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SA Return- where to enter post termination benefit

SA Return- where to enter post termination benefits

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I have a client who was made redundant in February 2020.  As part of his compromise agreement it was agreed that he would continue to have use of his company car until 30 April 2020.

I have a copy of his P11D for 2019/2020 which shows a BIK in respect of the company car until the date he was made redundant in February 2020.  His termination payment was in excess of the £30K exemption so any continuing BIK on the car will be taxable in full.

I am aware that he will be taxed on the continued use of the company car following the termination of his employment and that this continued use cannot be shown on his P11D.

My questions are:

  1. Where on the SA tax return do I enter the company car BIK for the remainder of the 2019/2020 tax year.  Should this be included on SA101 amd of so in which box?
  2. Am I correct in thinking that the BIK calculation for the part of 2020/2021 tax year up until 30 April 2020 will be based on the normal company car BIK calculation method but that for 2019/2020 (year of being made redundant) as opposed to 2020/2021 (being the year the BIK is taxable)?

If I have misunderstood how this BIK should be taxed then I am happy to be pointed in the correct direction.

Thank you for your help.

Replies (6)

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By Paul Crowley
28th Oct 2020 04:30

Getting the tax right is all that matters
If convinced it is taxable add to any other income is a pragmatic solution

Not come across the issue, ever

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By Tax Dragon
28th Oct 2020 06:48

I have seen this before and I'm trying to remember (you can look it up as much as I can).

I think your para 2 sounds familiar. Ongoing use of the car is part of the termination package and is taxed (in 19/20) as part of that package. But if that's right then surely the employer has to report it to HMRC, so I'm puzzled by your suggestion that it's not disclosed in the paperwork provided.

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By richard thomas
28th Oct 2020 14:52

1. The amount of the post-termination car benefit should go on page Ai 2 in the SA 101, along with any other amounts. The notes are confusing but it seems that for 19/20 the excess over £30k goes in Box 5, any tax deducted in Box 6 and the £30,000 in box 9. That's what the notes for box 9 say. In 20/21 I suggest you put the amount of the benefit in box 5, but box 3 would also seem to cover it.

2. The BiK calculation will be calculated according to the car benefits rules for employees that apply in the year the benefit is afforded (ie the car is used or available), at least that is what s 403(3)(b) read with s 415 ITEPA suggests.

As to what Tax Dragon says, I disagree that the car benefit enjoyed in 20/21 is taxable in 19/20.

The employer must make a return under reg 91 of the PAYE Regs which includes an estimate of the amount in subsequent tax years. Reg 96 provides that they must give a copy to employees before 7th July after the tax year in which payments are made.

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Replying to richard thomas:
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By Dowland
06th Nov 2020 16:13

Thank you Richard for your helpful response and I apologise for the slight delay in acknowledging this. I had come to the same conclusion as you but just did not know where on the Ai page it should go having not come across this siutation previously.

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By Tax Dragon
02nd Nov 2020 06:42

Looking things up always beats relying on memory. [Something for Awebbers to remember.] Ch3 (and s403 in particular) indeed seem pretty clear.

I'm now trying to recall the situation I thought I was remembering before.

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Replying to Tax Dragon:
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By Dowland
06th Nov 2020 16:13

Thank you Tax Dragon for your help with this.

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