - and then the amount you owe (or are owed) would be the difference between the two BIK numbers, multiplied by your highest tax rate.

It should be up to the company to sort out for you, so let them do the legwork after that, but at least you'll have an idea of what sort of bill you are looking at. If it turns out that you will owe money, I'd be tempted to keep quiet and just notify them of the change from today.
 

noiseboy72

Distinguished Member
You can update your company car details using your online personal tax account - if you have set one up. This allows you to add and delete company cars, but if its been wrong since 2019, you may not be able to go back that far and might need to call them.

Your car would have been shown on your (Edited) P11D, so if you didn't check that the details were correct on there, then the liability is yours unfortunately.
 
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cessna172

Active Member
Being self employed I am entitled to claim for many expenses involving company car use but have not done so for many years now as I found it inconvenient having to keep records of mileage v private mileage and other details. I know I am losing out but at least am no longer subject to questioning by the accountant over petty car related claims.
 

DemonAV

Distinguished Member
I have a Co car and in the first 6 months of use I didn't realise I had to inform HMRC. I did and they altered my tax code to pay off what I owed. Companies assume you will inform the tax office and don't inform their employees most of the time.
 

Roger More

Standard Member
You can update your company car details using your online personal tax account - if you have set one up. This allows you to add and delete company cars, but if its been wrong since 2019, you may not be able to go back that far and might need to call them.

Your car would have been shown on your P60, so if you didn't check that the details were correct on there, then the liability is yours unfortunately.
I think you mean P11D Dearest Heart.
 

HowardC

Novice Member
If your tax code is already adjusted for the Citroen, then at least any money owed shouldn't be too bad (or certainly a lot less bad than if you'd been paying nothing). However, to work out the exact figures, you need to know a bunch of information about the fuel type, engine size, CO2 ratings etc. for both cars

You can have a go at it here - http://cccfcalculator.hmrc.gov.uk/CCF0.aspx - and then the amount you owe (or are owed) would be the difference between the two BIK numbers, multiplied by your highest tax rate.

It should be up to the company to sort out for you, so let them do the legwork after that, but at least you'll have an idea of what sort of bill you are looking at. If it turns out that you will owe money, I'd be tempted to keep quiet and just notify them of the change from today.
Thank you yes I will complete the calculator.
 

HowardC

Novice Member
Yes it seems that I have underpaid £1,900 in tax due to my employer or car lease company not notifying HMRC. I was informed by payrol they update HMRC so very confusing. In future I will do this. It’s £170 a month extra tax now. I wonder if I’m better to change jobs for lower income?
 

RebelScum

Well-known Member
And the thing is, had HMRC carried out an investigation into the company and discovered details hadn’t been reported correctly, in most cases as part of the settlement the employer voluntarily agrees to pay the tax underpayment on behalf of the employee along with the Employers National Insurance.
 
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crepello

Active Member
Yes it seems that I have underpaid £1,900 in tax due to my employer or car lease company not notifying HMRC. I was informed by payrol they update HMRC so very confusing. In future I will do this. It’s £170 a month extra tax now. I wonder if I’m better to change jobs for lower income?
It is definitely not worth changing your job for a lower income. The consequences of that will drag you down for the rest of your working life
 

RebelScum

Well-known Member
Yeah, I assume the £170 extra a month is a made up of arrears from previous years and the tax you should be paying now. It’s not like the arrears will go away if you get another job, you’d still have to pay that, on a lower income.
 

oneman

Well-known Member
Yes it seems that I have underpaid £1,900 in tax due to my employer or car lease company not notifying HMRC. I was informed by payrol they update HMRC so very confusing. In future I will do this. It’s £170 a month extra tax now. I wonder if I’m better to change jobs for lower income?
is you job really that portable ?

Think of it this way, its tax you should have paid anyway so its not like you are paying extra tax. And this does surprise me that did you not know your newer car had more tax on it and thus the amount of tax you are paying will have changed ?
 

HowardC

Novice Member
is you job really that portable ?

Think of it this way, its tax you should have paid anyway so its not like you are paying extra tax. And this does surprise me that did you not know your newer car had more tax on it and thus the amount of tax you are paying will have changed ?
The first car was the newer car. Never thought the Astra would be taxed higher.
 

