Self Assessment and company car help!

[Bingo78]

If my Husband is required to complete a self assessment due to just earning over 100k, does he need to fill in the company car details if he already has his personal allowance reduced due to this and it’s declared annually by HMRC by his employer? I’ve read that he doesn’t need to as they’re already aware of this “income” but wouldn’t want to make a mistake as he’s never had to do one before. Thanks in advance.

It is a benefit in kind , tax value is listed on his p11d.

If he is taxed on it through his payslip he doesn't need to include it on the tax return or hell be double counting it.

This. He needs to include the total for his benefits (including his car) from his P11D on his self-assessment. This contributes to how they calculate his tax free allowance for the next tax year.

Thank you.

So, just to clarify, even though he has a reduced personal allowance and his company notify HMRC every year of the P11D amount accordingly, he will still have to declare it and therefore pay tax on it twice? This is the first year he’s earned this amount (same company 18 years and always company car).

It goes on the return.

He won't pay tax on it twice. The self assessment requires to have all income on it in order that the correct tax overall is calculated.

It must all go on the return. But be careful to pull the correct figure from his payslips / P60 if the benefit has been payrolled (doesn’t sound like it has if his tax code has been reduced)

The figures are showing already on there as reported by his company to HMRC. It shows he has a reduced personal allowance in the calculation at the end when we’ve entered all the information. I’m just confused as the P11D amount we’ve added on the self assessment is showing as income on top and so he will pay tax on that according to the calculation.

He doesn't pay tax on it twice. As @tigger1001 says, he needs to enter everything. The form is very clear with good guidance if he isn't sure.

It isn't income, it's a taxable benefit. If you don't understand what you're doing, speak to HMRC and/or read the guidance.

When you say the figures are already there, you mean on the self assessment return? And it agrees to the p11d?

All income should be shown, but not twice. If you are using Hmrc software through his personal tax account it may be pre populating the return with the information they already hold, such as p60 and p11d

Thanks for your help.

It has just pre populated his income from
his employer. On his personal tax account page it states he has paid the right tax for the year. When he inputs all the information into the self assessment page it states he owes £822 in tax for the year.

You need to declare everything. He won't pay twice. But they need to check he's paid the right amount of tax. Sometimes like this year he will need to pay a balance and sometimes will get a refund.

£822 owed could be right for income over £100k

So if HMRC already know his income for that year and the P11D amount and so have adjusted this tax years code accordingly (this tax return is for 21/22), why does he owe tax?

There are often allowance variations as income rises and benefits change. Iirc the extra over £100k does not automatically go through tax code. Plus you may have other income/donations to bring into the equation.

It's not an exact science when they adjust the code.

It could be that the code wasn't restricted early enough, or by not enough.

There are online calculators which you can plug the info in to see if it agrees to the computation.

Is there anything else in his code?

Also be aware that earning over £100k means his tax free allowance is reduced by £1 for every £2 more he earns. So not only is the benefit in kind of having a company car taxable, it hits his personal allowance as a reduction due to the extra 'income' too. Earning just over £100k is a nasty spot tax-wise as it can mean that a proportion of income is effectively taxed at 60%. If you weren't aware, read this as it explains it quite well:

taxscouts.com/high-earner-tax-returns/60-tax-what-to-do-if-you-just-started-earning-over-100000/

658LX is the code.

That will be the issue - it's a month 1 code, also known as an emergency code. It doesn't tax on a cumulative basis - ie if doesn't take into account pay and tax details of previous months. This often leads to under/over tax

P11d's are a nightmare, you need to declare the same as the company includes on the P11d they send you otherwise it gets in a mess. Some items you declare as a benefit in one box (if your employer puts them on the P11d) and have to claim back as an allowable expenditure in another box. Such as expenses fully used for your work. You need to read what they send you in the p11d carefully or you may pay tax on what should be tax free items. When I had to do it, it was a pain!

Thank you. Is there anything we can do to stop this happening again? As I say he’s been with the same employer for a long time and never had an X on the tax code looking back!

Actually looking at this year’s payslips there is no X just an L.

Thanks everyone for your help and guidance.

That would be normal - the x would be removed from the code at the start of the new tax year.

X codes can happen when there is a new benefit or a change in the amount of benefit and Hmrc don't action it quickly enough.