Salary Sacrifice Car Scheme

Ciwan

Hello Guys

My company has a Salary Sacrifice Car Scheme, and I am thinking of getting one, but before doing so, I want to fully understand what I'm putting myself into.

The car I am interested in is the Audi A3 5 Door Sportback 1.6 TDI 105ps SE.

I'll be Sacrificing £320 a month and my current salary is £35K pa. I get free insurance, servicing / maintenance, and some other benefits.

I will not own the car, if I want to do that, I'll have to pay a balloon payment at the end of the 2 year contract.

Is this a good deal? What other information do you require in order to work out if this is good or bad?

What should I be aware of?

Any help and advice would be greatly appreciated.

Thank You.

InsideInsurance

Is the sacrifice from your gross or net salary?

If its from your gross salary, ie it is a company car, then you will have BIK tax to pay.

Ciwan

Thanks for the reply. It goes out from my salary before tax, so I make a little bit of a saving on tax .. isn't that right? At least that is what the person down stairs who wants to sell it to me says

InsideInsurance

If its before tax then its a company car and you will have BIK to pay on it.

So an extra £52.50 or £105 a month in tax (depending on if you are a 20% or 40% rate) to pay assuming you have no optional extras

Of cause the deductions are made pre tax so there are some tax savings there for the contributions

BJV

Have to be honest depending upon your driving history i.e how much car insurance would normally cost you it does not sound that fantastic.


I would shop around there are so I am told mega deal's on Mercedes at the moment. Depending upon the model circa £220 a month. mostly for the SLk but a colleague has just on a E class for buttons.


I would Google new car deals and shop around as that would leave depending again on your model approx. £100 for service and maintenance.


Depending on the mileage you do please remember that a two year contract may only mean one service as lots of German cars now only need one service every 2 years or 20,000 miles.


What mileage does the work scheme allow?

scotsbob

It's a good deal for your employer because that's £320 a month they don't need to pay employers NI contributions on.

In 2 years time you will have paid out £11,500 and still not own a car.

If you don't have any accidents in the 2 years will those 2 years count towards no claim bonus on any future insurance or will you be told group insurance doesn't count?

stevemLS

If you are in a defined benefit contribution pension scheme your salary after the deductions for the car is what will count for the pension scheme.