Salary sacrifice P11d bik help

William_fenton

Good morning,

I was wondering if anybody can help me as HMRC were a little unhelpful.

I have been offered a salary sacrifice company lease car which seems like a no brainer until I take into account the bik tax. As the cars I'm looking at are over the 120co2 ruling then the tax is pretty hefty.

My question is, if I am paying 100% of the lease car costs, does this go on my p11d as a contribution towards the bik? If so is it at the gross or the net amount I pay every month?
Or am I trying to have my cake, eat it and then drive off in a nice car!?!

Thanks

Will

Cardinal-Red

When I worked at a company offering a similar scheme, it worked as follows:

- 100% of the payment was deducted from pre-tax earnings for IT and NIC purposes (and pensions too)

- the BiK was calculated on the list price regardless of the monthly cost

- some people benefitted, some people paid more tax, mainly depending on CO2 emmissions

William_fenton

Thanks Cardinal.

Do you know if the monthly payments made by the staff went on the P11d's as contributions towards the bik?

Cardinal-Red

No they're not contributions as such.

You receive tax relief on them by having them deducted pre-calculation of income tax.

Which I think achieves the same result you're hoping for, i.e. you're not taxed on your contributions.

William_fenton

I thought that was the case ;-(

Thanks

Cardinal-Red

Hi am not sure why you're sad about it?

I anticipated from your question that you wanted to effectively reduce the "value" of your benefit in kind by the value of the contributions, and so pay less income tax on the reduced value.

But by having the full value of the salary sacrifice ignored for income tax purposes, don't you achieve the same result?

(Haven't done the maths and sorry if I have misunderstood your question?)

William_fenton

Chill out, it was only a sad face.

I was hoping to save the tax in two separate ways, but alas HMRC has already thought of that one.

:-(