1. What is a Car Salary Sacrifice Scheme?

A car salary sacrifice scheme is an arrangement where employees give up part of their salary in exchange for a company car. This reduces taxable income, potentially lowering 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
• Salary Sacrifice Amount — Annual cost of the car scheme

3. Benefits of Salary Sacrifice

Details: Salary sacrifice can reduce your taxable income, potentially placing you in a lower tax bracket. It 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 gross annual salary, estimated income tax, National Insurance contributions, and the annual cost of the car scheme. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is salary sacrifice right for everyone?
A: No, it depends on individual circumstances. Those near minimum wage or certain benefit thresholds should check eligibility.

Q2: How does this affect my pension?
A: Salary sacrifice can reduce pensionable earnings. Check with your employer about pension contributions.

Q3: Are there other costs involved?
A: Yes, you may need to pay Benefit-in-Kind tax on the car's value. Maintenance and insurance are typically included.

Q4: Can I leave the scheme early?
A: Usually yes, but there may be early termination fees. Check your contract terms.

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