Last year the Inland Revenue admitted
to the issue of around 280,000 incorrect tax codes to taxpayers who
had company cars. Surely it isn't going to happen again! I know the
pantomime season is over but I can still hear cries of, "Oh, yes
it is!" If you have a company a car and, especially, if your
employer provides fuel for that car, you should check very closely any
car benefit or fuel benefit figures included in your code number for
the year 2003/04.
The calculation of car and fuel
benefits was a relatively simple matter before April 2002. However, in
Gordon Brown's constant (but woefully ineffective) drive towards
simplification of the UK tax system, a new car benefit system was
introduced last April based on a percentage of the price of the car,
graduated according to the level of the car's carbon dioxide
emissions. This change led to last year's difficulties.
The rules for the calculation of fuel
benefits change with effect from 6 April 2003 and it would appear that
the Inland Revenue computer has not yet got to grips with the new
regime. In previous years, the fuel benefit was determined quite
simply from a table, the only variables being the engine size and the
type of fuel. There were only three fuel benefit figures for petrol or
diesel engine cars, £2,240, £2,850 or £4,200.
In the new "simplified"
system the Chancellor has now linked the fuel benefit figure (in the
same way as the car benefit figure) to a percentage determined by the
carbon dioxide emissions. That percentage (the same as for the car
benefit) is then applied to a set figure (£14,400 for 2003/04).
The percentage can vary between 15
(for cars with emission levels up to 155 grams per kilometre) and 35
(for cars with levels of 255 g/km or more.) These are the levels set
for 2003/04 and are reduced each year. The emission level for your car
can be established as follows:
For cars first registered in the
UK from 1 March 2001, the approved CO2 emissions figure will be
shown on the new Vehicle Registration document (V5).
For cars first registered 1
January 1998 to 28 February 2001, the manufacturer should provide
this information if asked to. Under an agreement with the Inland
Revenue, the Society of Motor Manufacturers and Traders (SMMT) is
providing a CO2 enquiry service free of charge on the Internet -
at www.smmt.co.uk - for cars
first registered from January 1998 to February 2001.
Once the emission level for your
particular car has been established, the appropriate percentage figure
can be obtained from Inland Revenue Booklet 480, which is available on
their web site.
To save you a lot of time and trouble,
visit our web site at www.ietaxguard.co.uk
where you will find a calculator for your car and fuel benefit
figures. If the figures included in your code number are incorrect,
contact the Inland Revenue as soon as possible to ensure that the
correct tax is deducted from your earnings in April.