Would you give the car back?

(43 Posts)
DoofusMcXmas1 Sun 30-Oct-16 10:38:19

In March this year I took delivery of a brand new car. The car was ordered through a salary sacrifice scheme at work. DP and I had discussed getting a car on the scheme for over a year, worked out financials (or so we thought) as being no worse off than we were before then as we were paying nursery fees via salary sacrifice. My car was due an MOT in April and we knew there was no way it was going to pass without costing more than the car was worth, it seemed like a no brainer. We are both discharged bankrupts so finance was not an option either.

I have to say it is the worst thing I have ever done. What they don't tell you is that the HMRC adjusts your tax code and, despite being salary sacrifice, it's classed as a company car. This car is costing a ridiculous amount of money. I'm being taxed through the nose so, with the cost of the car, I'm losing £500 per month. To put it into perspective, my gross pay 25/10 was £1850....I took home £1000 sad by 26/10 I was in minus figures with a week until DP gets paid. I'm working stupid shifts for, what seems like, not a lot of benefit. We are in a dire financial situation, we have next to no food and there are bills bouncing left, right and centre (this has not been helped by the fact it was dsd's birthday 25/10 and we spent £80 on her birthday shopping and lunch....again bad planning, we just haven't had the money to buy presents in the months leading up to it so did it on pay day) and it's starting to spiral out of control.

I spoke to the company and it is possible to give the car back but it will cost £2200. At the moment I have no idea whether it will be possible to pay that back in installments as the 2 people I need to speak to within the trust to ask are both on annual leave but it appears that the trust are invoiced for the exit fee and then recoup the money from me.

Would you give the car back? I don't see how I can sustain this level of poverty for another 2 years sad

DoofusMcXmas1 Sun 30-Oct-16 12:54:32

Anyone?

Gizlotsmum Sun 30-Oct-16 12:59:03

Have you had it confirmed it classes as a company car for tax? Not just an error somewhere? Only asking as DH had something similar and it wasn't taxed as a company car. Would you still need a car? Can you sit down once you have checked the tax is right and see where any money goes. If you need a car how would you finance it?

MumOfTwoMasterOfNone Sun 30-Oct-16 12:59:38

Is your tax code correct? You should be getting tax relief from the salary sacrifice scheme, but then there will be adjustments to your tax code for the company car.

How much is the monthly payment compared to what's left in lease payments? I think it's up in the air until you get an answer as to whether you can pay in instalments. Have you explained you can't afford it?

LIZS Sun 30-Oct-16 13:08:54

The lease will be subsidised, that in itself is a taxable benefit. I'm sure had you read the terms fully they would have told you the situation. You need to check your ongoing liability should you return the car early.

DoofusMcXmas1 Sun 30-Oct-16 13:09:03

I just don't know about the tax code, I'm really not very good with tax codes. I've spoken to HMRC and they say my code is correct, 768L from 110L, and nothing else can be done. I didn't realise, and they don't make it clear, that it's classed as a company car so a benefit amount comes off of my earnings. Had I known that I would never have done it. I've done salary sacrifice for nursery fees and cycle to work and it's never affected me like this. I feel so bloody stupid.

I have spoken to the trust and told them I can't afford to live (DP is also on a zero hours contract so his earnings vary from month to month) but it was pointless telling hem this as neither person I need to talk to are in work.

DoofusMcXmas1 Sun 30-Oct-16 13:13:19

Thanks LIZS, that's absolutely what I need right now is to be patronised. It isn't overly clear in the t&c's, if it was I wouldn't have signed up to the scheme.

LIZS Sun 30-Oct-16 13:16:58

So the taxable value of the car is £2500 approx. Assuming you earn within the 20% band it is actually only costing you £500 in tax per year plus the lease payment. If they have only just changed your code it may be that there was a one off catch up payment and it won't be so great in subsequent months. Speak to your payroll team to clarify the situation.

