1. What is Car Leasing Salary Sacrifice?

Car leasing salary sacrifice is an arrangement where employees give up part of their salary in exchange for a company car. This can reduce income tax and National Insurance contributions, but benefits in kind (BIK) tax may apply.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• Gross Pay — Total annual salary before deductions
• Income Tax — Amount deducted for income tax
• National Insurance — Amount deducted for National Insurance
• Car Lease Sacrifice — Amount sacrificed for the car lease
• BIK Tax — Benefit in Kind tax on the company car

Explanation: The calculation shows your take-home pay after accounting for salary sacrifice and any associated taxes.

3. Importance of Net Pay Calculation

Details: Understanding your net pay with salary sacrifice helps you evaluate whether a company car scheme is financially beneficial for your circumstances.

4. Using the Calculator

Tips: Enter all values in GBP. For accurate results, use your actual tax and National Insurance figures from your payslip or tax calculation.

5. Frequently Asked Questions (FAQ)

Q1: Is salary sacrifice always beneficial?
A: Not always. While it reduces taxable income, you need to consider the BIK tax and whether the car benefit outweighs the salary reduction.

Q2: How is BIK tax calculated?
A: BIK tax is based on the car's P11D value, CO2 emissions, and your income tax rate. Your employer should provide this figure.

Q3: Does salary sacrifice affect pension contributions?
A: Yes, since pension contributions are typically based on your reduced salary. Check with your pension provider.

Q4: Can I opt out of a salary sacrifice scheme?
A: This depends on your employer's policy. Some schemes allow opt-out during certain periods.

Q5: Are there minimum salary requirements?
A: Yes, your salary after sacrifice must not fall below the National Minimum Wage.