Salary Sacrifice Scheme - Car

sgx.saint

Hello.

My employer has recently introduced a salary sacrifice scheme in order to allow you to obtain a new car.

I have spent time reading through the official company guide to the scheme and of course MSE and other online resources.

However I am still a little confused in regards to how this would potentially impact my take home pay.

Below is a quote provided by the company that provides the scheme and most of the calculation appears to have been done based on a base salary of £23,500.



So am I correct in thinking that my net monthly salary of £1514 is simply reduced by the net amount of £223.97? (which incorporates tax relief and BIK)

Or is there more to it than that?

psilvester

To be more accurate your GROSS salary will be reduced by £283 per month, then any deductions are calculated (Tax, NI, Pension, Student Loan etc), then the BIK tax is deducted. This will give you your final NET salary.

sgx.saint

Hello.

Thanks for the reply.

Okay, that makes sense to me, however I'm trying to get my head around the tax and NI savings listed in the above quote, where do I see those savings, if I was to work out how much tax and NI that I would be charged on my new gross after sacrifice, is that where I would see the circa £70 saving?

DUTR

sgx.saint wrote: »

Hello.

Thanks for the reply.

Okay, that makes sense to me, however I'm trying to get my head around the tax and NI savings listed in the above quote, where do I see those savings, if I was to work out how much tax and NI that I would be charged on my new gross after sacrifice, is that where I would see the circa £70 saving?

Where do you get £70 from? It's £59.07 and it shows on the illustration.
Are you restricted to certain marques and models with the scheme?
Anyways after the scheme if you participated, then you would take home £1290 plus have a car of some sort.

psilvester

Use http://www.listentotaxman.com/

Put your current Gross salary in and take a note of the figures, then your Gross salary after sacrifice in and compare the two.

molerat

Your monthly pay will be reduced by the cost of the car payments, £283 per month, so you will not pay tax or NI on that amount. Your tax liability will be increased by the "cash value" applied to that particular car, £157.45 per month, http://www.parkers.co.uk/company-cars/tax-calculator/ so you will pay tax on that amount but not NI. Your savings are therefore (32% of 283 = £90.56) - (20% of £157.45 = £31.49) = £59.07