Salary Sacrifice and Universal Credit

Spoonie_Turtle

HillStreetBlues said:

Spoonie_Turtle said:

HillStreetBlues said:

HistoricalTicket said:

HillStreetBlues said:

HistoricalTicket said:

Also, if UC did ignore the BiK and therefore massively reduced the amount we receive because they use the original gross amount then it would be like we are paying for the car twice!

Why would it mean you are paying for car twice?
UC either funds the car or you fund it, The worse way you just pay once.

OK let me.put it a different way.

Say I bought a car on finance through a garage completely separate from my employer, that car cost £400 a month (example) then my UC would not be reduced as they would use the actual amount of money I'd been paid as a net figure.

But if I pay for the car on salary sacrifice, I lose the £400 out of my wages, then if UC ignored this deduction and used the original gross and net figures, they would then pay us LESS money by the same amount so we would almost be paying double for the car!

They work out the same, say wages are £2k
1) £2k wages, plus UC based on £2k  minus £400 for car
2) £2k wages, minus £400 for car, if BiK is not taken into account UC is based on £2k wages, 
Both methods end up in same result, all that's different is the stage you pay for the car
You seem to be double counting the £400 in your calculations, as you would not be getting less money as both UC award is based on same amount (£2k)

Now if BiK is taken into account then number 2 is
£2k wages minus £400 car UC is based on 1.6k wages

Which means UC pays more money, offsetting some of the £400 lease, thus effectively subsidising it.

Yes, as I said previously

HillStreetBlues said:

Why would it mean you are paying for car twice?
UC either funds the car or you fund it, The worse way you just pay once.

 

Yes, I was just making it explicitly clear to the OP that that's what the latter scenario worked to be

HistoricalTicket

**Update**

So after continuing to get confirmation directly with my employer on how they report this scheme to HMRC (harder than it sounds!)

They have finally confirmed that it is reported by them as a BiK on my P11d at the end of the financial year. So this should mean that UC won't treat it as a 3rd party deduction and acknowledge it as a BiK as it should be.

cezuni

Hi I was wondering ifnyou went ahead with this? Has it increased or decreased you UC ? 

morph20

I'd be very interested to hear on this too. If you could update that'd be very helpful!

Rachelw99213_

Hi what was the outcome of this? I pay into a salary sanction pension scheme which has now put me under the AET threshold so now need to work extra hours. Have you had to work extra hours if your net pay is less? 

huckster

If you reduce your pay in this way so it is below the AET, then yes Job Centre will be asking to increase work hours.  

StateOfMind07

Historical Ticket, could you comfirm what happened with your UC payments? I am considering doing this, but I cannot afford to sacrifice the salary without some of it being returned through UC. Does the employer just report your take home pay each month without factoring in the salary sacrifice. Also how does BiK work?

sheramber

StateOfMind07 said:

Historical Ticket, could you comfirm what happened with your UC payments? I am considering doing this, but I cannot afford to sacrifice the salary without some of it being returned through UC. Does the employer just report your take home pay each month without factoring in the salary sacrifice. Also how does BiK work?

That poster has not logged on since Feb 24.

UCSingleMum

Hi all, just jumping on the thread here. Has anyone got a car yet and how did it work out?