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.

@TattiePants oh yes I know there will always be a travel cost for commuting. However he covers the whole north region so the amount of driving from meeting to meeting he does is crazy. He does get mileage for that travel but at 11p per mile which is significantly less than the cost of the petrol. He can be travelling 100+ miles a day easy and the distance between us and his office is approx 8 miles so his commute mileage is a drop in the ocean compared to what he loses on work mileage.

if he uses his own car having to get business insurance, the extra wear and tear on the car, road tax, servicing, depreciation etc etc will probably cost the £1000
so either it's an extra £1000 in tax ie £83 per month or you keep the £1000 and shell out for the extra insurance etc etc the need to hire a car when your car is in for servicing MOT or repair; and hope together with allowance of 45p per mile you are in pocket slightly at the end of the year if all the extra costs are less than £1000 you are quids in, if they are more than £1000 you lose out, also you may need a new car sooner because of heavy mileage which has to be factored in

I'm guessing the company would expect most people to know that a company car comes with a tax liability. I'm afraid it sounds like you didn't do your research very well. I guess all you can do is look for other jobs and make sure you do look properly at how the take-home pay will work.

Thanks @Poppyinafieldofdreams

I'm looking for ways to snip more out of our budget but we're also pretty close to the bone on frugality. At the moment we are managing to let our girls go to a couple of activities still which are very low cost, they are our only luxuries. I really don't want us to have to stop those things but unless we have a change in DH's job I can't see how we'll continue to make ends meet.

I've also just had a crappy experience in being mid way through re-training on something that would have been an extra income stream but the course has cancelled and won't be available in this area again. Could have really tipped the scales towards us but won't be an option any more.

Is the £70 fuel reimbursement figure correct? If he's driving 100+ miles a day, that's about 2,000 miles a month, so more like £200 fuel reimbursement at 11p a mile, unless I'm missing something? I don't drive... no idea if that ought to cover the cost but something isn't adding up there.

the £200 per month in fuel will be offset by the 11-12p allowance
whether this completely covers it depends on the price of fuel and the economy of the car
average petrol price per gallon in uk today is £5.45 so at 11p per mile it needs to be doing 50mpg to break even and 45mpg at 12p

if the car only does 40mpg you need to cover 1.6p per mile so if DH does 500 miles per week or 2000 per month the fuel will cost you £32
the other £168 being covered by fuel allowance

11p a mile adequately covers fuel for a diesel ford focus ime.

Cheesy are you sure he is reclaiming all his work mileage? I get that the 11p rate is low compared to the price of fuel but this doesn't stack up. If he is regularly doing 100+ miles a day he is only being paid for 630 miles a month (£70/11p per mile). That's only the equivalent of 6 days of travel per month? Either he is forgetting to reclaim some of his trips (my DH is a bugger for that!) or his employer is disallowing a lot of journeys. If it's the later he may be able to make a tax claim.

I'm a Chartered Accountant (although this isn't my area of expertise) so I'm happy for you to PM and I'll try to help if I can.

Is there any possibility of changing the company car to something with a lower tax liability perhaps at the end of the lease?

11p per mile is very low, you'd have to be getting about 60 mpg.

I think you can pinch and save for a bit if his jobs is going somewhere. But if he is already at his expected earnings, then it's not enough and you will both have to look for something else.

I'll get him to check what he is claiming for at work. He claims back petrol and parking separately. He gets back 100% of parking costs and 11p per mile on petrol. His petrol claims are usually about £70-80 per month and he goes through a whole tank per week give or take a little. He claims petrol back about once a month as it takes ten days on average to process a claim and pay it.

PP are right OP, your figures do not add up!

Op, company car tax rates are closely linked to emissions and value of the car (as new). It would be worth this conversation with the employer as to when the car is replaced and what the options are regarding own choice of vehicle.

(Can't remember exact figures but the diesel Passat was going to decrease my husbands take home income by 350-400 whereas an hybrid electric by 80)

All of this info is on the hmrc website. I would strongly recommend you have a good read of it to fully understand the benefits and implications of company cars and other benefits.

A whole tank of petrol, that should be 400 miles?

