Salary Sacrifice Car Scheme

lbsagada

Hello folks,

I have been offered a company car via a salary sacrifice scheme, I need to make a decision by the weekend cause once you are in the scheme, you simply cannot leave! The car on offer is BMW 116d efficient dynamics. My questions are:

1. Should I go for 24 or 36 month? The net monthly cost is £280 and £300 respectively (Inclusive of tax, insurance, service, etc.)
2. Is that a really good deal or not as good as they make it sound?

At the end of the lease period they normally offer the two classic options; buy the car outright or take a new lease. I'm thinking that the car after 3 years will be worth less i.e. more affordable for me to buy outright?

Really confused and any help will be so much appreciated.

Cheers

alia.1

Hi there

Dependent upon your annual mileage sounds a very good deal - especially if it is for a brand new car, fully maintained & insured with tyres, servicing, road fund licence and RAC. It is quite normal at the end of a salary sacrifice car scheme that you can either buy the car, get a new one on the scheme or simply hand it back and your commitment will have finished. Corporate finance rates, discounts and VAT efficiencies will make a salary sacrifice car scheme very attractive to employees.

Hope that helps.

Cheers

Ali

steve-L

It all depends if you wanted a new car. (As in new new)
is it a good deal, can't say... assuming you want a new car it depends what you have to pay after 3 years to but outright and how much you paid.
Is it £280x24 and £300*36 ???

What does salary sacrifice mean tax wise to you?
Do you use the car for work?

glenbois

Salary sacrifice usually means giving up salary so that the employer pays less NI conts. You have to know that this is not the only effect, if you receive redundancy monies, it will be based on your new lower salary, future pay rises may be based on your new lower salary.

Only you can decide but think long and hard about your decision as it is not reversible.

VSynth

lbsagada wrote: »

1. Should I go for 24 or 36 month? The net monthly cost is £280 and £300 respectively

That's strange, our scheme costs less per month if you have the car for a longer term.

I went for it, since I needed a new car and I could afford the £300 a month and like the peace of mind of not having to worry about extra expenses.

lbsagada

VSynth wrote: »

That's strange, our scheme costs less per month if you have the car for a longer term.

I went for it, since I needed a new car and I could afford the £300 a month and like the peace of mind of not having to worry about extra expenses.

You are absolutely right, I mixed up the figures! £300 is the cost for 24 months contract. I have to admit that peace of mind is the one thing I'm paying the extra money for. My private car costs about £180 a month but its 10 years old and so unreliable!

lbsagada

steve-L wrote: »

It all depends if you wanted a new car. (As in new new)
is it a good deal, can't say... assuming you want a new car it depends what you have to pay after 3 years to but outright and how much you paid.
Is it £280x24 and £300*36 ???

What does salary sacrifice mean tax wise to you?
Do you use the car for work?

Cheers for replying Steve, I don't use the car for work (only commuting). Tax-wise I don't think there's a great impact, because the figures quotes are net

lbsagada

glenbois wrote: »

Salary sacrifice usually means giving up salary so that the employer pays less NI conts. You have to know that this is not the only effect, if you receive redundancy monies, it will be based on your new lower salary, future pay rises may be based on your new lower salary.

Only you can decide but think long and hard about your decision as it is not reversible.

That's one thing I never though of! I did not realise that this will have an impact on my annual salary increase, this could be a game changer, thanks for heads up.

edwardw

why would it affect a wage increase/
surely they would just increase your wage by what they would have before, if they were to at all?

lbsagada

edwardw wrote: »

why would it affect a wage increase/
surely they would just increase your wage by what they would have before, if they were to at all?

My company pays an annual increase ranging from 2.4 to 3% (based on performance, etc.) I'm not sure why would the company car affect that, but surely it shouldn't. I'm thinking a quick call to my company HR should clarify..

Dan:_4

glenbois wrote: »

Salary sacrifice usually means giving up salary so that the employer pays less NI conts. You have to know that this is not the only effect, if you receive redundancy monies, it will be based on your new lower salary, future pay rises may be based on your new lower salary.

Only you can decide but think long and hard about your decision as it is not reversible.

Total rubbish.

You will still keep your notional salary (i.e. full salary before any salary sacrifice deductions) and this will still be shown on your wage slip.

This is the figure any redundancy, pay rises and mortgage applications will be based on.