To ask DH to change jobs because of work car?

[itseasybeingcheesy]

I really don't know whether there's a better category for this but please do tell me if you're an Uber expert on tax and work benefits.

DH got a new job in January in the property sector he took it because there was talk of redundancies at his old job and because he really wanted to get into this branch of work and start a career.

The job involves a lot of driving. We weren't told much about the logistics of this other than you'll be covering this region and we provide the car, you get petrol and parking expenses back.

Fast forward four months, he loves job and is doing well. Makes bonuses every month. We are still struggling a bit money wise because I took a lower paid job to get out of a career that was making me ill. We get by but aren't managing to save. We have another baby on the way.

His work finally get around to telling him he needs to put the car in his name for tax as everyone else does and then call HMRC to tell them that. HMRC then immediately deduct about £5000 of his personal tax allowance and we are facing being a couple of hundred pounds worse off each month. Add to this that he only gets back 11p per mile on petrol and we are majorly in the hole on living expenses and struggling even more.

I'm super worried about finances and ask DH to start looking for another job to remedy this situation. He is gutted. Understandably. And is exploring transferring internally within his company but this kind of moves him to the side of the career he wanted.

AIBU? Any other solutions to this gaping hole in our finances other than changing jobs? Would appreciate the perspective of others who have to use a work car and the impact on their income.

Is he a higher rate tax payer?

The deduction in the personal tax allowance is to account for personal use of the car - HMRC view it as a taxable benefit. It also attracts a lower rate of mileage because the full rate includes things like tax, insurance, and wear and tear.

As DH work is paying for the upkeep/maintainance/insurance etc for the car you're not having to pay this out. If its not working financially, you're right, your DH will need to look for another job - check the terms of the car agreement though - as he may need to make a payment towards it if he leaves.

Would it be cheaper / possible for you to provide a car for him and if so would the company accept it. Company car tax isn't cheap...

So it sounds like he wasn’t paying tax on having his car as a benefit in kind so it’s better it was picked up sooner rather than later so he didn’t get a backdated bill for it.
Unfortunately there is no such thing as a free company car but then there’s no such thing as a free car at all really. If it was his own car he would be paying for tax, insurance etc anyway.
However, if he doesn’t need a car then he wouldn’t be paying anything but surely there would be some sort of transport costs anyway?
I am a bit confused about how he claims mileage for a company owned car though? Is it for personal fuel? The company should be paying for fuel used for business matters I would have thought.
Depends on his contract really

11p per mile for petrol is well below the tax free allowance so he should be able to file a tax return and make a claim for the difference there (the tax free allowance is 45p per mile for the first 10,000 miles in a year and then 25p per mile thereafter).

Not sure on the rest. But if you can't make ends meet with the way the job is set up then he needs to look for a new job or speak to his employer about changing his package.

Kinsters-MAR doesn't apply to company cars. The HMRC expense is for fuel and wear and tear so N/A to company cars

Yes he gets the mileage back for the actual miles travelled for work purposes but not personal. We don't use it for personal purposes as we have our own car.

We really can't afford to run two cars (which we are essentially doing because of the drop in income) and this was never explained to us before he started the job.

He could offer them the possibility of using our car for work, that does mean that they would pay more in mileage as we own the car (from my understanding) so I'm not sure they would go for it.

@Kinsters you only get 45p a mile if you claim for mileage when using your own car as it is supposed to cover wear and tear as well. 11p (actually I think it might be 12p now) a mile for fuel you put in to your company car is correct. It is a con as 12p a mile doesn't cover the cost of fuel on my company Golf so I just fill it up when I'm out on business using the company credit card. (I'm paranoid about making sure I don't profit from any excess fuel)

I would find another way. He has a job he enjoys which isn't easy to fall into. Mental happiness is important in a job as you've found out.

So your husband loves his new job, earns enough to be talking £££ in HMRC dealings, makes bonuses etc. The car situation is a bit tricky, but at the level you're talking about, it sounds more like a symptom of a financial problem, rather than a problem itself.

OTOH, you decided to change jobs for a lower paid one, got pregnant and now want your husband to move mountains to cover for that.

I think you need to reconsider your expenses and start budgeting better, not ask your husband to cover up your mistakes by sacrificing something he loves. And yes, I do realise I might get flamed for that.

If he uses his own car he can clam Mileage allowance relief of 45p for the first 10000 and 25p thereafter. This is tax relief though so 45 x highest rate of tax and deducting any payments already made by the employer.

Could you pick up some extra work that could be done from home on mat leave? Transcription or something?

Can’t you sell your car and just have the one?

