📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Salary sacrifice EV scheme

2»

Comments

  • Penguin_
    Penguin_ Posts: 1,591 Forumite
    Fifth Anniversary 1,000 Posts Name Dropper
    Your gross income for tax will be £28200.
  • WellKnownSid
    WellKnownSid Posts: 1,957 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Penguin_ 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 
    Is that net or gross?  Can you share the full breakdown (to be fair they should give you this so you don't have to ask a forum)

    Example:
    Ford Explorer 125kW
    P11D value £39,820
    £674.24 Gross Salary deduction including ill health cover, tyres, servicing, maintenance, breakdown, accident management and insurance
    -£303.41 Income tax saving at marginal rate of 45%
    -£13.48 NI saving at marginal rate of 2%
    £59.73 Company car tax payable

    £417.08 per month

    As others have said - read and understand when you are liable e.g. if you resign.  On our scheme they can never charge you more than one month's salary but that's still a hell of a lot of money... like 15-16 months worth of payments!
  • Dental1983
    Dental1983 Posts: 5 Forumite
    First Post
    Penguin_ 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 
    Is that net or gross?  Can you share the full breakdown (to be fair they should give you this so you don't have to ask a forum)

    Example:
    Ford Explorer 125kW
    P11D value £39,820
    £674.24 Gross Salary deduction including ill health cover, tyres, servicing, maintenance, breakdown, accident management and insurance
    -£303.41 Income tax saving at marginal rate of 45%
    -£13.48 NI saving at marginal rate of 2%
    £59.73 Company car tax payable

    £417.08 per month

    As others have said - read and understand when you are liable e.g. if you resign.  On our scheme they can never charge you more than one month's salary but that's still a hell of a lot of money... like 15-16 months worth of payments!
    Thank you for the advice !
    I do have the breakdown and I’m happy with it ! I’m just cautious and I guess my main question was other than the BIK tax will there be any other tax implications that will sting me ? 
    Gross £552
    income tax.  -£110
    NI   - £44
    BIK tax  £34 
    net cost - £431 
  • Bluebell1000
    Bluebell1000 Posts: 1,124 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    Unless your scheme includes it, you may need to buy an electric vehicle charger for your house. 

    Having said that, we have an EV under salary sacrifice, it's our second one now (4 year lease each time) and we love it - while it is more expensive than running a cheap runabout, it's worth it for the peace of mind that everything is covered, and I know how much I'm paying each month. It's also handy as we get business cover for myself and my husband included, which means we can use the car for work trips.
  • ButterCheese
    ButterCheese Posts: 594 Forumite
    500 Posts Third Anniversary Name Dropper
    Penguin_ 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.....

    It's horses for courses, OP has already made their mind up and wants to lease a car.  For some, the extra money is worth the extra piece of mind that you won't be lumbered with a potential eye watering repair bills if something goes wrong.  Unlikely on a new car but it does happen.

    As an example, I bought mine at 8 years old for £5600.  I have spent over £3000 in the last 3 years on clutch, flywheel, various sensors, suspension.  Plus £240 for a full service every year.  That brings my total to about £9500.  I'm selling it now and will be lucky to get £3200.  So it has cost me approx £175/month to own (without insurance and tax).

    OP can get a nice new car (which won't incur anywhere near the fuel costs that mine did) for just £225 more a month.  If you have the money and want to drive a shiny new car then it's not really a lot more.
  • WellKnownSid
    WellKnownSid Posts: 1,957 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Penguin_ 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 
    Is that net or gross?  Can you share the full breakdown (to be fair they should give you this so you don't have to ask a forum)

    Example:
    Ford Explorer 125kW
    P11D value £39,820
    £674.24 Gross Salary deduction including ill health cover, tyres, servicing, maintenance, breakdown, accident management and insurance
    -£303.41 Income tax saving at marginal rate of 45%
    -£13.48 NI saving at marginal rate of 2%
    £59.73 Company car tax payable

    £417.08 per month

    As others have said - read and understand when you are liable e.g. if you resign.  On our scheme they can never charge you more than one month's salary but that's still a hell of a lot of money... like 15-16 months worth of payments!
    was other than the BIK tax will there be any other tax implications that will sting me ? 

    Yes - your company should update HMRC and you should be taxed accordingly.  However I've had colleagues in the past where this hasn't happened and suddenly HMRC want three years' worth of company car tax...
  • jimjames
    jimjames Posts: 18,739 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    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 don't believe this is true for most although it may be for the NHS. For most private sector DC schemes the salary sacrifice pension payments are based on the base salary not the salary after paying for the car so pension will not be affected.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • GrumpyDil
    GrumpyDil Posts: 2,080 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper Combo Breaker
    jimjames 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 don't believe this is true for most although it may be for the NHS. For most private sector DC schemes the salary sacrifice pension payments are based on the base salary not the salary after paying for the car so pension will not be affected.
    Was reading through to see if anyone had covered this. 

    OP you should check but this is exactly what happens on salary sacrifice pension and car schemes where I work.  Pension contributions are based on my gross salary before any salary sacrifice is accounted for.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 351.4K Banking & Borrowing
  • 253.2K Reduce Debt & Boost Income
  • 453.8K Spending & Discounts
  • 244.3K Work, Benefits & Business
  • 599.6K Mortgages, Homes & Bills
  • 177.1K Life & Family
  • 257.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.2K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.