Appendix A Guidance Notes, Car Users Taxable Benefit

Tax on Lease Cars

Lease cars provided by the County Council are available for private use and are therefore deemed to be a "benefit" to the employee. This benefit incurs income tax liability.

From 1.4.2002 the percentage, whilst remaining in the range of 15% to 35%, will be determined by the CO2 emission level of the car. The minimum charge, 15% will apply to cars emitting up to 165g/k of CO2 and will increase in 1% steps for every 5g/k emitted up to a maximum of 35%. The exact CO2 emissions figure will be rounded down to the nearest 5g/k interval for tax calculation purposes. Where the employee makes a contribution towards the financing of the car this is offset against the calculated "benefit" and reduces the employee's liability to tax. The Inland Revenue will collect tax due on the car benefit at the employee's personal rate by adjusting the personal tax code.

Notes:

1 The benefit is proportionately reduced if the car is not available for part of the year.

2 Employees earning less than £8500 per annum will have no liability arising from the provision of a car. (The car benefit is treated as earnings for the purposes of calculating total annual earnings).

FDS Officers can personally apply to the Inland Revenue to have the calculated taxable benefit reduced because their vehicles, being fitted with blue light and two-tone horn, are classed as emergency vehicles.

Essential and Casual Users

Individuals claiming essential and casual user mileage allowances are taxed on the 'profit element', i.e. the difference between the mileage rate claimed and the tax-free mileage allowance determined by the Inland Revenue. At the end of the financial year the County Treasurer submits a return (called P11D) to the Inland Revenue giving details of all essential and casual users' mileage during the previous year. Based on this information, the Inland Revenue adjusts individual tax codes. For 2002/3 the Inland Revenue tax-free rates are as follows; all rates are in pence per mile:



First 10,000 mileage pa	40p
Mileage over 10,000 miles pa	25p

The profit is therefore the difference between the total amounts paid by way of mileage allowance, including the lump sum in the case of essential car users, and the rates shown in the above table.

After the end of the financial year HFRS are required by the Inland Revenue to submit a return of allowances paid and the amount of profit calculated on which tax is payable.

Employees will also be provided with a copy of this information for use in completing their income tax self assessment form.

Where the total amount paid by HFRS is less than the amount allowed by the Inland Revenue, the system will produce a negative ‘profit’ which can be included in the return

The Inland Revenue will determine the effect on an individual’s tax coding. Employees should therefore direct any enquires regarding their personal tax position to HM Inspector of Taxes, Southampton Parkside, Queens Keep, 1-4 Cumberland Place, Southampton, SO15 2UN tel. 8045 302 1400, quoting reference 663/2H3002 and their NI number.