So he should be claiming getting on for £200.

Is he claiming everything? It's really common for people to only claim some of their petrol expenses in my experience, they lose receipts or it's time consuming...

If this is his dream, I don't think it would be fair to ask him to give it up so that you can keep your dream job. I think you'd both have to commit to finding better paid work, or resentment would grow.

There's usually an information sheet about company cars in the starter paperwork at most jobs, did he get one? Does he need to pay anything back for the benefit he's had so far?

It'll be a matter of ensuring he's properly claiming everything he's supposed to be, checking over all the figures, seeing what else can be cut out of the budget and then seeing if you can make ends meet without either of you giving up your jobs.

Will you look for a better paid role when you return from maternity leave?

Can I ask what tax code they have put him on? I can’t see how he would loose £5000, he will loose £5000 free pay which just means he will start paying tax after he has earnt x amount of free pay (in accordance with his tax code) but I don’t no how that would equate to £5000? If you mean they have lessened his tax code by 5000 this just means he will pay 20% tax earlier than on his standard code

I don't think its unreasonable to suggest he may wish to look for something else if it isn't working for you as a family. You may have to look at self employed options though. I've picked up quite a bit of work whilst on mat leave mostly from working from home Facebook pages. One is MLM and doing very well to I might add so dont discount it. Some have been a little unsavory (moderating forums was an eye opener!) but the reality is there is a lot of flexible work you can do and it will be better for your relationship If you're both pulling together rather than just him making changes. Its great if there are savings to made in the family budget but sometimes you just cant cut anymore or there were times DD needed private treatments etc so it had to be a case of income generation rather than just making cuts

If you go to listentotaxman online you can put in the figures and his new tax code and it will tell you his monthly income.

If you don't need a second car then you are almost certainly better off getting employer to subsidise the cost of the car you already own via the higher petrol rate. Teacup looks to have her head round the numbers.

Most employers give this as an option. A lot of people don't take it because they want a second car (and want to pretend it is cost free).

Somemthing else to consider. Is he getting good fuel economy from his car? I had a land rover that was a guzzler. I read a bit about how to use less fuel, i.e. driving in low gear, being less heavy footed with the gas and then got 100 more miles out of a tank. Does he drive like a boy racer?

As you now realise, just because you don't use it for personal use doesn't mean it's not taxable - it's available for personal use, and similarly, a commute to work is personal use anyway.

However his work are in the wrong for not doing it correctly from day one - they should have been clear on appropriate mileage rates to claim from the beginning and also on the rest. Things shouldn't have been changing four months into the job, they should have been as they should be from the beginning.

Doesn't help now, but that wasn't good.

Another one that can’t see how your numbers add up.
Did he have a choice of car type?
If he didn’t understand the tax implications, he may have just chosen whatever he fancied, and there may be better choices - not only fuel economy but also lower tax based on engine size / emissions. (I forget the rules on that - it’s been a while for me!)

At a place I worked, you sometimes could change car mid lease because of staff turnover - taking someone else’s.

You couldn’t just go for car allowance though, because the company wanted a particular type of car for image, safety and maintenance costs.

So he really needs to check out the details with the company.

The 11p a mile - it’s low, but it does sound like he’s not claiming all his miles.

On the tax, as others have said it’s £1000 you lose not £5000 - as it’s the tax free element that’s lost. In which case, once the baby arrives you’re nearly offset on that by the increase in Child Benefit.

I think you should look at whether you need your car. You say his can’t be a family car as the boot is too small and there a 3 car seats. You can put a car seat in the front, and how much boot space do you really need? The only thing I can think of that you actually need is pushchairs - and some do fold really small. It might not be an option when you look properly - but it did seem like you were too dismissive of it.

Seems crazy his mileage rate is not even covering the cost of fuel. I would definitely query that with his employer.

Get an appointment with an accountant if you need some clarification - you should get marriage allowance if you don't earn much and there may be other things an accountant can help you with.

@itseasybeingcheesy

If you are earning less than £12,500 you can transfer some of your tax allowance to your spouse. It's not a lot but everything helps. Here is a link to explain it.

www.gov.uk/apply-marriage-allowance