Company cars via Salary sacrifice

[senwar]

Does anyone have a company car via the salary sacrifice method?

I currently have one via traditional BIK route but may be moving onto a salary sacrifice one. I can't get my head around it to be honest and know some changes came into effect in April last year.

My current vehicle is a Golf GTE and I pay just over £100 per month BIK. This will go up to just over £152 in April. I will be changing at some point this year.

Can someone explain to me how the salary sacrifice scheme would work? Am I right in thinking you effectively pay a lease cost via sacrifice? But if the BIK calculated would be more than the lease cost, you would pay BIK instead?

Any help with figures would be appreciated. I'm more than likely going to go down the get my own car route again but want to understand this before I make a decision?

[Chris_in_the_UK]

I used to be on a scheme where the lease was subsidised - the firm paid 5/7ths of the lease cost and I paid 2/7ths (the weekend portion). Whilst not quite the same as you have posted the pitfall may be similar.

On occasions we got offered really good lease deals Evoque as an example) when the vehicles were first launched. Cost to me was around £200 everything found. HMRC however took the view that the BIK for a top fo the range Evoque was whatever it was at the time and my BIK was the difference between what the car was worth and what I paid - which was substantially below the typical market rate for a lease.

[Gav]

This link explains the changes particularly well

https://home.kpmg.com/uk/en/home/ins...tax-rules.html

As an aside HMRC use the list price of the vehicle not the cost to the employer as it would give large employers who can negotiate advantage costs from leasing companies or car dealers an unfair advantage over smaller employers

[Zolawinston]

I have my i3 through a sal sac scheme and because it's a ULEV I still save on tax and NI which far out weighs the BIK.

If the vehicle you want is over 75gms Co2 then the you're not going to save the tax anymore and you'll be hit with the BIK so it's hard to see how this would be beneficial on a car with a list price over £20K.

[senwar]

Thanks all. I'd read about the ULEV saving and to be honest if I went down the car route this way then I'd look at another PHEV such as the Mercedes 350e or BMW 530e if they were on the list. I have been considering a 4x4 due to where I live however but feel this won't be viable.

Am I correct therefore in thinking that for example, if my salary sacrifice was £400 but the BIK cost calculated was £500, I'd be charged the higher of the two? But if the BIK was £300 then I'd be charged £400 which is the salary I'm sacrificing for the benefit? But there's no other additional cost, its one or the other?

[adrianw]

we gave up with company cars and just claim mileage, if you want to sit in something nice you just cant win whatever way you try to finance it.

[senwar]

we gave up with company cars and just claim mileage, if you want to sit in something nice you just cant win whatever way you try to finance it.

This current car is my first cc. I have previously had an allowance. Whilst I don't like the car I have, I am certainly now used to the lack of faffing come insurance time and the ease of sorting issues. I just need to find the right balance.

Difference with this one is if I don't go down the sacrifice route, I'd end up buying my own and there's no additional car allowance to be added. So a cc in this instance may make more sense if you get me.

Two weeks ago I was totally sold on going back to owning my own though

[Mj2k]

I’ve been equally confused over this, particularly as a friend had sacrificed salary to get a Tesla.

For the life of me I cannot make the maths work out, unless his earnings etc are significantly different (higher) to the perceived lifestyle portrayed, and therefore the Tesla is so out of character. Cunning story to his wife maybe?

I’ve always opted out where I could; £8k allowance soon pays for a car which residual value is the the deposit for the next one. Greater choice if such a thing is important to you.


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[senwar]

I’ve been equally confused over this, particularly as a friend had sacrificed salary to get a Tesla.

For the life of me I cannot make the maths work out, unless his earnings etc are significantly different (higher) to the perceived lifestyle portrayed, and therefore the Tesla is so out of character. Cunning story to his wife maybe?

I’ve always opted out where I could; £8k allowance soon pays for a car which residual value is the the deposit for the next one. Greater choice if such a thing is important to you.


Sent from my iPhone using TZ-UK mobile app

Ooh now that I'd be happy with!!!!

Sadly, this is the scheme or no car allowance. So seems to be more favourable to take it but I'm not so sure. Currently I'm on a standard cc scheme OR £6400 car allowance. As I say though, this doesn't have the alternate option

[BCD]

we gave up with company cars and just claim mileage, if you want to sit in something nice you just cant win whatever way you try to finance it.

