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Salary Sacrifice

Welcome to a new benefit which enables your staff to acquire a brand-new company car through our Salary Sacrifice Scheme provided by Lakeland Fleet Management.

Salary Sacrifice

What is Salary Sacrifice?

The scheme is a true Salary Sacrifice scheme which enables your staff to acquire a brand new company car, fully serviced, maintained and insured for either 2 or 3 years – all they have to do is add fuel or charge the vehicle.

This scheme allows your staff to make substantial savings over traditional personal finance methods due to Income Tax and National Insurance (NI) savings, plus Fleet discounts on vehicles and maintenance costs, negotiated by Leaseyournewcar.co.uk, are included in the package.

If your staff are given a cash allowance, all of the allowance can go towards payment of the vehicle using this scheme - unlike personal finance where the payment is subject to tax and NI deductions.

The car is still classed as a company car on which the employee has to pay company car tax, however they can choose from the lowest CO2 emission vehicles, including electric and hybrid powertrains which will minimise the company car tax payable, although some petrol and diesel vehicles still offer good savings too.

Electric and hybrid cars are now compatible with many employees’ driving patterns and huge savings are available on these because there will be just 1% company car tax payable on electric vehicles, with very low tax on hybrids from April 2021.

There are also big savings to be made in Employer NI contributions on this type of vehicle. That means there is no cheaper way of acquiring a brand new electric or hybrid car than via this scheme!

What Does it Offer?

  • A brand-new car every 2 or 3 years
  • Includes all Servicing & Repairs
  • Income tax and NI savings
  • Unlimited Tyre Replacement/Repair (even due to accidental damage)
  • Access to Leaseyournewcar.co.uk buying terms for car and servicing
  • Comprehensive Breakdown Cover
  • No deposit required – fixed budget monthly rental
  • Fully managed by Leaseyournewcar.co.uk Assist – One call and you are looked after!
  • No credit checks to undergo
  • Fully comprehensive ‘Business’ Insurance fixed for 3 years (regardless of claims)
  • Includes road tax (if applicable) for the whole contract
  • Additional 2 named drivers allowed (min 18 years)

How Does it Work?

You save money by exchanging part of your annual salary for the car and the added services - before it is taxed - thereby reducing the amount of tax and national insurance you pay on the remainder of your salary.

As the vehicle is classed as a 'Company Car’ (Benefit in Kind) you must pay company car tax at the prevailing rate for the vehicle (via an amended tax code). However, this is often much less than the savings you will make in income tax and NI – especially if you choose a low or zero CO2 emission car.

At the end of the contract, you can either hand the keys back & order a new car, or you will also have the option to purchase the car.

An Example

Here is an example for an electric TESLA MODEL 3 SALOON Standard Plus 4dr Auto.

TESLA MODEL 3 SALOON

Standard Plus 4dr Auto

TESLA MODEL 3 SALOON Standard Plus 4dr Auto

Total Estimated Net Salary Reduction due to salary sacrifice

£333.33

Contract Annual Mileage 8000
Duration 3 Years
Colour Solid - Moonstone Grey

 

Salary Sacrifice Details

Your vehicle quotes are shown below together with the estimated net cost to you after your salary sacrifice. The cost of salary sacrifice depends upon your own personal tax position and you should make your own investigations. All tax and National Insurance calculations are indicative and based upon an average of the company car tax due over the contract period. Tax rates may be subject to change.

 

All inclusive Gross Monthly salary deduction £511.57
Income tax saving based on marginal rate of 20.0% -£102.31
NI saving based on marginal rate of 12.0% -£61.39
Company car tax payable £8.57

In the above example, the Gross Monthly Deduction from your salary is £511.57 per month (including everything except charging/fuel). However, you will save £102.31 in income tax (based on 20%) and £61.39 in National Insurance (based on 12%) if you are a 20% taxpayer. You should check the rates that apply to you.

Although you have to add back in the Company Car tax of £8.57 per month (collected via a change in your tax code), you will make an overall saving of £155.13 per month.

This means the amount you will see as a reduction in your net pay is only £356.44, instead of the original £511.57 cost.

Highlights

The vehicle is fully insured, serviced and maintained throughout - with no upfront payment required!

Plus, there is just 1% Company Car Tax (BIK) on Electric Vehicles starting in the April 2021 tax year, then only 2% in 2022 (2023 TBC), making this scheme the most affordable way to acquire a brand new fully electric or hybrid car.

Requirements

To be eligible, employees must have completed at least 6 months of employment with you to qualify. They must also consider whether they are going to remain in your employment during the 2 or 3 years contract that they choose – as with any retail/personal finance arrangement, there could be penalties should they voluntarily leave employment before the end of the contract period.

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