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Sam
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, I am about to get a company lease car and I am stuck

Resolved Question:

Hi,
I am about to get a company lease car and I am stuck on how to pay for it. It is 154 on the emissions so quite big. I can do a salary sacrifice but I am wondering if my contributions show on my P11d thus decreasing the amount of tax I pay, or should I just pay the full amount and have less of a bik?
Thanks,
Will
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.

Hi

Thanks for your question

Can you advsie whether the employer will pay the lease costs or you will directly?

As this is not clear, and how would you cover this through a salary sacrifice?

Thanks

Sam

Customer: replied 1 year ago.
Hi Sam,
I can either pay the full amount, circa £900 pcm (this leaves me with a small bik) or I can pay it as a salary sacrifice, once the tax saving is taken off I will be left making a contribution of circa £500 pcm, does this contribution then get taken into account when filling in my p11d thus decreasing the bik?
Thanks
Will
Expert:  Sam replied 1 year ago.

Hi Will

Thanks for your response

If you pay the lease cost directly then there is no benefit in kind - as this arrangemetn will be between you and the lease company - so can you clarify you will pay for the leae directly OR will the employer - who you then plan to make some form of reimbursement?

You cannot pay this as a salary sacrifice (in the true sense) I assume you are making reference to the scheme that the dealerships call their lower deals for employees -

So any arrangement you choose to take up - the answer you seek is dependant on whether you are engaging the lease of the vehicle vias your employer OR directly with the car dealership (and not part of any employer scheme)

Please clarify

Thanks

Sam

Customer: replied 1 year ago.

Hi Sam,

either way it will be done through my employer as to save on the VAT etc, plus they get a discount from the leasing company.

So I either do 2 things,

what ever the value of the monthly invoice is my employer will pay that and then I will pay them back. When I have looked into it there is still a small element of bik as the car is £61k and 154 co2 emissions. Is this not the case if I pay the whole value?

Or we do have a salary sacrifice scheme that I can pay the £900 a month but will only really pay £500 once the tax is calculated. But I'm unsure if this £500 goes towards the payments I make and reduce the amount of bik I will be charged?

Thanks,

Will

Expert:  Sam replied 1 year ago.

Hi Will

Thanks for this - then it will be through your employer

Then the charge for car and fuel is treated the same as a company car - so clearly you would probably want to avoid the higher CO2 emmision situation - as the car charge would NOT be based on the invoice amount but the car benefit calcualtion on the car its CO2 emmisions, age etc etc

So you would have a charge of approx £17000 just for the car itself (this is an estimate) less any contribution you make (which would have to be at least £1416 to reduce this to NIL)

But through the salary sacrifice position then the £500 you contribute (as long as your contribution is paid TO the employer - it can then be deducted from the car benefit charge. (so from the BIK) - plus these schmes usualy use lower CO2 emmision vehicles, and it would seem you already have the figures to hand

Let me know if you require any additional information, but it would be appreciated if you could take the time to rate (or click accept) to the answers provided, as this ensures I am credited for my time.

Thanks
Sam

Sam, Accountant
Category: Tax
Satisfied Customers: 13772
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Customer: replied 1 year ago.

Thanks Sam

That's great, Salary sacrifice it is then.

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