I'm thinking the same, doesn't really stack up otherwise, the only ones I'd run through my company are pickup trucks and vans.

[neillp]

I'm thinking the same, doesn't really stack up otherwise, the only ones I'd run through my company are pickup trucks and vans.

This really depends on your private mileage, I do a 90 mole return journey just to get to my office so the depreciation makes owning a car not feasible

Interested in seeing how the salary sacrifice would stack up against a standard cc though,especially on ULEV

[senwar]

So I've been given access to the car system to run some test quotes. And to be honest, they're pretty eye watering. Am I misunderstanding or missing something here?

I've run a quote on an Audi A4 allroad. P11d/OTR is £42.050. CO2 134kgm, 2.0 diesel. The quoted salary sacrifice is £762.24 this is obviously taken pre tax. The calcs come out as (using an arval spreadsheet calc):





So this is saying the NET cost to me would be £862.60 for the next tax year. £10,351.20 per annum. This just seems an absolute no brainer no??? Surely they can't be this high?

Even a hybrid Toyota Yaris, base spec comes in at a salary sacrifice of £356.29 with a NET cost of £294.25 per month. This just seems an extremely high personal cost.

As I say, am I missing something or is this how these schemes work?

[Estoril-5]

That doesn't sound right to me but I maybe wrong!

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[neillp]

I could be totally wrong here but you say you are moving from a traditional Company car where the company pay for it and you get taxed on the BIK?

If you were moving to a salary sacrifice system surely the company are giving you a car allowance as they are effectively no longer paying for the car?

To judge this system correctly you would need to take into account the benefit of no longer paying BIK on the CC plus the new car allowance value, then take this away from cost the salary salary sacrifice and see where this leave you (net).

FYI - I have no experience of this but I know our company are currently looking at all option after years of being very traditional in it's approach to company cars (you can have whatever you want, as long it is a black BMW/Audi 2.0tdi 4 door).

Cheers

Neill

[senwar]

I could be totally wrong here but you say you are moving from a traditional Company car where the company pay for it and you get taxed on the BIK?

If you were moving to a salary sacrifice system surely the company are giving you a car allowance as they are effectively no longer paying for the car?

To judge this system correctly you would need to take into account the benefit of no longer paying BIK on the CC plus the new car allowance value, then take this away from cost the salary salary sacrifice and see where this leave you (net).

FYI - I have no experience of this but I know our company are currently looking at all option after years of being very traditional in it's approach to company cars (you can have whatever you want, as long it is a black BMW/Audi 2.0tdi 4 door).

Cheers

Neill

It's different companies (so a new job offer). New company gives a flat base salary and from that you 'can' opt for a salary sacrifice car. To compare like for like to a certain extent I've added on my current company car allowance (which is what I'll be going back to in November if I don't take the new one anyway). However, the sacrifice/net cost to me using the calculator provided just seems way too expensive.

I've even just done a quote on an Audi A3 e-tron (equiv to my current GTE). OTR £36,550. Monthly sacrifice is working out at £750.50 with a net cost of £589.21 with it being a ULEV. This just seems a very high cost for such a vehicle although I appreciate its inclusive of mileage, insurance, tax etc). Taking my own figures into account of £152 per month BIK for my GTE, then adding the allowance back on (about £350 after tax), its nearly £100 a month more.

[neillp]

It's different companies (so a new job offer). New company gives a flat base salary and from that you 'can' opt for a salary sacrifice car. To compare like for like to a certain extent I've added on my current company car allowance (which is what I'll be going back to in November if I don't take the new one anyway). However, the sacrifice/net cost to me using the calculator provided just seems way too expensive.

I've even just done a quote on an Audi A3 e-tron (equiv to my current GTE). OTR £36,550. Monthly sacrifice is working out at £750.50 with a net cost of £589.21 with it being a ULEV. This just seems a very high cost for such a vehicle although I appreciate its inclusive of mileage, insurance, tax etc). Taking my own figures into account of £152 per month BIK for my GTE, then adding the allowance back on (about £350 after tax), its nearly £100 a month more.

OK that makes sense, I think part of the issue is you have one of the most tax efficent car out there already so any change above a ULEV is going to hurt no matter how it is funded.