Salary Sacrifice for a car

[sahajesh]

I get how SS works in general but for a car, do you just pay the BIK taxable amount monthly or is there an element of lease cost plus the BIK?

 

[Tengocity]

You lose a chunk of salary to pay the lease, and your tax liability via BIK is as per a normal company car situation. So if it's a BEV then it's very low- 2% for 22/23.
I'm on process of setting this up in our company, most likely via Octopus EV.

 

[sahajesh]

You lose a chunk of salary to pay the lease, and your tax liability via BIK is as per a normal company car situation. So if it's a BEV then it's very low- 2% for 22/23.

I'm on process of setting this up in our company, most likely via Octopus EV.

Cheers.

So on a £100k car, the BIK is £2k pa and therefore £166.66 per month? The actual lease cost of the car itself isn’t factored in?

 

[isleaiw]

You pay the lease from your salary gross, so therefore save your tax rate. The tax man then treats it as a company car and you pay company car tax to the tax man on the BIK.....

The saving happens when the tax saving is much higher than the BIK - so EVs mainly.

 

[sahajesh]

Thanks Ian.

Potentially useful then, however I guess the lease cost is retail and we know we can get decent discounts (unless the tax savings are greater than the dealer etc discounts).

I presume your pension contributions take a hit as your employer pays less for you as your salary has effectively decreased? If so, you need to pay more yourself to make up the shortfall from the employer?

 

[Tengocity]

Thanks Ian.

Potentially useful then, however I guess the lease cost is retail and we know we can get decent discounts (unless the tax savings are greater than the dealer etc discounts).

I presume your pension contributions take a hit as your employer pays less for you as your salary has effectively decreased? If so, you need to pay more yourself to make up the shortfall from the employer?

No it shouldn't work like that. you should have a contracted base salary, on which your pension is based, then salary sacrifice (which can be done on a number of benefits) calculations done to give you a revised "salary".

 

[sahajesh]

I’m waiting for details of my employer’s scheme and see what the prices are, compared to normal PCP etc.

I guess the benefit of SS is that you don’t need a deposit, if that is a concern.

 

[Tengocity]

I’m waiting for details of my employer’s scheme and see what the prices are, compared to normal PCP etc.

I guess the benefit of SS is that you don’t need a deposit, if that is a concern.

Ours is going to be set up so that the SS payment includes deposit, maintenance, servicing, tyres, insurance, and early termination insurance. If you normallu run with a PCP on a new car then SS on a BEV should be very attractive. I probably won't go ahead as it's still more expensive than running my 340i tourer off my car allowance.