HowardC

Novice Member
And the thing is, had HMRC carried out an investigation into the company and discovered details hadn’t been reported correctly, in most cases as part of the settlement the employer voluntarily agrees to pay the tax underpayment on behalf of the employee along with the Employers National Insurance.
That’s interesting so is it the responsibility of the employer or employee to notify HMRC? I am responsible but equally so is my employer for failing to update my company car details.
 

RebelScum

Well-known Member
That’s interesting so is it the responsibility of the employer or employee to notify HMRC? I am responsible but equally so is my employer for failing to update my company car details.
Both really, the tax is the employee’s responsibility whilst the employer is liable to Employers NI. The employer should notify HMRC of any changes anyway, but the individual also has a responsibility to ensure they are paying the correct tax.
 

HowardC

Novice Member
Both really, the tax is the employee’s responsibility whilst the employer is liable to Employers NI. The employer should notify HMRC of any changes anyway, but the individual also has a responsibility to ensure they are paying the correct tax.
I never had a company car before so unfortunately was not aware of this. My employer should have made me aware but too late. Should they contribute to this underpayment due to their not reporting it too?
 

RebelScum

Well-known Member
I never had a company car before so unfortunately was not aware of this. My employer should have made me aware but too late. Should they contribute to this underpayment due to their not reporting it too?
That’s a discussion for you and your employer. They might have sent you a copy of the P11D with details of the car benefit, or you could access it from HMRC, so there could be the argument put to you that you should have checked you were paying the correct tax. They are certainly under no obligation to pay any of the tax, as mentioned, even following an investigation if there is tax due the employer may pay the tax element of an unreported BIK on a voluntary basis on the behalf of the employee. Most do, but some dont and on those occasions HMRC would notify the employees impacted individually. As far as your circumstances, just as you are due the extra tax on the BIK, they would be due the NIC - assuming HMRC talk to each other effectively (personal tax / employer duties). The question is if they didn’t update your details and report accordingly, how many others in the business might be in the same boat as you? Just as other employees could potentially be looking at an additional burden, so might the employer if HMRC decided to look into it.
 

noiseboy72

Distinguished Member
Not sure if you have any kiddies, but if you get child benefit - even at the basic rate, the car counts as a taxable benefit and this could mean your income is more than £50K and you have to pay some or all of the benefit back.

More info here: High Income Child Benefit Tax Charge

This has caught a lot of people out, as it is not widely publicised but is still in force.
 

oneman

Well-known Member
Not sure if you have any kiddies, but if you get child benefit - even at the basic rate, the car counts as a taxable benefit and this could mean your income is more than £50K and you have to pay some or all of the benefit back.

More info here: High Income Child Benefit Tax Charge

This has caught a lot of people out, as it is not widely publicised but is still in force.
I had a few friends who ended up paying thousands. Fortunately most had put it away for their kids so had the cash to hand.
 

nvingo

Distinguished Member
Glad I don't have these complications; car bought outright mine for less than 12 months tax underpayment! And it still has more 'character' than these modern all-almost-the-same SUV type vehicles.
 

noiseboy72

Distinguished Member
Glad I don't have these complications; car bought outright mine for less than 12 months tax underpayment! And it still has more 'character' than these modern all-almost-the-same SUV type vehicles.
I guess it depends what you are using the car for. I get a car cash allowance on top of my pay, so on one hand I can buy and drive what I like, but I also need something reliable and reasonably fuel efficient now that we're out of lockdown and my business mileage is increasing again. For that reason, the Z4 has gone and been replaced with a new Golf GTD.

Company cars are not quite the perk they used to be, so keeping an eye on the taxation classes and ensuring the right vehicle is declared is essential. When I still had a company car instead of the cash, I got charged for 2 cars and 2 fuel after my main car broke down and I had a hire car for a while. It was only when we realised how much tax I was paying that I started to investigate and unpick things with our compensation and benefits team and the tax man.

BiK is based upon emissions and purchase price, hence the rise in popularity of hybrids. They make little sense to most private buyers, don't really cost much less to run, but remain hugely popular.

If your Astra has a large or inefficient engine, the BiK may be quite high. Quite often hand me down cars fall into this category as managers offload them in order to reduce their own tax with something in a cheaper tax band
 

oneman

Well-known Member
I did read a report that something like 80% of PHEV never get plugged in as the only reason people have them as they are cheaper on tax.
 

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