Benefits of car through salary sacrifice or business lease?

Miss_J

Does anyone know which is more beneficial?

I currently have a car through a salary sacrifice scheme which means my monthly cost comes off my Gross salary thereby reducing my tax, NI and pension contributions.

Since getting my car I've started using my car for my job and so gave enquired about seeing if I can change my car to a business lease contract.

Apparently it us possible but the way I pay for it changes, on the business lease the cost is taken from my Net salary. I've been told that the amount taken is similar to what is taken from my Gross salary but that a £133 subsidy is taken from the total value. I can't work out which way is more beneficial for me. Anyone else have a car on a similar scheme?

InsideInsurance

If the cost is coming out of your Gross salary then you will pay less NI and Income Tax on you the cash element of your salary but will be paying BIK tax on the company car. Depending on the value of the vehicle, CO2 emissions etc this can be considerably more than the savings in tax.

If you are paying it out of your Net salary then your cash element of tax is higher but there is no BIK to pay on it subject to how the £133 element is done. Certainly if its just leveraging the companies buying power to get a lower rate then thats fine, if the company are actually making contributions to the rate then there will be tax to be paid on it.

Which is going to be better for you will depend on the vehicle, if you are a standard or higher rate tax payer etc. There are plenty of online calculators to work out BIK