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Salary Sacrifice FAQs
Discover answers and explanations to the most frequently asked salary sacrifice questions when leasing a car. Select a category below to explore different topics.
What is a Car Salary Sacrifice?A salary sacrifice arrangement is an agreement to reduce an employee’s entitlement to cash pay, in return for a non-cash benefit. The SalSac scheme 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.
How is Benefit in Kind (BIK) calculated?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
What is the car salary sacrifice process?Company joins the scheme 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 Financial administration completed by SalSac Salary deductions begin after delivery of the vehicle
How does the car salary sacrifice scheme benefit employees?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.
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