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

Does he get a fuel card OP? The tax on them is pretty hefty.

If he's a 40% tax payer company cars can cost a lot but just to give you an idea, (I've been looking recently), a range rover evoque would be around £375 a month in tax, Volvo XC40 £350 a month but a fuel card will then add a hefty whack on top.

His tax code will be printed on his pay slip - have a look at April or May, and at June's
(It won't tell you how the code's made up but we may be able to tell you if his car was previously included or not)

Tax code was 1250L and now it is 544L

1250L is the standard code, with no car tax deduction, in last couple of years it's gone up from 1100L ish.

Sorry but it sounds like he might have some underpaid tax from previous years.

Maybe if they are trying to take it all back in one year and that's not affordable, they might be able to spread it over more years?

Also the P11D with his benefits on would have been submitted in May which is why the change is through now. Can you see what his tax code was in March? Have you checked his P11D to make sure the details are correct. My DH is a high rate tax payer and is getting a hybrid soon and his tax will be £275 pcm, though he doesn't have a fuel card.

Does he have other benefits like BUPA as that would be taken into account too.

No other benefits. Although it's a "new" car it's not a particularly more valuable model than previous years and emissions are less. I'm wondering if the P11D was submitted for the year now and he's thinking of previous year's P11Ds when he thinks it was done

But there's no K in the tax code or does that come later when this year's becomes "overdue"?

I can't ask much more as he is at work now and HMRC obviously won't speak to me

Do you have a salary OP? You could transfer some of your allowance over to your DH which will help.

Yep 1250L is the maximum tax code so he can't have been paying tax on his car. 588L sounds reasonable for your average company car

His tax code has a differential of 700 but that shouldn’t mean he looses £700 pay, this means that now he only gets free pay of £5444 per year and not £12500 which is standard, he will then pay tax on anything he earns over the £5444 either at 20% or 40% dependant on income, it shouldn’t equate to £700 per month even if he hasn’t paid tax on his car.
Are his benefits put on payroll or does he get a p11d every year still? Was his tax £700 more than last month on his payslip?

That tax code means about £110 per month change in take home pay.

I suspect the £700 is paying back underpaid tax, look at his code from last year and the year before. Standard is 1250L this year, 1185L last year and 1150L the year before. If thats what he had then the money will be paying back unpaid tax from the previous (7??) years.

If salary same each month so no bonuses etc, rough calculation
c£6k monthly salary would have tax of roughly £1358 when code 1250L,
if code changes in month 3 to 588L (& not a month 1 code, probably have M1 or W1 or X after if it was) tax would be c£2019 so about £700 more
month 4 onwards (July onwards) tax would be c£1578 so £220 more per month on a ongoing basis than it was in May 2019
Quite probably will still owe for last year if was on code 1185L to March 2019
Hth

Thanks everyone.

It transpires that the car is £160ish a month. It wasn't paid last year but the overdue amount will be spread out over next year which is manageable. This month's is higher but that's ok, we can cope with the £700 less this month

Phew!