maybe an estate or hatchback - salary sacrifice car scheme

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Thu 17 Feb 2011 23:14
maybe an estate or hatchback - salary sacrifice car scheme - P E

Good evening,

My employer has introduced a salary sacrifice for cars scheme. I have looked online at the employers website and obtained quotes for cars and have searched for alternative online calculators to check the numbers. In the end I made my own spreadsheet to crunch the numbers ad am so intrigued now as to be consulting an accountant to take a professionals advice to see if this scheme would be worthwhile for me.

Basically I reckon I can run a vw golf twist for £216 per month over 3 years inclusive of tax, maintenance, insurance, etc. which I think is a good deal.

I estimate it would cost £302 per month gross but would be saving ~£90 per month in tax and NI contributions. My employer even allows me to benfit from reduced pension contributions without those reduced contributions affecting my pension.

I quickly searched the HJ website for reference and found an older thread related to people on similar schemes in the NHS.

Any backroomers comments and experience would be appreciated.

P

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Fri 18 Feb 2011 08:58
maybe an estate or hatchback - salary sacrifice car scheme - craig-pd130
Does that mean you pay tax on the car as a benefit-in-kind?

If so, it's worth looking very closely at emissions and purchase costs to minimise your tax burden -- some cars will fall into a lower tax band.

In any case, around £2500 per year all inclusive is pretty good.

My firm offers either a company car or a car allowance (in both cases, you simply reclaim for the fuel cost of company travel).

For me it made financial sense to take the car, as I reckoned I could get a good, tax-efficient family barge with all costs paid apart from private fuel.

Some people may say they'd rather have the money, but of course you pay tax and NI on that money too so it's swings & roundabouts.

Edited by craig-pd130 on 18/02/2011 at 08:59

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Fri 18 Feb 2011 15:13
maybe an estate or hatchback - salary sacrifice car scheme - Falkirk Bairn

Who owns the lease?

In some schemes early termination results in a bil for the driverl - premium of say £15 /mth is your get out of jail card - just in case you leave, made redundant, fall out with company etc etc

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Fri 18 Feb 2011 15:23
maybe an estate or hatchback - salary sacrifice car scheme - daveyjp

"My employer even allows me to benfit from reduced pension contributions without those reduced contributions affecting my pension."

Get this in writing.

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Sun 20 Feb 2011 20:09
maybe an estate or hatchback - salary sacrifice car scheme - P E

Thank you for the replies. All good points raised.

On Thursday evening when I first posted I was on a mission to minimise my tax bill so this scheme seems very appealing in that respect.

I hadn't considered who owns the lease so that is a question I will be asking the leasing company.

daveyjp - Really good point. I will be asking the leasing company and my employer to clarify that point and to get it in writing. This is important as I pay 11% of my salary into a final salary scheme. I realise I am both very fortunate and at the same time vulnerable to changes to my pension scheme over the period of the lease.

If anyones interested I'll post back on the details of a colleague who is getting a Nissan Juke/Duke? on this scheme.

Thanks again

P

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Sun 20 Feb 2011 20:16
maybe an estate or hatchback - salary sacrifice car scheme - P E

Hi craig

Yep I pay the benifit in kind on the vehicle.

The vehicles available are limited to 149g CO2/km or less.

P

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