Universal Credits (UC) and the NHS Car Lease Salary Sacrifice Scheme

Hi all, and thank you in advance for reading.

I am single Mum to two young children. I am also a Nurse who works around 33 hours a week. We live in private rented accommodation, and I am very grateful to receive UC as a top up my income currently.

My situation is that I rely on a car to get my two children to school and then to and from work. I am in a financial deficit every month as I'm sure many people are, struggling to make ends meet with the general costs of living. My car is costing me so much money to run and the costs of repairs are exceeding its value. A colleague introduced me to NHS Fleet Solutions who essentially provide you with a car that is fully insured and road worthy for a sum of money that is deducted from your gross pay. The only way I could ever afford to do this is if UC were to recognise my revised net income.

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 anyone out there is in a similar situation to me who could share any information? There is so much conflicting information about this online. 

I hate having to rely on benefits, and as much as I appreciate everything I receive, my job is about to be thrown into jeopardy as the repairs to my car 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. As much as I would be happy to get public transport, the links just aren't there to make it viable round trip.

I really don't want to throw away everything I've worked so hard for, and a job I absolutely love because I can't commit to my working hours.

Any advice and guidance would gratefully be received. Thank you 🙂

Comments

  • sammyjammy
    sammyjammy Posts: 7,294
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    This would not be an allowable deduction and so the payment you made to it would be included when working out your UC.
    "You've been reading SOS when it's just your clock reading 5:05 "
  • This would not be an allowable deduction and so the payment you made to it would be included when working out your UC.
    I don't know how the NHS scheme works - but i don't think it is that clear cut necessarily. If it is done as a salary sacrifice then the amount of salary coming through on the RTI feed will be lower. I would suggest the OP needs to first understand the tax position and then it will be possible to tell the UC position from the legislation. 
  • kaMelo
    kaMelo Posts: 2,284
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    edited 11 November 2023 at 1:44PM
    The NHS car lease scheme is definitely via salary sacrifice, UC is calculated on net income so as @Icequeen1 said, any reduction in income will just be fed through RTI like normal, probably leading to a slight increase in UC entitlement. 

    The wider question is whether it's the right choice.
    It is certainly it's a cheap way to drive a new car. As a basic rate taxpayer, every £100 of the lease will actually cost you around £60 as you don't pay income tax, NI or pension contributions (20% +12% + whatever pension tier you're in, 7.7% - 8.8 %) . If you have a student loan then these repayments will also reduce.
    The negative side, your future pension benefits will be reduced accordingly, 1/54 of whatever the annual lease costs are, plus 1.5% per annum for the rest of your working life. Your tax code will also be adjusted down for receiving an employer benefit, this can vary a lot depending upon the choice of car.
  • Grumpy_chap
    Grumpy_chap Posts: 14,405
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    This would not be an allowable deduction and so the payment you made to it would be included when working out your UC.
    It would be good to understand the rules that your are considering in making that statement.

    Someone asked virtually the same question in the Cutting Tax board earlier in the week.  The responses given there suggest that the SS reduces income (so increases UC payable) and the company car is not considered as income for UC purposes.
    https://forums.moneysavingexpert.com/discussion/6444344/salary-sacrifices#latest

    I have no knowledge but I assume that if the SS car is an EV, then any considered "income" associated with the EV would be on the basis of the currently low BIK rates for EV's.

    The OP does need to consider the overall calculation as to whether the new car under the SS scheme is cheaper than replacing the current car with a second hand model.
    There is a long term potential impact to future benefit entitlement to consider.
    Plus the definitive position with regard to UC.
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