19/06/2012
Are you a company car driver? If so, it's probably a good idea to check your HMRC tax code carefully. Why? The industry-leading publication Fleet News recently conducted a poll (1) in which a shocking 80% of drivers surveyed had been given an incorrect tax code in relation to their company vehicle.
3% of 18 million tax codes incorrect
So what has been going on? HMRC have admitted that as many as 3% of the 18 million tax codes they've issued for 2012/13 might be incorrect, putting around 360,000 codes under question. The organisation has defended itself by blaming taxpayers for supplying inaccurate information, which led to the wrong tax codes being issued.
Who is responsible – the tax payer or HMRC?
Employers should report driver earnings and benefits accurately in the first place, and HMRC then make the calculations based on the information supplied. A car allowance is treated as income, taxed at the time, but fuel use is based on the real-life amount of fuel you use, and the tax is collected the following year from information supplied on your annual P11d form. This leads to two questions that ought to concern those who use a vehicle in their everyday field of work:
Is your company correctly reporting the number of business miles travelled?
Do you keep an accurate record of business miles travelled and expenses claimed in relation to these?
Thank goodness for fuel cards!
Thankfully there's one sure-fire way to help you get it right. With fuelGenie fuel cards you can easily track the money you spend on fuel, and our HMRC compliant reporting makes filling in your end of year accounts a doddle.
What about the future?
Fleet News has called for affected motorists to sign a petition demanding a thorough 'drains up' review of the way HMRC processes tax codes, to help improve tax code accuracy. In the meantime, whether or not you suspect your code is incorrect it's always wise to check your 'notice of coding change' letter as soon as you receive it, and contact HMRC immediately if anything seems off-key. In the words of Fleet News magazine's 'The Insider' (2), "What does concern me is how many employees are prepared to believe their tax code must be right because HMRC issued it."
Sources:
1. fuelcards.co.uk - Fleet News urges company car drivers to check their tax codes
1. QBE Europe - Incorrect tax codes blight fleets
2. Fleet News May 2012. Page 16: 'A tax fiddle'
