Salary Sacrifice for Cars Scheme
Discussion
Deva Link said:
Zigster said:
Still not sure why you think HMRC wouldn't like it.
Why would HMRC be keen on a scheme which reduces employees tax and NI payments?Bikes benefit from being seen as green, childcare vouchers from being family friendly etc. But there's no such halo effect with cars.
There is no 'halo effect' and hmrc has no 'morals'. All they do is enforce the law! As such the only things they "wont be happy with" are things they suspect are illegal, NOT jst those things reducing their take!
mrmr96 said:
As such the only things they "wont be happy with" are things they suspect are
illegal, NOT jst those things reducing their take!
Yes, they see salary sacrifice as tax avoidance. Not officially, obviously. But it's pretty hard to argue they're not as the whole point of them is for the employee to mitigate their tax bill.illegal, NOT jst those things reducing their take!
Laws are never black and white and there's always people trying to work around tax law, and the Revenue, as has been seem from various court cases, will spare no expense to try and stop them. Their recent VAT win on salary sacrifice is seen as significant.
Our company car scheme works the same way - I can take my company car allowance as cash or I can hire a car using some or all of it.
For me, it would work out obscenely expensive to take a company car, but I know some people for whom it's cheaper - usually those who commute long distances, but I suppose high insurance costs would be another reason. Make sure you know how the scheme works if you lose or leave your job.
For me, it would work out obscenely expensive to take a company car, but I know some people for whom it's cheaper - usually those who commute long distances, but I suppose high insurance costs would be another reason. Make sure you know how the scheme works if you lose or leave your job.
TwigtheWonderkid said:
There is no BIK on a properly set up salary sacrifice scheme. The car is not owned by the employer, but the employee.
If the scheme isn't set up in accordance with the rules, there can be BIK on the cash saving over funding your own car of a similar make, but most schemes are set up correctly.
You're thinking of ECO schemes - employee car ownership. HMRC hates them too, as there's no BIK due to the employee technically owning the car but the employee has very little, often none, risk of ownership as all the costs, including insurance, repairs etc, are dealt with by the scheme and leaving the company is usually dealt with by a covering insurance policy.If the scheme isn't set up in accordance with the rules, there can be BIK on the cash saving over funding your own car of a similar make, but most schemes are set up correctly.
ECO schemes are aimed at people who would have had company cars and they're paid for out of a combination of taxed car allowance, saving in BIK due to not having a company car, and business mileage allowance.
Salary sacrifice schemes are generally aimed at people who wouldn't have had company cars - many NHS staff, for example, have access to them.
PurpleMoonlight said:
So how does this work then?
You give up some of your gross pay and get a car in return?
Is the car then declared for BIK, if so what is the tax charge?
I give up an amount of £234 gross pay, a month there is a choice of cars mainly economical cars to make the environment better. The car is actually £364 so thats what gets paid to the company a month but i save £100 in tax and NI then i pay £30 back for BIK which means £234 a month leave my account monthly.You give up some of your gross pay and get a car in return?
Is the car then declared for BIK, if so what is the tax charge?
The only thing I would say is ask others who've taken part in the scheme what the lease company are like to deal with - presuming your employer uses a third party lease company.
We've actually stopped leasing, and started buying vans on finance instead because we found lease companies such a pain to deal with.
If your colleagues say it's no biggie then get in there if it's the car for you.
We've actually stopped leasing, and started buying vans on finance instead because we found lease companies such a pain to deal with.
If your colleagues say it's no biggie then get in there if it's the car for you.
Deva Link said:
mrmr96 said:
As such the only things they "wont be happy with" are things they suspect are
illegal, NOT jst those things reducing their take!
Yes, they see salary sacrifice as tax avoidance. Not officially, obviously. But it's pretty hard to argue they're not as the whole point of them is for the employee to mitigate their tax bill.illegal, NOT jst those things reducing their take!
Avoidance is legally structuring your affairs so you're declaring everything and being fully above board and compliant with the laws, but your tax bill is lower as a result.
Salary sacrifice for a car is perfectly legal, and is therefore "tax avoidance" and HMRC won't care about you doing it, so long as the scheme is legal.
I did this for a period through my work for a BMW 118Sport - we were limited to cars <140g carbon.
At the time it was a no brainer as we were paying £250 in a loan and insurance on the 3yr old astra we had, and all in the BMW worked out as £290 fully maintained for up to 4 drivers. As already said the payment goes off your gross wage, so the gross outgoing for the beemer was £400 odd, but offset by what you save in tax/NI plus the small increase in tax cam in at £290 net.
Only advice I can give is check how much it costs to return the car early (cost us £800 a year early) due to a change in circumstances. Also although I returned my car June last year, HMRC have only just sorted my tax code and I'm still waiting on a rebate. Somethimg to do with the car being treated as a benefit so the tax free proportion of the your wage reduces so they had to wait for a P11D form from my employer which took ages...
At the time it was a no brainer as we were paying £250 in a loan and insurance on the 3yr old astra we had, and all in the BMW worked out as £290 fully maintained for up to 4 drivers. As already said the payment goes off your gross wage, so the gross outgoing for the beemer was £400 odd, but offset by what you save in tax/NI plus the small increase in tax cam in at £290 net.
Only advice I can give is check how much it costs to return the car early (cost us £800 a year early) due to a change in circumstances. Also although I returned my car June last year, HMRC have only just sorted my tax code and I'm still waiting on a rebate. Somethimg to do with the car being treated as a benefit so the tax free proportion of the your wage reduces so they had to wait for a P11D form from my employer which took ages...
