Knowles Fleet - car benefit scheme

Salary sacrifice is when you agree to swap part of your monthly salary for a benefit provided by your employer, such as a car.

Payments are taken from your gross pay which means your tax, national insurance and pension contributions are calculated from a lower salary - and you benefit from the savings.

This arrangement is reflected in your contract of employment for the duration of the benefit agreement. At the end of this, your salary will return to its former amount.

All benefits provided by your employer are taxable.

The tax on a car is based on its carbon emissions and taxable list price.

Your employer will either collect the car benefit tax by changing your tax code or deducting it from your salary.

Sam works full time, earns £35,000 per annum and travels an average of 10,000 personal miles a year.

Their choice of car is an electric Vauxhall Frontera taken out on a 36 month contract.

Under salary sacrifice, the total cost Sam will pay each month is £232.20.

This is made up of:

Monthly sacrifice payments: £327.90

(includes tax, insurance, servicing and repairs, tyre replacement, breakdown cover, accident management, VAT)

Monthly payroll savings: £108.87

(split into Income Tax, national insurance and pension)

Net monthly cost: £219.04

Benefit in Kind (company car) tax: £13.17

Entering a salary sacrifice arrangement may impact your pension. So in all cases, we recommend you seek independent financial advice before taking out a car contract.

Lifetime and annual allowance

If you are a higher earner (typically over £100,000 per annum), you may have concerns regarding the lifetime and/or annual allowance limit. Unlike the pension rate, the income tax rate applies to the salary at each band.

Tax band (excluding personal allowances)

The scheme makes driving an EV more affordable.

• Lower Benefit in Kind tax
• Save on running costs, especially if you charge at home.
• Optional home charge point included
• Free expert advice and support

You can choose to either:

• Return your car
• Buy your car
• Choose a new car under a new agreement

Before joining the scheme, it is important to think about the following areas and to seek advice if required:

• Pension - salary sacrifice arrangements can affect your work, state or private pension. The impact depends on individual circumstances so you may with to seek specialist pension advice.
• Unpaid leave - if you are taking an extended period of unpaid leave, you should make sure you will still be able to fulfil the monthly car payments.
• Leaving - consider whether you might resign from your post during the period of the lease. If so, you may be liable for early termination costs.
• Working Tax Credits - seek specialist advice if you receive Working Tax Credits.
• Maternity pay - taking part in the scheme could reduce your occupational maternity pay as this will be calculated on a lower salary. If you fall pregnant during the lease term, please contact Knowles as soon as possible.

It couldn't be simpler:

• Visit https://knowlesfleet.com/carcc/ and request quotes for any cars you are interested in.

• Choose the right car for you and submit your quote.

• Once your employer approves your quote, your car is ordered.

You'll receive regular updates until your new car is delivered to your door!

Your expert scheme provider Knowles Fleet is on hand with full support.

t. 01206 255420

e.quotesteam@kafleet.com

https://knowlesfleet.com/carcc/