Wrong tax taken from wages

purpleparrotuk

Hubby has just had his second wages since he started a car salary sacrifice. The salary sacrifice deduction is correct but he’s had more tax this month taken out which means his take home pay is £328 less than last month. In effect overall instead of £760 reduction in take home pay due to car payment it’s £1100. Last months salary sacrifice was a full month and his reduction from salary was £760 overall. Has anyone else had this happen? His payroll person is on holiday so we can’t even ask them. Thanks.

Penguin_

I would think that last month he was on a normal tax code, or his regular one, & this month the Benefit in Kind may have been reported & his tax code has been adjusted. 

purpleparrotuk

Penguin_ said:

I would think that last month he was on a normal tax code, or his regular one, & this month the Benefit in Kind may have been reported & his tax code has been adjusted. 

Just noticed his tax code was 1257L and now it’s K388 M1. What’s that mean? He’s going to have a lot of tax come out every month now? So we are having no discount in the car. 

Dazed_and_C0nfused

purpleparrotuk said:

Penguin_ said:

I would think that last month he was on a normal tax code, or his regular one, & this month the Benefit in Kind may have been reported & his tax code has been adjusted. 

Just noticed his tax code was 1257L and now it’s K388 M1. What’s that mean? He’s going to have a lot of tax come out every month now? So we are having no discount in the car. 

It seems a common thing for people to enter into these car related salary sacrifice agreements without actually understanding the tax implications 

purpleparrotuk

Dazed_and_C0nfused said:

purpleparrotuk said:

Penguin_ said:

I would think that last month he was on a normal tax code, or his regular one, & this month the Benefit in Kind may have been reported & his tax code has been adjusted. 

Just noticed his tax code was 1257L and now it’s K388 M1. What’s that mean? He’s going to have a lot of tax come out every month now? So we are having no discount in the car. 

It seems a common thing for people to enter into these car related salary sacrifice agreements without actually understanding the tax implications 

It’s obviously wrong. The HRMC think we have a company car for free buy the look of it and are taxing us for it. 

Dazed_and_C0nfused

purpleparrotuk said:

Dazed_and_C0nfused said:

purpleparrotuk said:

Penguin_ said:

I would think that last month he was on a normal tax code, or his regular one, & this month the Benefit in Kind may have been reported & his tax code has been adjusted. 

Just noticed his tax code was 1257L and now it’s K388 M1. What’s that mean? He’s going to have a lot of tax come out every month now? So we are having no discount in the car. 

It seems a common thing for people to enter into these car related salary sacrifice agreements without actually understanding the tax implications 

It’s obviously wrong. The HRMC think we have a company car for free buy the look of it and are taxing us for it. 

You do have a company car.  And will be taxed on it.  That is how these schemes work!

https://www.thecarexpert.co.uk/how-does-salary-sacrifice-work-for-employees/

Penguin_

What car does he have? Your husband still has to pay the Benefit in Kind tax on the P11d value of the car. Im going to guess it's got high CO2 emissions.

purpleparrotuk

Penguin_ said:

What car does he have? Your husband still has to pay the Benefit in Kind tax on the P11d value of the car. Im going to guess it's got high CO2 emissions.

No it’s an BMW I4. Electric. It seems they don’t know he is paying for the salary scheme and are just assuming it’s a free company car. He is on hold with the tax office now waiting to find out. 

purpleparrotuk

Penguin_ said:

What car does he have? Your husband still has to pay the Benefit in Kind tax on the P11d value of the car. Im going to guess it's got high CO2 emissions.

Here is the info. 

la531983

He owes tax from a previous year, thats only going to compound the issue.

purpleparrotuk

Dazed_and_C0nfused said:

purpleparrotuk said:

Dazed_and_C0nfused said:

purpleparrotuk said:

Penguin_ said:

I would think that last month he was on a normal tax code, or his regular one, & this month the Benefit in Kind may have been reported & his tax code has been adjusted. 

Just noticed his tax code was 1257L and now it’s K388 M1. What’s that mean? He’s going to have a lot of tax come out every month now? So we are having no discount in the car. 

It seems a common thing for people to enter into these car related salary sacrifice agreements without actually understanding the tax implications 

It’s obviously wrong. The HRMC think we have a company car for free buy the look of it and are taxing us for it. 

You do have a company car.  And will be taxed on it.  That is how these schemes work!

https://www.thecarexpert.co.uk/how-does-salary-sacrifice-work-for-employees/

I know how it works thanks. My hubby’s company haven’t told the tax office about the salary sacrifice so the tax office think it’s a FREE company car we have received.