Salary sacrifice EV scheme

Dental1983

Hi ! I am looking to sign up for the EV salary sarcafice scheme ! I am going through my terms and conditions and it says I’m liable for income tax on the vehicle does this just mean the BIK tax ? I am currently a 20% tax payer , will having the car take me into the 40% bracket ! I’m abit confused 

On-the-coast

Take the new price of the car (e.g £30000) multiply that by 2% (this years BIK rate… which increases every year…) and that’s how much will be added to your taxable pay.   £600 in this case / but more than double that over the term of the lease. 

By if your scheme is salary sacrifice your pay will doubtless drop by more than that.  

All’s  good until you want to change employer…
I’d be wary

Penguin_

Your pay will drop so no you won't move into the 40% tax bracket.

Make sure your employer has an "early termination cover" payment included in your monthly sacrifice.

ButterCheese

I'm sure you are already aware, but your drop in salary will also mean both yours and your employers pension contributions will drop.  We were "sold" the idea of all these schemes in the NHS but when you look at it, it's quite an expensive way of doing it regarding reduction in both pay and pension

WellKnownSid

Also if you're a 20% tax payer your employer will need to make sure that you're not going below the minimum wage.

Penguin_

ButterCheese said:

I'm sure you are already aware, but your drop in salary will also mean both yours and your employers pension contributions will drop.  We were "sold" the idea of all these schemes in the NHS but when you look at it, it's quite an expensive way of doing it regarding reduction in both pay and pension

I guess it depends on how much you'd pay to lease/insure/tax/maintain/service a car. Someone I work with has got a lovely little electric car, fully looked after for about £249 a month net reduction in pay. They were paying £55 a month insurance on their previous car so thats a saving straight off the bat.

LightFlare

Penguin_ said:

ButterCheese said:

I'm sure you are already aware, but your drop in salary will also mean both yours and your employers pension contributions will drop.  We were "sold" the idea of all these schemes in the NHS but when you look at it, it's quite an expensive way of doing it regarding reduction in both pay and pension

I guess it depends on how much you'd pay to lease/insure/tax/maintain/service a car. Someone I work with has got a lovely little electric car, fully looked after for about £249 a month net reduction in pay. They were paying £55 a month insurance on their previous car so thats a saving straight off the bat.

My diesel costs me <700 a year to keep on the road and its all paid for and fully owned by me

Surely thats better money saving than paying 3000 a year for something you will never own.....

Dental1983

Thanks for replies everyone ! 

I’m just abit warey that the Ts & Cs say I’m liable for income tax is this the BIK tax ?
The HMRC calculator says the BIIK will be £169 for this year ! 

Salary £33000
car value £42000
what I don’t want to happen is to be taxed on the whole £75k taking me into the 40% bracket !

Penguin_

LightFlare said:

Penguin_ said:

ButterCheese said:

I'm sure you are already aware, but your drop in salary will also mean both yours and your employers pension contributions will drop.  We were "sold" the idea of all these schemes in the NHS but when you look at it, it's quite an expensive way of doing it regarding reduction in both pay and pension

I guess it depends on how much you'd pay to lease/insure/tax/maintain/service a car. Someone I work with has got a lovely little electric car, fully looked after for about £249 a month net reduction in pay. They were paying £55 a month insurance on their previous car so thats a saving straight off the bat.

My diesel costs me <700 a year to keep on the road and its all paid for and fully owned by me

Surely thats better money saving than paying 3000 a year for something you will never own.....

As I send it depends, some people may need a new car & this is an affordable option especially as you don't have to put a deposit down.

Penguin_

Dental1983 said:

Thanks for replies everyone ! 

I’m just abit warey that the Ts & Cs say I’m liable for income tax is this the BIK tax ?
The HMRC calculator says the BIIK will be £169 for this year ! 

Salary £33000
car value £42000
what I don’t want to happen is to be taxed on the whole £75k taking me into the 40% bracket !

You will have your tax code adjusted for the BIK. How much is the car a month?

Dental1983

Penguin_ said:

Dental1983 said:

Thanks for replies everyone ! 

I’m just abit warey that the Ts & Cs say I’m liable for income tax is this the BIK tax ?
The HMRC calculator says the BIIK will be £169 for this year ! 

Salary £33000
car value £42000
what I don’t want to happen is to be taxed on the whole £75k taking me into the 40% bracket !

You will have your tax code adjusted for the BIK. How much is the car a month?

£400 a month