Before your car is delivered, you will receive a Schedule of Salary Sacrifice from the Electric Car Scheme. This document shows you what your estimated take home pay will be, with a detailed breakdown of the calculations.
Sometimes there is a difference in the estimated take home salary vs your actual take home salary for the month. This can happen for several reasons. You can read more about them and how to resolve any issues below.
- If your salary before you began salary sacrifice was between £100,000 and £125,000
- If your delivery date has changed since you first ordered your car
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Your tax code is not yet updated so HMRC are applying the incorrect tax band or rulings
If your salary before you began salary sacrifice was between £100,000 and £125,000
It is likely that the difference in the net reduction to your take home pay vs expectation is due your tax code. If your gross income is between £100k and £125k, you save at a c.50% rate as your Personal Tax Free Allowance reduces as you sacrifice your salary. This means you can save even more through the scheme — however, as the mechanism is more complex, it can take time for this to materialise as HMRC must adjust your Personal Tax Free Allowance.
What you can do about it
To ensure that your tax code is updated appropriately we recommend that you get in touch with HMRC directly regarding your income tax and tax code: HMRC: Income Tax- General Enquiries.
In addition, at the end of the tax year, following submission of your personal tax return, your tax will be reconciled so any overpayment of tax should be repaid by HMRC.
If your delivery date has changed since you first ordered your car
Your estimated take home salary for each month will be detailed in the Schedule of Salary Sacrifice. We send you this when your car is first order and is based on an estimated delivery date. However, if the actual delivery date is changed, your schedule will also be changed.
A couple of days before your car is delivered we will send you a final Schedule of Salary Sacrifice, which will reflect the actual car delivery date.
What you can do about it
Please make sure that you are looking at the final document when checking your salary sacrifice payments! You will have been sent it by us by email a few days before the car was delivered. You can also contact your employer as they will be able to download the most up to date schedule on the Employer Portal.
Your tax code is not yet updated so HMRC are applying the incorrect tax band or rulings
Your tax code is not yet updated so HMRC are applying the incorrect tax band or rulings. (We instruct your employer via a P45 form to update HMRC when you receive your lease.)
Example: You recently received a pay rise that will result in a new tax band. HMRC are not yet aware and will not apply the right deduction. HMRC will recognise after several months you are likely to earn more and apply a change to your tax band if not instructed to do so already by your employer.
What you can do about it
- Provide us with the correct gross yearly income to apply and we can provide you with an updated schedule estimate.
- Check your current tax code is correct based on the amount you are total income and your benefit.
- Ensure your end of year tax filing reconciles any tax you feel you may have over or under paid.
- Ensure **your personal allowance is adjusted by notifying HMRC as soon as practical. To contact HMRC, see this link on what to do.