Bankruptcy and salary sacrifice car lease

user_21

Note: I haven't declared bankruptcy YET

My work does a salary sacrifice scheme whereby I can lease an electric vehicle. Note lease, not own. As my current car is leaking and ancient I'm considering doing this which take maybe £400 out of my monthly pay before tax.

Would the OR have a problem with this?
(Would they even notice?)

The way I see it, the OR is going to take a nice chunk of my disposable income as soon as I declare bankruptcy, so if I can keep back some of that for something useful (a new car that works and I don't have to die of anxiety every time my MOT comes around) - that's preferable. Just not sure what the rules are.

la531983

I suspect there is no chance on earth you will be allowed to keep that. 

Keep_pedalling

Knowing you are going to declare bankruptcy just after deliberately just after tiring up a large chunk of you income in SS sounds rather like fraud to me, but If you have that much spare income then the more important question you should be asking is, is bankruptcy the route you should be taking? 

How much debt do you have? Are you a home owner? A statement of affairs regarding income and expenditure would also be useful.

DullGreyGuy

You'd assume the OR would consider your salary based on the true gross, which if its the same as the SS offered by my previous employer doesn't change anyway. So they'll consider what you can afford assuming you are still receiving that £400 gross.

If you think you can live off what's left after the repayments to the OR and the £400 sacrifice then great but they aren't normally that generous

kevker23

My company also offers this. One thing to bear in mind, you will lose £400 from your salary upfront, but more than likely you will get a tax hit as well  as HMRC will view this as a Benefit In Kind and you will be taxed accordingly (at least that is how our scheme works). I'm unsure of how much extra you will get taxed but I would double check this before doing anything else as it will significantly affect your final take home pay

DullGreyGuy

kevker23 said:
I'm unsure of how much extra you will get taxed but I would double check this before doing anything else as it will significantly affect your final take home pay

The OP mentioned its an electric car they are looking at... the BIK on electric cars is tiny in comparison to regular fuel cars.

kevker23

DullGreyGuy said:

kevker23 said:
I'm unsure of how much extra you will get taxed but I would double check this before doing anything else as it will significantly affect your final take home pay

The OP mentioned its an electric car they are looking at... the BIK on electric cars is tiny in comparison to regular fuel cars.

I agree, but that will not always be the case and I'm sure it will change in the future, just something to bear in mind.

R200

What’s BIK?

kevker23

R200 said:

What’s BIK?

Benefit in Kind. HMRC use it to collect extra tax. So if you have a company car or company provided health insurance, you will pay tax on the value they deem to be a benfit in kind

silvercar

DullGreyGuy said:

kevker23 said:
I'm unsure of how much extra you will get taxed but I would double check this before doing anything else as it will significantly affect your final take home pay

The OP mentioned its an electric car they are looking at... the BIK on electric cars is tiny in comparison to regular fuel cars.

kevker23 said:

DullGreyGuy said:

kevker23 said:
I'm unsure of how much extra you will get taxed but I would double check this before doing anything else as it will significantly affect your final take home pay

The OP mentioned its an electric car they are looking at... the BIK on electric cars is tiny in comparison to regular fuel cars.

I agree, but that will not always be the case and I'm sure it will change in the future, just something to bear in mind.

Until 2024, the BIK rate for EVs is set at 2%. This rate is expected to increase incrementally by 1% each year, reaching 3% in 2025/26, 4% in 2026/27, and capping at 5% in 2027/28.