Salary Sacrifice Lease Car Adjusted Net Income

Ducklingrm

Hi All, hoping someone might be able to clear up a query.

My employer have started to offer salary sacrifice electric car leasing scheme. Our first child is approaching nursery age and as such I am keen to plan my earnings to make the most of any support available.

Total gross salary £130000, at the moment I am sacrificing just over £30000 into my pension to reduce my adjusted net income below £100000. Allowing me to claim tax free child car and hopefully 30 hours free childcare when at a suitable age- whilst maintaining my personal allowance.

The GOV website is unclear as to what can be used to reduce adjusted net income. But would I be correct in saying that any leasing cost under the ULEV car scheme would reduce my adjusted net income. E.g £130000 income minus £20000 pension minus £10000 lease cost under car scheme would equal a £100000 adjust net income? Does a 2% BIK change anything?

Thanks 👍

Dazed_and_C0nfused

Total gross salary £130000, at the moment I am sacrificing just over £30000 into my pension to reduce my adjusted net income below £100000

E.g £130000 income minus £20000 pension minus £10000 lease cost under car scheme would equal a £100000 adjust net income? Does a 2% BIK change anything?

Your figures are a bit confusing.  Are you sacrificing £30k, so only £100k taxable income, plus £20k into a RAS scheme (which doesn't reduce taxable income but does reduce adjusted net income)?

Company benefits are taxable income and will form part of your adjusted net income just like any other taxable income would.

Ducklingrm

Apologies I should have been clearer. At the moment I am sacrificing £30001 into my pension to reduce my adjusted net income below £100000.

I would like to reduce this to £20001 and take out a £10000 per year lease on my works salary sacrifice electric car scheme. Hopefully keeping my adjusted net income below £100000. Assuming the new ULEV schemes reduce net adjusted income as well as pension contributions?

Northeastlass01

Hi, did you get an answer to this? Looking for advice for a similar problem. Thanks

penners324

Its salary sacrifice.

The monthly charge of the car is deducted from your gross salary

Dazed_and_C0nfused

penners324 said:

Its salary sacrifice.

The monthly charge of the car is deducted from your gross salary

But there can also be a new source of taxable income arising from the provision of a company car (and possibly car fuel benefit).

surffreak89

Bump on this - need clarity on whether an EV salary sacrifice reduces your Net Adjusted Income (to below £100,000) for the purpose of claiming the 30hrs free childcare. Anyone got a definitive answer?

Grumpy_chap

surffreak89 said:

Bump on this - need clarity on whether an EV salary sacrifice reduces your Net Adjusted Income (to below £100,000) for the purpose of claiming the 30hrs free childcare. Anyone got a definitive answer?

It depends on the starting position, how much is sacrificed and the resultant BIK.

sheramber

surffreak89 said:

Bump on this - need clarity on whether an EV salary sacrifice reduces your Net Adjusted Income (to below £100,000) for the purpose of claiming the 30hrs free childcare. Anyone got a definitive answer?

Salary sacrafuce means you have given up( sacrificed) part of your salary, so yes, your gross salary is less.

but, you will be charged an amount for the benefit of having the car- a BIK figure will be added to your income which is included for adjusted net income

The amount of that benefit in kind charge wil depend on the car you  have.

Your employer should be able to tell you what it will be 

you can read more here  https://taxaid.org.uk/tax-information/employee-paye/employee-expenses/benefits-in-kind