Salary Sacrifice affect on UC

adam_swift96

I am looking in to a salary sacrifice for a vehicle through my Work(NHS) and was just wondering how this would affect my UC payments as i receive money on top of my salary due to My level of income, Would i be penalised?

Alice_Holt

This, I think, will represent a benefit in kind which will be taken into account as employment income by UC

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1150813/admh3.pdf 
see  H3025, and specifically on benefits in kind for UC, H3015-3017.

Benefits exempt from tax are excluded from UC assessment, e.g. mileage allowance payments.

NedS

As Alice says, you will be treated by UC as if you had received that income that has been sacrificed in exchange for the vehicle as it is a benefit in kind.

huckster

When the employers report the earnings through HMRC RTI they report the salary sacrifice in a way that should ensure that Universal Credit still takes into consideration the correct earnings amount.  

kaMelo

Whilst I don't know the answer, although I'd tend to agree with what others have said that it will be counted.
Where it will not be counted is in regards to your NHS pension entitlement, it's important to understand how using the NHS salary sacrifice scheme will reduce your future pension benefits before committing to use it.

Icequeen1

Alice_Holt said:

This, I think, will represent a benefit in kind which will be taken into account as employment income by UC

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1150813/admh3.pdf 
see  H3025, and specifically on benefits in kind for UC, H3015-3017.

Benefits exempt from tax are excluded from UC assessment, e.g. mileage allowance payments.

@al@Alice_Holt

H3081 in the link you give specifically says benefits in kind are excluded are earnings even though counted as earnings by HMRC. 

The longer term intention was to take them into account but they haven't done so yet see https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/404201/uc-and-employers-faq.pdf 

peteuk

adam_swift96 said:

I am looking in to a salary sacrifice for a vehicle through my Work(NHS) and was just wondering how this would affect my UC payments as i receive money on top of my salary due to My level of income, Would i be penalised?

My limited understanding is your wage is your wage and is reported as such.  By taking a salary sacrifice wont change your basic income.  It does mean slightly less tax and you avoid a loan and interest. Some companies work on a lease basis  so do read into it fully.

If you are thinking that by taking a salary sacrifice it will lower your wage (which it will to your take home) that it would increase the top up, then because the way your wage is reported it wont.  Equally I believe that it should not effect it the opposite way and decrease it. 

sheramber

Scroll down to DEPRIVATION OP EARNED INCOME  page 42

in the link quoted by Alice

Deprivation of earned income H3201                      In a case 1. where 1.1 a person has deprived themselves or .
          1.2 an employer has arranged for a person to be deprived of earned income and                             2. the purpose of the deprivation was to                           2.1 secure entitlement to UC or 2.2 increase the amount of UC then that person must be treated as being in possession of that earned income

The following pages explain how the DM would assess whether deprivation of earned income had occurred.