PortiaCastis Sun 30-Oct-16 13:33:42

doofus I deal with HMRC everyday. Give them a ring and ask for clarification of your code.
Hopefully this link will help.

www.gov.uk/tax-codes/numbers-in-your-tax-code-what-they-mean

dalmatianmad Sun 30-Oct-16 13:44:59

Hi op, I have a lease car from the Trust I work for, sounds very similar, it goes back In April and I won't be getting another one, i wrongly assumed that your tax code was altered so that you pay less tax but apparently not! There are penalties for sending it back earlier, these decrease the longer you have it.
The benefits manager at my Trust is never available! I reckon we must work in the same Hospital confused

whinetasting Sun 30-Oct-16 13:47:35

This is wrong. Either your employer or the tax office has messed up. You are saving on the tax and NI part of the salary you are sacrificing, and should only be paying a BIK (benefit in kind) tax code for the car. If you told the tax office it was a company car then this could be where the issue has arisen. Explain it is from a salary sacrifice scheme, and speak to your payroll dept about what has been deducted.

PortiaCastis Sun 30-Oct-16 13:48:34

Also this may help,

www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye

DoofusMcXmas1 Sun 30-Oct-16 14:02:06

whine I spoke to HMRC n Tuesday and they told me to clarify whether it's put through as a company car, the person who gives the details to HMRC from my trust has confirmed that it is. Apparently that's how it's always been done. It's advertised as salary sacrifice but it appears it's not that simple sad

portia thank you for the links. I'll have a look through.

PortiaCastis Sun 30-Oct-16 14:10:33

doof There's an address and email address on the link. Ask your payroll to inform HMRC that yours is not a Company car but a salary sacrifice. They've messed up big time as far as I can see.

GhostlyBlueDressForHalloween Sun 30-Oct-16 14:22:05

doof do NOT PAY to give it back. Get them to prove that HMRC is wrong and if they can't provide the legislative proof that HMRC are wrong, then they mis-sold it to you. When something is mis-sold you do not have to pay any penalties the contract states, you should be released without charge. If anything you could technically take them to court for costs you've incurred as a result of their mis-selling (in reality it would cost too much in court fees but just highlights how much you are not liable for costs from leaving contract early).

GhostlyBlueDressForHalloween Sun 30-Oct-16 14:24:07

Sorry typed that earlier, got distracted, and there have been more posts since.

DoofusMcXmas1 Sun 30-Oct-16 14:46:34

PM'd you blue

DoofusMcXmas1 Sun 30-Oct-16 14:53:50

portia I spoke to the trust on Tuesday and, apparently, the trust puts it through as a company car. I don't get it, it's surely one or the other? Not both?

PortiaCastis Sun 30-Oct-16 14:57:03

Who insures it doof ?
Because if it's a company car it would probably be on a fleet insurance.

DoofusMcXmas1 Sun 30-Oct-16 15:01:06

Tusker, the company I ordered the car through, insure it using their underwriters.

GhostlyBlueDressForHalloween Sun 30-Oct-16 15:18:17

The key point in that link that makes HRMC argue it is a taxable benefit whilst being a salary sacrifice is
"An employer’s key responsibility is to make sure that they pay and deduct the right amount of tax and NICs for the cash and benefits they provide"

So whilst on one hand its salary sacrifice reducing amount of tax payable on the cash you receive, on the other hand it is considered that a benefit, of a car, means the company is providing the car, irrespective of the sacrifice the tax code needs to be for a company car.

PortiaCastis Sun 30-Oct-16 15:20:40

forums.moneysavingexpert.com/showthread.php?t=4037393

DoofusMcXmas1 Sun 30-Oct-16 15:25:03

So my tax code is correct then blue?

GhostlyBlueDressForHalloween Sun 30-Oct-16 15:27:40

Just another thought are you in a union? Some of them give you general legal insurance type cover, ontop of the normal employment cover, that actually may mean they can get a solicitor to help you out of it.

DoofusMcXmas1 Sun 30-Oct-16 15:29:41

portia I just read the last link you provided (thank you btw) and I did laugh at the end because that is exactly who is providing me with the car and their message is in exactly the same vain as the conversations I had with them. That message makes it sound like you'll save sooo much money and serves to sell the scheme....that is so far removed from the truth.

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