Salary Sacrifice FAQs

A salary sacrifice arrangement is an agreement to reduce an employee’s entitlement to cash pay, in return for a non-cash benefit. Salary Sacrifice enables an employee to use a portion of their gross salary before Income Tax and National Insurance (NI) is deducted to pay for a brand-new lease vehicle for a set period.

BIK is calculated based on the P11d value of the vehicle, its fuel type and CO2 emissions. For more information please refer to the HMRC BIK calculator https://www.gov.uk/tax-company-benefits/tax-on-company-cars

Company signs up and SalSac assists with scheme rollout Employee received a quotation for their chosen vehicle Funding is secured, paperwork completed & vehicle is ordered Home charger, if chosen, is installed Vehicle Insurance set up, if included Vehicle delivery is arranged for a convenient date Addendum to employment completed prior to vehicle delivery Salary deductions begin after delivery of the vehicle

One set monthly salary deduction can include a brand-new vehicle, fully comprehensive motor insurance, vehicle servicing, maintenance and repair, breakdown cover, road fund licence and a home electric car charger if required. Tax & NI savings - as payment is taken from the employee’s gross salary via payroll, they benefit from Tax and National Insurance savings (typically 30-50% savings for an electric vehicle) making the rental substantially less than a Personal Contract Hire (PCH) agreement. No deposit or employee credit check Low Benefit in Kind (BIK) payable for electric vehicles. Current BIK rates on an electric car are 2% in the 2022/23 tax year, and are being held at this rate for a further two years.