Help - suddenly earning £700 a month less because of tax code change but nothing has changed?

[horseyhorseydontyoustop]

My DH's wages this month were £700 less than usual which is huge for us, that's our mortgage

He called HMRC who said his tax code has changed because he now has a company car, but he's had one for about 8 years and nothing has changed! His salary has been the same for a year. They also said it will be this way every month.

I don't understand, how can the company car be this much? If it is we'd be much much better off asking for it to be taken off and us buy him a car and expense mileage

It's an electric car too so I'd have thought less tax although I guess that's a totally separate thing

What can we do? His office don't understand it either

What's his revised code? Benefit in kind comes down to emissions and list price, and also if fuel is also provided. Assume its a hybrid rather than fully electric?

Phone HMRC back, ask exactly how much of his tax code has been restricted, ask if it is for underpayments for previous years. He needs a copy of the P11d from his work. Check the details. It could be his work have added a zero or two to the value of the car in error, or they haven't declared his company car in prior years and HMRC have found out.

Is it back payments maybe for the past eight years?!

This doesn’t sound right at all. My company cars have only ever added on around £50 per month in tax, and they have been nice cars. Is it to do with him not having paid tax on it for the past eight years and HMRC finding out?

I’d imagine he’s underpaid for years and they’re claiming it back per month but you should of had a letter ? Ring them up and see if you can make a more realistic payback, goodluck getting through as takes ages

How mu h is the car worth? And how long is the lease?

Has he been paying tax on the car all the time he's had it? Has his company been submitting P11d forms? He should have been having letters about the tax code change, has he? Does he pay towards the car? £700 pm tax doesn't sound right at all. Unless maybe it's a very flash car and he's a higher rate taxpayer and his company pays his private fuel. I pay around £30 pm tax for mine, but I also pay quite a lot for private use.

Has he got a more expensive car, petrol paid or other perks?

Thanks for these.

Sorry, it is a hybrid. We call it the electric car because it's still a novelty charging it each night. P11D form was submitted for new car about a year ago (we have a copy)

He's always had copies of these forms (various different vehicles) so I can't imagine it's not been deducted before

It's a nice car but meant to be in lower tax bracket because of low emissions

It's so weird. He'll call again tomorrow to try and get more info

It's personal use too and petrol mileage deducted

So I see we would pay a fair amount of tax but not £700 a month!

What was his tax code and what is it now?

That does sound odd, but you need more information from HMRC - they’re the only ones who can tell you why they’ve applied the code they have

I had this at one point they were taking 1200 from me eventually I gave the car back. Admittedly when I first had the car I didn't realise I needed to inform them I thought the company had to so I owed about 6 months. Annoyingly everytime I phoned the amount would change I finally had enough when they said I still hadn't paid back the 6 months owed.
I worked out that I was paying 35% of my income on tax, I'm all for paying my way bit a fair and proportional amount.
This salary calculator will give you an idea of his income without the car www.thesalarycalculator.co.uk/

DH has an diesel X trail and pays about £380 a month in tax. £700 seems a lot unless it’s a £100k car!!!
Can you look at previous payslips and see what the tax code is and how much tax he has paid. Has he paid tax in line with normal amounts eg 20% or 40% which would suggest he hasn’t been paying for a car before or has he been paying more than normal levels of tax?

Do you know what I kept telling them with mine that I wasn't a flashy or big car a 2.0litre diesel ford at 24k but they kept insisting my tax code was correct and then change it again think I've had 7 tax codes in the last year.

Get yourself on the HMRC website, it'll list all the info relating to his car and what he's paying tax on.

My colleague got stung one month and it turned out HMRC had him down as having two company cars!

Having had many company cars and now in a job where I do NOT have one but exactly the same salary and I'm £600 per month better off so yes, I can well believe it is £700 per month tax and perhaps it was previously not calculated correctly and has now been adjusted

Some companies submit car changes at the end of the financial year, so tax could have been underpaid for a number of months before HMRC informed. Happened to us when husband changed to a better car. Apparently he underpaid £5000 in tax. Deducted over 1 financial year and that was very hard on us (we didn't even have the car at that point anymore). Apparently it was our responsibility to inform them as soon as he changed the car, and not wait on company to submit at year end. I am now very sceptic about company cars as I feel it's not as 'free' as we believe. But then we also benefit from paying no maintenance etc. HMRC can give you all the details of what had been submitted and what you are paying for - I'm guessing it is an underpayment as well as current tax. Sorry to hear about this, I know how gutted we felt when discovered. Or hopefully there has just been a mistake.

The P11d is completed once a year, the next one is due by 6th July so has probably been recently submitted, sparking the change in tax code. If you've had copies of the P11d's previously that's good news in that HMRC are aware of his company vehicle. My bet is now a cock up on the car value and/or emissions, or they've added private fuel. He needs to get them to double check the P11d submission. £700 a month will be a tax code beginning with K (unless he's a mega earner) and means a hell of a lot is owed. This sounds like an error and will be fixable.

Can't remember why, but dbil ended up hundreds of pounds down extra every month for a year due to timing/back dating of his company car allowance too.

What was his tax code and what is it now?

Thanks for this. A bit scary

We will find out tax code before and after tomorrow, I don't think he asked as he thought it would be a quick call to fix.

We are worried because we have recently made some big decisions based on income and this is a huge drop.

I think he said the form had been submitted last year (or at least he got a copy then) so I'm not sure how it's not been deducted? But I agree that makes the most sense!

Hopefully there's an error on the new one then and the old one was right!

I know we should check this stuff but never occurred to us as saw the forms etc

It must be back pay. Either way he should give the car back to the company. Surely he can find something cheaper.

If he's only just taken a new car, it's unlikely he can just 'give it back' unless a colleague is willing to take it over from him or his employer will take it as a pool car. Otherwise he's likely to have to pay a large penalty to the lease company or buy the car outright, because his employer will have the car on a multi year contract with the lease company.

But if he's getting £700 less than last month, that's either a mistake or more than one year of unpaid tax being clawed back as it's £700 on top of whatever he was paying before.

Did he work out what it was supposed to be before he chose the new car? Anytime one of the people I work with is due a new car, we're all looking through the lease quotes and running spreadsheets to check the cost.

Does he have to have a car for his job or is there an alternative (car allowance, pool or hire cars)?

OP have you used online calculators such as listentotaxman to check that your DHs take home pay is correct for the last few years? You will need his P60s and monthly take home amount. if you calculate what he would get without a car but with any pension and student loan deductions, you should be able to see that he's been getting less because he's been paying for the car and does this amount look right? He should have a feel for what the car should be costing him as no-one would make such a significant decision without checking the cost.