Opting Out Of Company Car

[paradiddle1984]

Hi all,

I am currently working through my (4 month) notice period with my employer as I have accepted a new role closer to home. I currently have a company car. However, the new company I will be going to doesn't offer a car scheme so I need to sort my own car out. I found an excellent offer on the car I wanted that literally could not be matched anywhere else so to save money in the long term I have chosen that deal whilst still having my company car & being taxed on it. I have asked my current employer if I can hand the company car back to them given that ive had to sort a new car out for when I leave and they have said no. There isn't anything in my contract that says I must keep the company car until I leave. It simply states we have the choice of a car or the allowance. Similarly, the company car itself is in the company name and not mine.

Where do I stand as far as this situation goes? I've asked a few times about it and been told each time that it's policy to keep the vehicle. However, I've never received/seen/signed paperwork to that effect and would appreciate some impartial advice.

Thanks everyone,

paradiddle1984

[buildersmate]

I think it's hard to see how you are going to win this one.

You put it in 'legal' and I think the legal answer is that you can ask your employer to change the term for you from having a CC to having an allowance but the employer can reasonably request that this applies only at the change of lease. I remember when I was a younger HR manager, we used to have this problem when someone (with a car) resigned and the trouble is the leasing company won't have the car back (or effectively change the company the same as to termination to get-out). We used to insist that new employee entitled to company cars used up the lease on a secondhand one first.

Your situation is even more demanding - you haven't left yet and you want to give the car back.

Unless you can persuade an incoming employee (informally) to take the car off the employer, or identify to the employer an incoming employee who might have the car (you will proabaly have to negotiate a bit on this - i.e. accept less allowance for the rest of your tenure), I think you are on a hiding-to-nothing.

[WELSHYORKIE]

Para, your company gave you the choice of car or allowance and you chose car - we have a similar scheme in operation here - unless there is another employee coming in who is willing to take that vehicle on then the company will hold you to your choice. Is there another employee of a similar grade on allowance who is willing to change to your car?

[paradiddle1984]

Hi guys,

Thanks for the responses. Unfortunately there are no colleagues who would be suitable to take the car over. Sounds like I just need to grin and bear it!

[mccfluff]

our contract states that you can only change to a cash allowance with the approval of a director and on the renewal of the lease. they are not going to want to pay for the car and your allowance, the same way you don;t want to pay the tax and have your own car

do you use the car for business or is it a perk?

[paradiddle1984]

Hi, it's for performance of my duties as per my contract. However, now that I'm in my notice period I'm pretty much performing basic admin as opposed to my usual work with clients - makes sense not to expose clients to someone who is leaving as it just creates a handover headache for the company. Work did offer me to finish ahead of my "official" notice period but I have a week of accrued leave that I need to take now so can't take them up on the offer as I wouldn't be guaranteed that week from my new employer.

[McMouse]

Park the car in company car park and hand the keys back. Write to your company and state that as at a certain date you have relinquished use of the car and although you do not expect an allowance in lieu, your tax liability should cease. Ask them to reflect this date when they issue P11d. Might be a good idea to copy your PAYE office on your letter.

[mccfluff]

I would say to them you want to give the car back now but you will not expect any allowance from them, make sure you have business insurance on your new car so you could use it if you needed.
They don't really have any reason to deny the request, apart from being "funny " with you as it won't cost them anything extra
Ring HMRC and tell them you no longer have a co car

[Skyline D]

I'm not absolutely clear what the actual question is here?

As others have said there's no way you can require the company to take back the car and pay you allowance instead. You've made your choice on that one.

However, if what you are saying is you just don't want the car then I can't see any issue with that. You can't make them pay you the allowance but you should certainly be able to hand back the car. I don't see what odds it makes to the company whether you have it or don't have it. From your point of view though there would be a marginal tax saving to remove the benefit early if you don't need it. I am not clear on why exactly the company would refuse this move if that's what you are asking them to do?

[joko]

can't you just transfer the tax to your new car, change over any insurance etc, and find a place to park the company car, declare it sorn until you give it back?

[factor-fiction]

Sorry joko, I don't understand that. The issue is about whether he can avoid being taxed on the 'benefit in kind' and can receive a higher salary in lieu of the car benefit.

As others have said, companies usually don't allow you to relinquish the car until the end of a set period (maybe it's on a 3 year lease), but you could ask if you could return the car (thus saving on benefit in kind tax) but continue to forgo some salary.

[factor-fiction]

Also joko- in my experience it's the company not the employee who registers, taxes and insures a company car, so I don't see how the employee could transfer over the insurance and declare it as SORN

[joko]

FF, it does not actually state in the op is seeking the allowance instead, just that they want to hand it back because they are being taxed on the vehicle and don't want to be... i took that to mean they are paying for the tax disc and will have to pay for another as well.

obviously there's more to it, as i don't know anything about this 'benefit in kind' tax

[buildersmate]

Actually, thinking about it in a bit more depth there IS a benefit to the employer of this - it doesn't have to pay the employer's Class 1 NI contributions on your benefit-in-kind if you decline the car. You could point this out of them.

I rather like McMouse's suggestion if they won't play ball.