Deduction From Pay

[scjgreen]

Hi Guys

Just after a bit of advice and opinion around a situation at work with a deduction from my pay.

Unfortunately I had an Accident in my Company Car which has led to me footing the bill of £1000 for the excess on the companies Fleet Car Insurance.

I agreed that this money would be taken from my pay.

£100 in December and £900 in January

Having just got my Payslip I have noticed that the £900 has been taken after all the tax, national insurance and student loan has been calculated.

This has let to a Gross Pay of £3970 becoming approximately £1800 NET

My question is has my employer conducted these deductions correctly or should it have been deducted from the NET Pay?

If it had been taken from the Gross (not net) Pay then I would have saved around £500 in Tax, NI and SL.

Thanks in advance
Steve

Edited by scjgreen on Tuesday 24th January 18:14

[Marvtec]

It has been taken from the net pay...

[scjgreen]

Marvtec said:

It has been taken from the net pay...

Sorry I meant Gross

[randlemarcus]

http://www.accountingweb.co.uk/any-answers/deducti... seems to cover your next few questions

Sorry chap. Nick a few paperclips to make up for it.

[Magic919]

That would mean doing a salary sacrifice. It doesn't sound like something that would qualify.

[Marvtec]

There are only certain deductions that can be made from gross PAYE income. Pension, Sharesaves, obviously tax & NI. To repay an employer for damage caused to co. car is not one

[Flooble]

I personally don't really see how it could be a pre-tax deduction to be honest. It's £1000 of actual cash that you have to pay the company, same as if you had bought a computer from them. It can only be a non-taxable, non-niable payment if it's subject to tax relief, e.g. pension payments and the like.

I would hope Eric will pop up if you edit your subject to say "Tax situation in relation to Deduction from Pay" in order to give you some advice from a person who actually understands the law properly rather than my vague awareness.

[scjgreen]

Cheers Guys

Appreciate the advice, stings a little but thats life I guess!

Thanks again

[Condi]

More to the point your CC excess is HUGE!!

[FiF]

Condi said:

More to the point your CC excess is HUGE!!

Not really. Ours was/is same.

Can't recall anyone being asked to stump up for the excess though.

[davepoth]

might be worth insuring that excess perhaps?

[elanfan]

The Company could be offering a scheme whereby you can buy off the excess. This however might contradict their driver policy which is to try to encourage a safer style of driving which improves claims experience on the fleet and leads to cheaper premiums.

[craigjm]

scjgreen said:

Cheers Guys

Appreciate the advice, stings a little but thats life I guess!

Thanks again

If it was your own car you would pay it from your net pay so why would this be any different?

[Vaud]

They have been a bit harsh to take it one lump. Easy for HR to spread it over 4 months.

Was the excess made very clear before you took on the car?

[Starfighter]

The excess is £1000 and the company wants this. If they reduce the salary by that amount then they get their money. It does seam rather harsh to insist on it being effectively paid as cash from taxes income.

[55palfers]

A few questions...

How many previous at fault accidents have you had?
How many miles per year do you drive
How many hours do you spend behind the wheel
Has your employer carried out a roadrisk assessment
Have you ever been provided with any defensive driving training
If anyone makes any scrap, do they have to bear the cost

?

[FiF]

55palfers said:

A few questions...

How many previous at fault accidents have you had?
How many miles per year do you drive
How many hours do you spend behind the wheel
Has your employer carried out a roadrisk assessment
Have you ever been provided with any defensive driving training
If anyone makes any scrap, do they have to bear the cost

?

That's a fair set of questions, and whilst it might be embarrassing to the OP wondering what caused this.

As I said can't recall any of our lot who've been asked to stump up for work or excess, and they include some really stupid incidents despite the driver training.

[edc]

Starfighter said:

The excess is £1000 and the company wants this. If they reduce the salary by that amount then they get their money. It does seam rather harsh to insist on it being effectively paid as cash from taxes income.

The fact the company can see a gross and net salary in a payroll does not make it correct for a company. Forget the comps aspect and just look at the transaction. If this was a regular private insurance policy you would pay the excess from cash you have or from a bank account or in reality the amount is netted off against the insurance settlement. You do t have the luxury to pay this from pre-tax salary.

[Royce44]

slightly off topic,

I've only signed my employment contract which mentions nothing about the company car and its excess. i presume thats a seperate policy to sign for which they've forgotten about.

would they still be able to enforce the excess if I haven't signed for it?

[Vaud]

Royce44 said:

slightly off topic,

I've only signed my employment contract which mentions nothing about the company car and its excess. i presume thats a seperate policy to sign for which they've forgotten about.

would they still be able to enforce the excess if I haven't signed for it?

It might be detailed in an employee policy handbook / website that they have made available?