Reply To: I’ve never had a company car, can someone explain the BIK rate?

#167557
Avatar photoAbercol
Participant

    Salary sacrifice is basically paying for a car up front  before tax & NI – so it lowers your overall taxable income. You are still liable for BiK, but a BEV will be cheap as you have stated above. This cost is offset to all or some degree by the reduced tax & NI payments you will make on your salary – clearly a high rate taxpayer will save more from the scheme at 40% (or 45% for those really high rollers).

    The only other up front issue is if the scheme includes all the on-road costs or not, many do, but again, if not, with a BEV these are not exactly high, servicing etc is cheaper and there is no road tax.

    Mortgages and loans would also be based on a lower salary as the sacrifice scheme is included – but then, any car loans you take up would also reduce your overall lending capacity, so no big change there either, unless you had a fully paid up car prior to the scheme.

    The final thing to check is how the scheme may affect your company pension and /or sick pay, that kind of depends on your workplace.

    In life, it's not who you know that's important, it's how your wife found out.