Car Salary Sacrafice / Child Benefiit Calculations

TaxLover77

Hey all!

I'm looking for a bit of advice as I'm unsure on the impact of a car salary sacrifice has on my specific circumstances and I'm a little paranoid I'm getting it wrong!

I've recently started a new job and have the joy of being able to enter the 40% tax bracket and of course would like to make as much use of my money as possible, the vehicle salary sacrifice scheme seems like a sensible option (please note I have no option of a company car) that could potentially save me money on a vehicle and continue child benefit payments as well (c.£1000 pa depending on earnings). I have tried a few online calculators but getting significantly different results depending which site I use so really appreciate any guidance.

Tax Code: 1375M
Salary: £58,000
Pension: £2,320 (4%, I know! I do have other investments!)

Option 1: £9,924 Gross Sacrifice (reducing salary to £48,076 + ~£700 child benefit)

CO2 (WLTP): 44 - 44 g/km

Electric Range (WLTP): 41 - 37 miles

P11D	£56,130 (Under the new BIK rates I believe this is 7% for 2021/2022?)

BIK: £3929 (effective 48076+3929 = 52005 and 2k over allowance?)

Option2: £10,668 Gross Sacrifice (reducing salary to £47,332 + ~£700 child benefit)

CO2 (WLTP): 0g/km

Electric Range (WLTP): 350

P11D	£50,990 (Under the new BIK rates I believe this is 1% for 2021/2022?)

BIK: £510 (effective 47332+510 = 47842 and under allowance?)

In theory this could keep me under the 50k hit for child benefit (option2) and saves around £300 per month in tax effectively making the car cost <£600 per month... I may opt for a cheaper vehicle and really ride the line however trying to ensure my logic / calculations are at least on the right track in terms of BIK/Salary Sacrifice and their impact on my net salary.

Any guidance would be really appreciated.

TaxLover77

Sacrifice* 

Dazed_and_C0nfused

Have you considered the benefits of sacrificing salary in return for increased employer pension contributions?

And don't forget if you are liable to tax at higher rate (or would be liable to higher rate tax on dividend income if it weren't for the dividend nil tax band) then you will no longer be eligible for Marriage Allowance for that tax year.

TaxLover77

Thanks Dazed, I don't hold any stocks so won't receive any dividend income so not too worried about that and will look at upping my pension to effectively hover the 40% tax band as much as possible once I'm sure I'm calculating this correctly and in all likelihood pick a cheaper vehicle to increase the pension.

My main concern is that I'm working out salary sacrifice calculations incorrectly with BIK which could cost an additional +£100 per month.

Online calculators are suggesting that reducing my salary by £900 per month should actually only cost me £500 net, plus any BIK I'm then also liable at the mentioned tax rates (£30 for an EV at 20% or £120 at 20% / £240 at 40% for a hybrid so keen to ensure I'm understanding the implications! Thanks again for your reply.