Calculating Salary Sacrifice - Car Leasing
Here SalSac aims to explain how salary sacrifice is calculated, what the key drivers are and highlight the importance of accurate calculations enabling informed decisions. Salary Sacrifice like all car leasing is a long-term commitment & employees should always consider all options before entering into a car salary sacrifice arrangement.
Key Salary Sacrifice Concepts
Understanding Salary Sacrifice as well as Car Leasing Terms will help employees and employers quickly grasp the fundamentals surrounding Salary Sacrifice.
Funder - The institution/bank that owns the car and leases/rents it to the employee and employer.
Leasing Broker - The broker's primary role is to assist clients in finding the most suitable lease agreement for their needs and negotiating favourable terms with the funder.
Supplying Dealer - The car dealership that prepares and delivers your leased vehicle.
BIK or Benefit in Kind - This refers to the Tax Payable for having a work benefit such as a leased car.
Early Termination - Sometimes referenced as "ET" Early Termination refers to the process if a car has to be cancelled mid-contract.
Initial Rental - The first payment made for the lease, this is not a deposit.
What do I need to get a salary sacrifice quote?
In order to lease a car through a salary sacrifice you will need the following information. If you are unsure please contact us & we can help build your bespoke quotation.
Your Gross Salary
Taxable Country (UK and Wales or Scotland)
Monthly Price of the Car Lease
Value of the Vehicle (P11D)
Electric Range (if any)
Accurate Salary Sacrifice Calculations
When calculating salary sacrifice figures it's important to be accurate and clear as what may seem a small technical detail can make a big difference to the overall tax calculations.
For example, if the car in question is a plug-in hybrid and has 69 miles electric range the Benefit in Kind is currently (30/05/2023) 8%. However, if the vehicle and derivative has a 70-mile range then the BIK is reduced to 5%.
This and many other factors such as emissions and tax bands can drastically alter employee savings. To get an accurate salary sacrifice quote please contact our team on 0330 174 6768 or email us at email@example.com.
Do you have a question?
Please message us via our live chat in the bottom right-hand corner or call our team on 0330 174 6768.