LR, no extras, about £1300
P, 6/7 seats, a couple other extras and you’re looking at £1800
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Salary Sacrifice
- Thread starter Pagemakers
- Start date
P, 6/7 seats, a couple other extras and you’re looking at £1800
my figures were before any tax savings. So £1300-£1800 sacrificed. Hope that helps.
So my employer doesn’t currently offer salary sacrifice for their employees but they do have a big fleet of cars with Lloyds so I’ve asked if it’s in the pipeline.
I was in the company car scheme but now take an allowance instead. Assuming EV come back to the scheme I could go back when the 0% BIK comes back but I’d rather stay off it. Just to make sure I’ve understood this properly can someone check I’ve not misunderstood;
lease company gives a price for the car to the employer
employer passes this to the employer but takes it pretax (saving 40% if high rate)
bik is added but 0% after April
If that’s right then that cost needs to be less than the allowance after tax to make it worth while?
then need to compare the cost to financing it separately and taking the £3.5k grant and owning the car at the end
/Jon
I was in the company car scheme but now take an allowance instead. Assuming EV come back to the scheme I could go back when the 0% BIK comes back but I’d rather stay off it. Just to make sure I’ve understood this properly can someone check I’ve not misunderstood;
lease company gives a price for the car to the employer
employer passes this to the employer but takes it pretax (saving 40% if high rate)
bik is added but 0% after April
If that’s right then that cost needs to be less than the allowance after tax to make it worth while?
then need to compare the cost to financing it separately and taking the £3.5k grant and owning the car at the end
/Jon
Employer will calculate the effective rental based on the cost of the lease over the terms. For example if the cost of the lease repayments over a period of 36 months is £36,000 then company will deduct £1k a month from your salary (or utilise car allowance). This is deducted pre-tax so if you are a HIgher rate taxpayer it will be a net cost to you of £590 a month. As BIK is 0, there is no further tax to pay. Once it is £1% it will be 1% of the tax price so assuming £55k it would be a BIK of £550, so £45.83 a month which is a net cost of additional £27 a month assuming HRT.
WannabeOwner
Well-Known Member
Just minutia:
Pro rata for any period before then (and BiK for EV is currently less than ICE) so no need to specifically wait for April.
Seems to me that that is "already in the quoted RRP" (i.e. employer gets it too, unless I am much mistaken), so even-Stevens (unless I am also missing something else!)
Pro rata for any period before then (and BiK for EV is currently less than ICE) so no need to specifically wait for April.
Seems to me that that is "already in the quoted RRP" (i.e. employer gets it too, unless I am much mistaken), so even-Stevens (unless I am also missing something else!)
JupiterMan
Active Member
The £3,500 grant still applies to the cost price of the car to the lease company, but IIRC is not deducted when calculating the p11d value (which is irrelevant for the 2020/21 tax year as it is 0%).
As mentioned above, the lease cost is met from gross pay which means you get tax relief at your highest rate, plus also National Insurance savings (normally 2%).
My employer is chucking back in their NI saving too, which saves me a further 13.8% on the cost.
For some companies (but not all) there are VAT savings as well, with 10% VAT reclaimable on the cost.
For some people there may be further tax savings:
After going through all of the above for me it was a no brainer. I've never leased before, always done PCP, but with the BIK rates it as too good to pass on for my circumstances.
Things to watch out for are impacts on pension benefits as your employer could base your contributions/benefit accrual on the lower salary after sacrifice (some may be happy however to still use the pre sacrifice figure in calculating benefits after negotiation - mine is)
with all these savings for me the costs under salary sacrifice were too good to pass on!
As mentioned above, the lease cost is met from gross pay which means you get tax relief at your highest rate, plus also National Insurance savings (normally 2%).
My employer is chucking back in their NI saving too, which saves me a further 13.8% on the cost.
For some companies (but not all) there are VAT savings as well, with 10% VAT reclaimable on the cost.
For some people there may be further tax savings:
- If you have children and sacrifice takes income below £60k then you may be able to reclaim some child benefit.
- If your sacrifice takes you below £125,000 then you are able to reclaim some Personal Allowance (nil rate income tax band)
After going through all of the above for me it was a no brainer. I've never leased before, always done PCP, but with the BIK rates it as too good to pass on for my circumstances.
Things to watch out for are impacts on pension benefits as your employer could base your contributions/benefit accrual on the lower salary after sacrifice (some may be happy however to still use the pre sacrifice figure in calculating benefits after negotiation - mine is)
with all these savings for me the costs under salary sacrifice were too good to pass on!
many thanks. My kids mum gets the child benefit as we are no longer together so I don’t have to factor that in.
ultimately I think going back to a company car would be less admin but I prefer the flexibility of an allowance. It’ll all be irrelevant if they say no on the salary sacrifice. There was an accident damages MS85 for sale for £15k I saw though lol
I can tell you exactly what mine is. From April it’ll be 963 for an X performAnce and would have been 743 for a LR. That said it’ll depend on your tax rate how
Much you save. That’s 3 years 15k per year service insurance tyres included etc
WannabeOwner
Well-Known Member
I think that was the 2019/2020 anomaly, wasn't it? As I remember it the EV BiK was much cheaper in years before that. I assumed that someone in government goofed up, and someone else didn't / couldn't fix it / in time.
Cyclone1
Member
Cyclone1
Member
Does anyone with an M3P (or LR) and in a salary sacrifice scheme, know what their employer is leasing the car at per month? This is the total amount you sacrifice in your salary.
Thanks
Thanks
Yes that’s the impact on pay. MX performance , white interior 22 rims
ordered recently (M3P) and the top figure was around £770 I think. Obviously different leasing companies/insurance policies will effect this price
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