NHS NET DEDUCTION LEASE CAR

KB8809

Evening all,

I wondered if anyone had any advice or can point me in the right direction of someone who can help me.
I have had 3 lease cars via NHS, all have been paid via NET deduction from my salary, meaning I do not gain any tax or NI relief from having the car. My salary is taxed etc as it would be if I didn’t have the car. I have been paying BIK tax on the cars and have only been able to claim the mileage rate for those with a lease car. I have queried this over the years with payroll who tell me it’s right but I am struggling to understand how it could be. If I was paying for the car via salary sacrifice and gaining a reduction in tax and NI contributions I would understand, but why am I paying BIK tax and receiving a lower mileage rate for something that is coming out of my pocket at a rate of 100% with no contribution from my employer! 

Please someone help me! It is driving me crazy. 

Thank you in advance. 

Grey_Critic

Payroll are not there to advise you about taxes simply there to pay your wage less any deductions advised by HMRC .- Talk to an accountant, they are the experts and if they do not have the the answer will know a man who does. .

Bigphil1474

If you are in a union, speak to them. I agree, it doesn't sound right. It doesn't even sound right that car users should get a reduced mileage rate for using a salary sacrifice car in the first place given you are still paying for the car, but it's taking the mick if you aren't even getting the salary sacrifice price for the car. I take it you are a car user for work? - maybe tell your manager that you'll stop the lease and get your own car and they can pay you the higher mileage rate - they'll probably lose more than you do. Might spur them into action.

Is it possible to pay for the lease car yourself after your wage has gone into your bank?

DullGreyGuy

KB8809 said:
why am I paying BIK tax and receiving a lower mileage rate for something that is coming out of my pocket at a rate of 100% with no contribution from my employer! 

Whether something comes from your gross or net salary in itself doesnt validate if the employer is contributing at all to the cost. The employer could be subsidizing the cost they are charging you (or they could just be using their buying power and passing it on at cost). 

cpbackhouse

Hi

We have a lease car via an NHS scheme. We are definitely getting tax and NI relief on ours, though it is very obscure from my wife's pay slip which quite frankly may as well be encrypted! The fact that you are paying BIK tax to me would imply that you are getting tax relief, or certainly should be. Our scheme is administered through Tusker who on their website break down the quotes to show the initial lease cost then the tax, NI and pension savings on that to give an estimate on the effect on the take home pay. Given their initial lease costs are horrendously uncompetitive until you take into account the tax savings it might be worth seeing if you have anything like that from your original quotes maybe?

KB8809

Bigphil1474 said:

If you are in a union, speak to them. I agree, it doesn't sound right. It doesn't even sound right that car users should get a reduced mileage rate for using a salary sacrifice car in the first place given you are still paying for the car, but it's taking the mick if you aren't even getting the salary sacrifice price for the car. I take it you are a car user for work? - maybe tell your manager that you'll stop the lease and get your own car and they can pay you the higher mileage rate - they'll probably lose more than you do. Might spur them into action.

Is it possible to pay for the lease car yourself after your wage has gone into your bank?

Hello, 

Thank you for your comment. 

Yes I use it for work but pay for the full costs. The payment is made from my NET pay (the amount that goes into my bank) meaning I get no reductions or incentives to having the car along with being penalised with low mileage rates and BIK tax, I’ve also just had my tax code reduced to pay £3000 tax per year and I am only bottom of band 4. 

KB8809

@cpbackhouse my car is leased via NHS fleet solutions. There are 2 options of salary sacrifice - which would be taken from gross pay in turn reducing the amount of Tax/NI/pension contributions. The other option is Salary Deduction - Which is the one I am on. This means no change to my contract, no change to deductions of any kind. I pay full tax/NI/and pension contributions. The company does not pay any contribution to the car. This car is effectively the same as if I had walked onto a dealership and taken out a personal lease contract. I have contacted head of finance who state they will look into it. But I have had this argument for 6 years now. 

sheramber

I suggest you ask on the cutting tax board where there are people who know the ins and outs of income  tax.

Does your employer operate a salary sacrifice scheme?  Some NHS trusts offer both SS and net pay arrangement.

Do you have paperwork for joining the lease scheme? If so, what does it say?

KB8809

@sheramber ok I’ve not got much experience with posting things in here but thank you I will certainly add it to that board if that will help me. Yes they offer salary sacrifice and net deduction. I do have the contracts yes, which state it is a salary deduction. It even says “it’s like paying direct from your own bank account’’
I have managed to get in contact with the deputy chief of finance for my trust today and he has agreed to look into this for me so I hope that is it sorted. 

Grumpy_chap

The OP now has a thread in the Cutting Tax forum, as suggested.  Hopefully the clarification required will be possible there.

https://forums.moneysavingexpert.com/discussion/6427923/nhs-lease-car-net-deduction#latest