1. What is Salary Sacrifice Car Scheme?

A salary sacrifice car scheme is an employee benefit where you give up part of your salary in exchange for a company car. This reduces your taxable income, potentially lowering your income tax and National Insurance contributions.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• Gross Pay — Your annual salary before deductions
• Income Tax — Estimated annual income tax
• National Insurance — Estimated annual NI contributions
• Car Scheme Sacrifice — Annual amount sacrificed for the car scheme

3. Benefits of Salary Sacrifice

Details: Salary sacrifice schemes can reduce your taxable income, potentially putting you in a lower tax bracket. They may also lower your National Insurance contributions and provide access to better vehicles than you might otherwise afford.

4. Using the Calculator

Tips: Enter your annual gross salary, estimated income tax, National Insurance contributions, and the amount you'll sacrifice for the car scheme. All values must be in GBP.

5. Frequently Asked Questions (FAQ)

Q1: Is salary sacrifice right for me?
A: It depends on your circumstances. While it can save tax, it may affect pension contributions and mortgage applications.

Q2: How does this affect my pension?
A: Since your salary is reduced, employer pension contributions based on salary may decrease.

Q3: Can I opt out of the scheme?
A: Typically yes, but check your employer's policy as there may be notice periods or penalties.

Q4: Are there any hidden costs?
A: Watch for early termination fees, insurance excesses, and potential benefit-in-kind tax.

Q5: How accurate is this calculator?
A: It provides estimates. For precise figures, consult a financial advisor or your payroll department.