Car allowance -reimbursement of cost no benifit from HO

[Sushil-ACCA]

hi Sushil,

Sorry for sending you a pm. I really wanted to ask your opinion/suggestion on this. So can kindly give me your suggestion please?

I'm due for Tier 1 general extension by the end of the year and I have to show earnings of over £35k. Currently with just my basic salary I do not meet the criteria. However I have a company car with full fuel allowance (including personal use) and I get taxed on it..roughly around £8k. So if I include this benefit i.e. basic salary + car benefit I meet the criteria.

The problem is that the car benefit is not listed on my pay slips even though I pay tax on that £8k and it is considered as part of salary package/renumeration. According to HO, any allowances to be claimed should be on the pay slips. So I'm confused if this is actually accepted by HO? If yes, will my P11D form and a confirmation letter from my employer work? Or what evidence can I show to prove this?

Many thanks.

no benifit as it is reimbursement of cost

[cs95tdg]

I presume you have already seen the information available below:

http://www.ukba.homeoffice.gov.uk/visas ... /earnings/

Based on what you have mentioned the car allowance appears to be a company benefit, just as some employers provide healthcare insurance. But please correct me if my interpretation is wrong. If so I suppose the question is, how do the UKBA categorise this type of benefit where you pay taxes on it, but have not necessarily earned it as a salary income. I.e. it does not appear as an income in your salary slip for this reason. Just for clarification, am I correct in understanding that your employer will reimburse any car fuel expenses upto 8K, and that this sum is not paid to you unless you incur the expense?

If so I suspect it may fall under the following category, but will leave it to others to comment on further:

Unearned sources of income that we will not consider as previous earnings include:

expenses (such as accommodation, schooling or car allowances) that reimburse you for money you have previously spent;

[easyguy]

Hi Sushil / cs95tdg,

You got it wrong. It is not reimbursement of fuel or car use, instead BENEFIT IN KIND provided by the employer. The car is owned and provided by the company itself with fuel for both private and personal use. I do not pay anything towards the car or car insurance or the fuel in anyway, everything is paid by the company directly so there is nothing to reimburse.

HMRC see this as a cash equivalent of £8K (as if I earn an extra £8k bonus based on the cars value/cost and co2 emissions etc) and I get taxed on it yearly. Coz of this additional tax I have a K code but nothing is mentioned on the pay slips apart from this special K code. However I receive a P11D form and a tax calculation from HMRC explaning the total earnings for the year explaining total cash equivalent of the car and the total tax they have collected.

So the question is - If there is no money previously spent on the car or the fuel (no reimbursement applies) and everything is provided as a BENEFIT by the employer then is this considered as part of previous earnings just like HMRC do?

Salary/Renumeration Package includes - Basic salary + Yearly bonus + Car (provided with car insurance, fuel, and maintenance)

[Sushil-ACCA]

As i am not allowed to Pm privately

any way it is not shown in pay slip

yes u r paying tax on it pvt

u can try but it will be hard to get

better u show some self employed income for smooth sailing
all the best

[cs95tdg]

I understand it's a benefit, but now from your explanation understand it's not paid as a reimbursement. I similarly get health insurance by my employer for which I pay tax (reflected in my annual P11D). I however, have never considered the amount my company pays towards my health insurance to be part of my salaried income as it's not shown on my payslip.

I would be interested to find out what the UKBA say if you enquire about this and it's definitely worth an enquiry.

IMHO, unless you get confirmation from them it's a risk not worth taking, unless you cannot find an alternative source of income to bridge the gap you have to score the required points.

[vkamath]

I have a similar question:
My company provides me car perk and it is reflected in my payslip. The car perk is not a part of my basic, but the payslip shows the total (basic + car perk) figure at the bottom. I don't own a car, but company provides this as an additional. Please could you help me know if this car perk can be included as part of my earning? A quick response would be highly appreciated as I am supposed to apply for my ILR soon and need to do the paper work within 3 days.
Thanks

[easyguy]

Yes this can be included as part of your earnings.

