Do company benefits affect my tax code?
The answer is ‘yes’. HMRC take any company benefits into consideration when calculating your tax code.
The value of your company benefits should be shown on your P11d which is given to you by your employer after the end of each tax year.
There are several different types of company benefit with the most common being a company car and health benefit. The value of the company benefit has to be taken into consideration to make sure that you pay the correct amount of tax. If you have a company benefit you should pay more tax.
Company benefits are taxable income
Any company benefits received are classed by HMRC as extra income and are therefore taxed in addition to your basic salary. Your tax code should reduce meaning that you will have less personal allowance resulting in you paying more tax.
If you have a large company benefit like a company car, you can often have the letter K placed in your tax code which means that you no longer have any personal allowance.
Check your notice of coding
You should receive a notice of coding each year to show how your company benefits are included in your tax code. It is important to make sure that the value of your benefits are reflected correctly in your tax code otherwise you can underpay or overpay income tax. If you think it is wrong you need to tell HMRC as soon as possible to allow for a new code to be issued.
