Can anyone help me with salary sacrifice car figures please

mark_j

Hi

I am in need of a new vehicle, i have the option of leasing a new one through my employee over three years by means of salary sacrifice, i want to make sure i have all the correct figures so i dont end up paying more than i expect, i have rang the leasing company, but i am still not sure of several things:

The car value is 42k and the BIK value on this car is 16%, so the BIK cash value is £6720, which means £1344 tax (20 percent)and £873 NI, total is £2217,so is this total figure paid over three years? surely you dont pay this figure each for three years?

On the quote you get from the company is shows a positive figure of £188 per month which it calls a total tax efficiency. I dont fully understand this figure either?

Any help would be appreciated.

Thanks Mark

Car_54

Yes, you pay tax on the BIK value every year.
Remember, since the car’s list price is over £40,000, you also pay an extra £320 VED every year.
Finally, check that the BIK doesn’t push you into the 40% income tax bracket.

mark_j

I dont mind showing the quote, as there is nothing personal to me.

This is how the quote comes out, Tax,servicing,insurance,tyres,breakdown is included in the cost. Still struggling to understand the tax efficiency part, is it because the vehicle is an hybrid and the co2 figure is really low at 36 grams per km?

Jonesya

Are you aware that the BIK on electric vehicles will be cut to zero in April, and then very low for next few years?

If you're looking at cars around £42k that's getting into Tesla Model 3 territory.....

AdrianC

mark_j wrote: »

The car value is 42k and the BIK value on this car is 16%, so the BIK cash value is £6720, which means £1344 tax (20 percent)and £873 NI, total is £2217,so is this total figure paid over three years? surely you dont pay this figure each for three years?

Yes. But the BIK %age may change.

mark_j wrote: »

So you are sacrificing £667 off your monthly gross pay.

That means that your tax bill goes down £133.50 and NI £80.10 per month, but paying £24.92 BiK - so your total monthly take-home pay is down £478.84 - the £188.69 difference is the "tax efficiency" simply because you're paying £188.69 less tax per month.

Salary sacrifice comes off your pre-tax pay, so you're leasing the car from pre-tax money. If you were just taking your pay as normal, then leasing the car, it'd cost you £188.69/month more. That's the "tax efficiency"...