How does salary sacrifice (for a car) affect Tax Credits

mum2many

I work in the community for the NHS and they are pushing for us to have a salary sacrifice in return for a new car, they say this will then reduce their monthly expenditure. If we dont go for it our pay per mile is cut by 50% to help reduce costs, if we do its cut by 25%. But they say although the milage is cut we save on paying Tax, NI and Pensions contributions( which seems daft as it means less to the NHS )

Now I have an old old car that will fail its mot no doubt so on that side it sounds great to have a new car BUT how will tax credits work? do they go off my salary before or after the sacrifice?

I need to find out as I need to be able to sort my mortgage payments out and would prefer to pay more to them and stick with the shed on wheels if tax credits take my before salary.

Em x

[Deleted User]

Expenses are included in your tax credit claim, that includes whatever benefits they pay for the car before you get your salary I'm afraid.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/TaxCreditsandChildBenefit/TaxCredits/Gettingstarted/Claimingtaxcredits/workoutincomeandworkinghours/DG_172877

cocoluvsmummy

the proposal for this change states that

"there are some issues that the employee needs to be aware of..... inland revenue allowences i.e tax credits may be affected"

there are a lot of meetings arranged to go over the lease scheme, get to one asap

Wee_Willy_Harris

Don't forget to factor in the savings a new car would make as well. Lower MPG from a modern efficient engine, lower maintainance costs, no unexpected repair costs (warranty), no MOT for 3 years etc etc etc.

corbyboy

How are they able to justify giving people different rates of travel expenses based on whether they have leased a car through the NHS scheme or not?