Salary Sacrifices

adam_swift96

Just wondering whether anyone could advise on Salary Sacrifice, i am looking in to one being an NHS worker with Fleet Solutions, i receive UC to top up my earnings as i am with my partner, and we have a young child, Does the gross income increase with a salary sacrifice thus meaning i miss out on the UC payment? currently this is the only way i can renew my car something which i need to desperately do due to the age of my current vehicle.

Jeremy535897

Salary sacrifice means that your salary reduces, as your employer uses some of your salary to pay for the car. This will also reduce what goes into your pension scheme, but the impact of that might be modest, depending on your age and how long you stay employed by the NHS.

There are savings in national insurance and there may be tax savings too, but the tax savings normally arise only where you lease an EV, because the benefit in kind (this arises because the NHS is paying to lease a car you can use for private mileage) is much lower for EVs. You should seek out the up to date version of this item for your particular NHS area:
https://southwestyorkshire.nhs.uk/wp-content/uploads/2018/10/NHS-Car-Scheme-Guide.pdf

I would suggest that you ask the question about the impact on UC in the benefits and tax credits forum, but so far as I am aware, car benefits are not counted as income for UC purposes (they are apparently thinking about this issue, but have been since at least 2015). This would mean that your UC should go up if it is already limited due to your earnings, as your salary will be reduced, and the benefit won't be added on.
https://forums.moneysavingexpert.com/categories/benefits-tax-credits

Inthepeaks

Hi this is a message to the original poster.. I am in a very similar situation and am dependent on UC to top up my income as a single parents. Neither UC or my payroll team can tell me whether my UC will be affected, and whether my salary (before deductions) will my counted when taking into account my UC award. I have been advised to contact Citizens Advice, but getting through to my local branch is tricky during normal working hours. 

I was wondering whether you were able to gain any kind of information? There is so much conflicting information about this online. The only way I could afford a lease is by sacrificing my salary and a potential increase in UC if they were to recognise my revised net income.

I hate having to rely on benefits, and as much as I don't want to come across entitled and appreciate everything I receive, my job is about to be thrown into jeopardy as the repairs needed to see me through the winter are going to exceed what the car is worth, and I'm not in a position where I can afford another car. I have two children who I also need to set to school and as much as I would be happy to get public transport, the links just aren't there to make it viable. 

I'm a nurse, I work hard, but I'm in a financial deficit every month. I'm in private rented accommodation in which the local housing rates have not changed in the last 8-10 years. I don't want to through away everything I've worked so hard for, and I job I love because I can't get there.

Any information you could share would be gratefully received. Thank you 🙂

Jeremy535897

See https://octopusev.com/info/what-impact-does-salary-sacrifice-have-on-my-salary-and-benefits

Grumpy_chap

Jeremy535897 said:

so far as I am aware, car benefits are not counted as income for UC purposes (they are apparently thinking about this issue, but have been since at least 2015). 

Speculation, but if the car benefit was to be considered as income for UC purposes, would that be at the relevant BIK equivalent value?  If that was the case, then SS for an EV (with the currently low BIK rates) would likely still result in a reduced income being reported for UC purposes.

The OP may be interested to read this very similar thread in the Benefits Forum:
https://forums.moneysavingexpert.com/discussion/6484798/universal-credits-uc-and-the-nhs-car-lease-salary-sacrifice-scheme#latest

Jeremy535897

It doesn't look as if much has changed, although if your benefit is put through the payroll rather than on form P11 D, it will increase income, by the amount of the benefit:
https://taxaid.org.uk/guides/information/issues-for-employees/employee/benefits-in-kind