Quinnaay said:
Ino many of you dislike leasing/finance schemes but whats your views on the the Leases through work as these save me around £100 on pension, tax and NI.
When you say it saves you money on your pension, you actually mean it reduces your pension contributions (and therefore your employer's contributions too). Your pension is (probably) a percentage of your pensionable salary, and pensionable salary is the gross income after salary sacrifice schemes.I think
salmon said:
I did this for a period through my work for a BMW 118Sport - we were limited to cars <140g carbon.
At the time it was a no brainer as we were paying £250 in a loan and insurance on the 3yr old astra we had, and all in the BMW worked out as £290 fully maintained for up to 4 drivers. As already said the payment goes off your gross wage, so the gross outgoing for the beemer was £400 odd, but offset by what you save in tax/NI plus the small increase in tax cam in at £290 net.
Only advice I can give is check how much it costs to return the car early (cost us £800 a year early) due to a change in circumstances. Also although I returned my car June last year, HMRC have only just sorted my tax code and I'm still waiting on a rebate. Somethimg to do with the car being treated as a benefit so the tax free proportion of the your wage reduces so they had to wait for a P11D form from my employer which took ages...
Thanks for the advice, as far as im aware i would have to pay something to hand it in early but i dont think ill feel the need to do so. At the time it was a no brainer as we were paying £250 in a loan and insurance on the 3yr old astra we had, and all in the BMW worked out as £290 fully maintained for up to 4 drivers. As already said the payment goes off your gross wage, so the gross outgoing for the beemer was £400 odd, but offset by what you save in tax/NI plus the small increase in tax cam in at £290 net.
Only advice I can give is check how much it costs to return the car early (cost us £800 a year early) due to a change in circumstances. Also although I returned my car June last year, HMRC have only just sorted my tax code and I'm still waiting on a rebate. Somethimg to do with the car being treated as a benefit so the tax free proportion of the your wage reduces so they had to wait for a P11D form from my employer which took ages...
mrmr96 said:
Salary sacrifice for a car is perfectly legal, and is therefore "tax avoidance" and HMRC won't care about you doing it, so long as the scheme is legal.
I think you're missing the point. It's fine at an individual level, and anyone offered such a deal should grab it with both hands.But, trust me on this, the bigger picture is that there are people sitting in HMRC wailing and gnashing their teeth about salary sacrifice schemes in general, and the car one specifically. Whether that comes to anything, who knows?
You can see the issue:
Quinnaay said:
i save £100 in tax and NI then i pay £30 back for BIK
Deva Link said:
TwigtheWonderkid said:
There is no BIK on a properly set up salary sacrifice scheme. The car is not owned by the employer, but the employee.
If the scheme isn't set up in accordance with the rules, there can be BIK on the cash saving over funding your own car of a similar make, but most schemes are set up correctly.
You're thinking of ECO schemes - employee car ownership. If the scheme isn't set up in accordance with the rules, there can be BIK on the cash saving over funding your own car of a similar make, but most schemes are set up correctly.
Schuey M said:
em177 said:
Schuey M said:
I cant imagine much worse than a 1.4 oil burner on credit. At least get a car with some power ffs!
I'm sorry but every single post you put on this forum is completely retarded!
V8mate said:
Quinnaay said:
Ino many of you dislike leasing/finance schemes but whats your views on the the Leases through work as these save me around £100 on pension, tax and NI.
When you say it saves you money on your pension, you actually mean it reduces your pension contributions (and therefore your employer's contributions too).Most youngsters wouldn't pay pension contributions at all if they didn't have to.
Johnnytheboy said:
The only thing I would say is ask others who've taken part in the scheme what the lease company are like to deal with - presuming your employer uses a third party lease company.
We've actually stopped leasing, and started buying vans on finance instead because we found lease companies such a pain to deal with.
If your colleagues say it's no biggie then get in there if it's the car for you.
I imagine with vans they're probably worked quite hard so you'll get a fair number of issues.We've actually stopped leasing, and started buying vans on finance instead because we found lease companies such a pain to deal with.
If your colleagues say it's no biggie then get in there if it's the car for you.
Running a car for 3yrs shouldn't throw up the same level of hassle. The only thing that used to bother me was getting tyres changed was always a palava - they usually won't change until 2mm, and they'll often fit a mid-market brand, whereas ideally I'd want like for like which practically never happened, so the car would feel different, and not always in a good way!
You do have to get used to the idea that the vehicle isn't yours, and not be so precious about it. This has the downside (or possibly upside, depending on your point of view) that you tend not to be so bothered about looking after it generally.
Quinnaay said:
So, I have the opportunity to take out one of these Leasing schemes through work which would save my self quite alot of money as im only 20 years old. The scheme includes insurance, full maintenance, tyres, european cover. I've been looking at the brand new Fiesta 1.4TDCI colour of my choice for £234 a month for 3 years then the option to either buy it at the end or do the scheme with a different car again. Ino many of you dislike leasing/finance schemes but whats your views on the the Leases through work as these save me around £100 on pension, tax and NI.
Sorry its long winded but i think whilst insurance is a hell of a lot of money on rubbish cars this seems something that must be taken advantage of.
I would go for the bigger 1.6 if your using it as daily long commute. I doubt there would be much difference in price.Sorry its long winded but i think whilst insurance is a hell of a lot of money on rubbish cars this seems something that must be taken advantage of.
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