Paying too much

frazermcv

Hello all, now i'm not really up to speed with income tax, etc. so i am seeking advice.


In Aug2018 I got a lease car (toyota yaris hybrid) through work with a salary sacrifice cost of £325, with the understanding that my tax and national insurance contributions would reduce as a result of this. However, this year my tax code has been adjusted from 1250L to 805L to account for the car as a benefit in kind. As such my average income tax contribution has gone up by around £73 per month, meaning that overall the lease car is costing me almost £400 per month which seems very excessive.


My question is should this be happening? Had i known that my tax liablity would increase to thsi degree there is no way i would have got a lease car, but unfortunately i am tied in with it until 2021.


Thanks in advance

00ec25

there are many websites that explain the facts of how it works
https://www.fleetnews.co.uk/fleet-management/salary-sacrifice/car-salary-sacrifice-fact-or-fiction

since you got your car after April 2017 , the rules are:

a) income tax paid on higher of the BIK value of the car or the amount of salary sacrifice (ie: £325)

b) National insurance cost is lowered since your salary is £325 smaller

if a) + b) = more "tax" than you were paying before you got the car, then you chose a car that is too expensive for the amount of salary you sacrificed