His work car is no where near big enough to use as a family car, not much boot space and definitely wouldn't get three car seats in and we are expecting DC3 in August.

As much as I'd love to sell our car it's on finance and slightly in negative equity so it would cost us to sell. It suits us fairly well at the moment.

Sorry just to clarify he is not a higher rate tax payer.

He's a standard rate tax payer so that £5000 of personal allowance is huge to us.

He can avoid paying tax on the company car if he makes no personal journeys at all. Unfortunately that also includes the commute to and from his permanent place of work. This would only work if he has a local office that he can get to by other means where he drops the car off every evening and collects it every morning. This might not be practical though and could add a lot of time onto his day.

This works because you sacrifice your personal allowance to pay for your car (obviously it’s not the cheapest way to own a car but suits people who would otherwise buy a relatively new car)

If you’re going to keep your car then it is going to be expensive for you. But I agree, if he loves it it wouldn’t be great to ask him to leave

Out of interest- You did take a lower paying job- if you got the freedom to do that why doesn’t he get the freedom to do a job he loves?

you can transfer £1000 of your tax allowance to him if you are married
however the tax on £5000 at 20% is 1000 so about £83.33 per month not £400 it will not alter national insurance
personal allowance is the amount you don't pay tax on not the amount of tax you divided 5000 by 12 to get £400 but you will not be £400 worse off you will be £83 worse off

Agreed that he could ask the company to not take the company car and instead to provide his own car.

However, his company will still be in contract on the car. They’ll have to continue paying for it. Asking when the contract expires and changing positions (from company car to personal car) at the expiry of the contract might be more agreeable. Don’t forget:

-You may not get 45p/mile from his employer. You may need to complete a P87 to claim tax relief on the difference between what mileage rate you receive and 45p. So he’ll either get an adjusted tax code, or a refund (of 20% of the difference).

• you will need to increase your car insurance cover to include Business Use (my cover is usually around £200 higher than just Social and Commuting cover)

• many more miles will be put on your own car. Is there a mileage limit in your finance agreement? It will devalue your car.

You are in trouble.

Mostly people never do the simple maths of a job.

You need to sit down and go through all of the maths involved to see how much the job is costing you.

There are red flags within your post.

A car is not an asset it is a liability.

I guess you are not costing your time in this consideration as yet. Most people don’t.

You are not saving anything. So you have neither an emergency fund nor savings ?

You may benefit from a thorough review.

11p a mile is a joke and a cost you are paying for the privilege of working for somebody else.

I do not want to be harsh but more of a cautionary note to you and others about this kind of attitude to a job.

@Passthecherrycoke

I know it sounds like I've been terrible selfish. Essentially a very rare job came up in a charity sector last summer. I was on the verge of sever anxiety problems and in counselling due to work and a miscarriage. We talked it through, looked at the gap in income and decided we could afford it on DH's current salary. I changed jobs and we discovered we were expecting another baby (entirely unplanned but wonderfully happy about it) in the autumn. It was a shock but we've been coping. Then DH changed job and we went from making savings and getting along ok to suddenly paying out £200 a month extra in petrol costs for this car. We made cut backs. I spend £45 a week on groceries, no big days out, no family holiday, no savings etc. But he was happy, I was happy and we were coping.

Now with this personal allowance reduction we will be approx £400 a month down on income (including petrol costs, of which he gets about £70 per month back) and we have realised we just can not afford to do this. We didn't have an extra £200 to lose in the first place.
I know I sound selfish. Our reality is tricky right now though.

You are in trouble.

Thank goodness you pointed this out! I don't think OP realised that.

@Poppyinafieldofdreams I agree we are in trouble and don't think what you have said is harsh actually.

We weren't actually told any of this before he took the job. DH has form for being vague about details unfortunately.

Had we known this I would have urged him to not take the job.

I'm not sure what you mean about the car not being an asset but a liability though as unless I've miscommunicated we have never treat it as an asset and have never used it personally. It's always been an item needed for DH to do this job. Little did we know how much it would cost us!

Again, OP, could you pick up any work from home, such as transcription, that could be done on maternity leave?

if your DH earns 40k normally his tax allowance is 12k ( I am rounding to easy numbers) so he would pay tax on 28K which would be £5600 or £466 a month
now his tax allowance is 7k so he pays tax on 33k which is 6600 or £550 a month which is £84 more than before ie the company car benefit is deemed to be worth £20 a week roughly ( the £1000 difference in tax is what you are not spending on servicing, taxing, repairs maintenance and insurance for the car which you would spend if it was your own)