I received my Tier 1 extension successfully by showing basic salary + car benefit. And I also know other people who have done so for their ILR application too.

Supporting documents I sent for previous earnings -
- Payslips & bank statements
- Employer letter - confirming total earnings = PAYE income + cash equivalent of taxable benefits (Car & Fuel)
- P11D form provided by employer

Additionally you can add your HMRC tax coding notice or a tax calculation you received from HMRC.

Read more here -
http://www.immigrationboards.com/uk-tie ... 33904.html

[vkamath]

Many thanks easy guy. Your reply is very quick and helpful. Sure, I'll follow what you mentioned (P11D form provided by employer)

[easyguy]

Yea P11D should be fine, also get a letter from your employer about the benefit to be 100% safe.

Good luck with your application and please do post the outcome of your application as this will always help other people in similar situation like you.

[vkamath]

Hi Easy,

Sure, will do that. Many thanks again.

Quick question: Since I don't have/own/use a car, is it just fine if I get a letter from my employer stating something like below?

Date: <date>

To whom it may concern

Re: Mr. XXXXXXXXXXXXXX

We can confirm that according to our records, our employee Mr. XXXXXXXXXX, date of birth <dob> , national insurance number <ni num> and resident at <address> has totally earned from us £<total gross earning inclusive of car perks> for the <from date> - <to date>.

We would like to highlight that the car perks mentioned in our Salary slips for Mr. XXXXXXXXXXX is taxed.

Salary Slips are attached

Net Salary £ xxxx.00

Gross Salary £ yyyy.00

Yours sincerely

Mr. YYYYYYYYY

Company Name
(and Seal/stamp)

[easyguy]

Hi vkamath,

Did you speak to your HR or accountants if they can give you a P11D copy? I believe by law all employers providing any benefit (car, fuel, health insurance etc) must provide a P11D to employees and submit the same to HMRC. But this is after the tax year usually around May / June, so it will have to be filled in manually for last 12 months.
Read more on P11d here - https://www.gov.uk/employer-reporting-e ... and-paying

If you don't get a P11D, then just a letter from your employer will be fine as you have your benefit mentioned on the payslips.

The letter looks okay, but I would say change 'Car Perk' to 'Car Benefit' as benefit is more appropriate.

Hope this helps.

[mightypower]

Easyguy

Do you get car cash allowance or the car. As far as I know if you get car cash allowance you can show it as your earnings but not when you get a car.

[easyguy]

Mightypower

I have a company car fully expensed for both business and personal use. Both my employer and HMRC consider this to be part of my salary package/earnings and I have to pay tax on this.

Say if my salary package is £36K basic + Car, then HMRC uses the actual value of the car when purchased (say £22K) and its CO2 emissions to calculate a 'cash equivalent' of having car benefit for the tax year 2013/14 which works out as £8K. Then my actual salary for the year is considered as £44k and I get taxed on this amount.
HMRC calculator - https://www.gov.uk/calculate-tax-on-company-cars

Generally there's a lot of confusion about what is considered as earnings and what's not. However from speaking to HMRC and my employer when I was due for a Tier 1 extension, I was told that no matter what the guidance says my earnings will include anything I pay tax on i.e if I get taxed on a benefit that itself means it is part of my earnings. All companies, legal departments, HMRC and even banks (when applying for a mortgage etc) have to consider all 'taxable benefits in kind' as part of earnings.

Read more on here -
HMRC - https://www.gov.uk/tax-company-benefits ... mpany-cars
Benefits in kind taxable as earnings - http://www.hmrc.gov.uk/manuals/eimanual/eim00530.htm
GOV.UK - https://www.gov.uk/government/collectio ... statistics
Citizens Advice - http://www.adviceguide.org.uk/england/t ... n_kind.htm

[mightypower]

Easyguy

Good info I too have company car