Salary Sacrifice - Company car

[elliot330]

Morning... are there any resident accountants in the office today or anyone with experience on salary sacrifice.

I have a limited company and want to buy an EV, Ipace, Tesla Etron sort of thing. I read somewhere that being ULEV you can salary sacrifice it. But thats all I can find.

Any ideas please?

Thanks..

[Stevie_P]

Hi

Being an NHS employee, this is something that has recently been offered to us.
We have to pay the lease costs personally but it's classed as a company car and we can do it via salary sacrifice.

Hope this helps.
Steve

[elliot330]

Thanks Steve.

If I understand correctly you pay the lease before tax & NI is taken and the value is considered Salary Sacrifice because its a low emissions car?

Cheers
Elliot

[oop north]

I have an EV through my ltd co. Not sure if it counts as salary sacrifice but I have the same salary as before I got the EV. I think it may be Sal sac as pension is.

Anyway if you lease and are vat registered half the vat on the lease can be recovered, and the net cost charged in p and l getting corporation tax relief. Any service tyres and repair costs you can reclaim vat on and have as expense in p and l. Insurance p and l deduction too. Oh, plus charging costs

This year the bik is 16% x list price - you pay income tax on that and there is employers nic on that too at 13.8% (on which you get corporation tax relief)

In 2020-21 the bik is 0%, year after 1%, year after that 2%. After that unknown

[Stevie_P]

elliot330 said:

Thanks Steve.

If I understand correctly you pay the lease before tax & NI is taken and the value is considered Salary Sacrifice because its a low emissions car?

Cheers
Elliot

Correct!
On the calculator they also show you how much you save on pension contributions.
You need to realise the full implications of salary sacrifice but I guess things are slightly different for you.

One of the cars on special offer with NHS fleet at the moment is the BMW i3 which I think will drop my take home by less than £250 which doesn't seem bad.
Even the Tesla Model 3 seems pretty good but you still have to pay £££ in BIK at the moment. Next tax year with BIK being 0% I may jump at this if I'm still working here...

Steve

[oop north]

Stevie_P said:

Correct!
On the calculator they also show you how much you save on pension contributions.
You need to realise the full implications of salary sacrifice but I guess things are slightly different for you.

One of the cars on special offer with NHS fleet at the moment is the BMW i3 which I think will drop my take home by less than £250 which doesn't seem bad.
Even the Tesla Model 3 seems pretty good but you still have to pay £££ in BIK at the moment. Next tax year with BIK being 0% I may jump at this if I'm still working here...

Steve

Not sure how much salary you are giving up but each year you do this you are knocking £100 pa off your pension from normal retirement age (assuming say 5400 annual gross cost / sacrifice with 2015 nhs pension scheme fraction of 1/54)

This doesn’t apply to op - if you do reduce your salary assuming it’s above the primary threshold then you will save employer and employee nic (25.8%) and tax. But you shouldn’t be taking a salary above primary threshold in the first place...