Ask the expert: Why is my Volvo’s company car tax bill higher than expected?
Dear Alex,
I am lucky enough to be given free rein over my choice of company car; I have long been a Volvo fan and the XC60 in particular suits me nicely. So when my dealer told me that the hybrid version would save me a fortune in company car tax, it was a no-brainer, and indeed my accountant believes the BIK [benefit-in-kind] applicable is £4,390.
However, my company’s payroll department tells me my particular car incurs a higher rate, and therefore BIK is payable at £8,232. At 40 per cent, the company car tax is therefore costing me £128 a month more than I believe it should be. Who is right – and has the dealer sold me a pup?
– DW
Dear DW,
Your problem stems from the fact that Volvo changed the specification of your car on the turn of the year in 2022, and as a result, the CO2 rating changed from 54g/km to 24g/km. That change brought with it a consequent, and significant, reduction in the rate of BIK that the model would be liable for.
The issue you have is that your car was registered in 2022, but according to the documentation you forwarded over from the lease company, it has a CO2 rating of 54g/km.
I got on to my contact at Volvo to see if he could clear up the confusion, and he has done – but unfortunately I don’t think the answer is the one you were hoping for.
You see, although your car was registered in January 2022, it was built in July 2021, which means it is in fact an older model that had been registered late.
What that means is that your company’s payroll department is correct, and that the car is rated at 54g/km, and therefore liable for the higher rate of BIK.
What the salesperson told you is not entirely untrue – even the older plug-in hybrid model would have worked out cheaper under the current BIK rules than the equivalent petrol or diesel.
However, if you specifically ordered the later model with the lower CO2 rating, that’s not what you’ve got. The trouble is, now that it’s almost two years down the line, I think you might struggle to reject the car, even though this is a problem that’s only just come to light now that your latest P11D has revealed the issue.
Even so, it might be worth a call to the dealer to see if they’re willing to offer any sort of recompense. You probably won’t have any joy, but as with so many things in life, you won’t know unless you try.
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