1. What is Lease Car Salary Sacrifice?

A salary sacrifice arrangement is where an employee gives up part of their salary in exchange for a non-cash benefit, such as a company car. This calculator helps determine the net pay impact of such an arrangement in the UK.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( Gross\ Pay \) — Annual salary before deductions
• \( Income\ Tax \) — Total income tax payable
• \( National\ Insurance \) — Total NI contributions
• \( Car\ Lease\ Sacrifice \) — Amount sacrificed for the car lease
• \( BIK\ Tax \) — Benefit-in-Kind tax on the company car

Explanation: The calculation shows the net effect on take-home pay after accounting for the salary sacrifice and associated tax implications.

3. Importance of Salary Sacrifice Calculation

Details: Understanding the net pay impact helps employees make informed decisions about whether a salary sacrifice car scheme is financially beneficial.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What are the benefits of salary sacrifice for a car?
A: Potential benefits include income tax and NI savings, fixed motoring costs, and often maintenance included in the lease.

Q2: How is BIK tax calculated?
A: BIK is based on the car's P11D value, CO2 emissions, and your income tax band. This calculator requires you to input the calculated BIK amount.

Q3: Does salary sacrifice affect pension contributions?
A: Yes, as pension contributions are typically based on reduced salary. Check with your employer about any pension implications.

Q4: Are there minimum wage considerations?
A: Yes, salary sacrifice cannot reduce your pay below the National Minimum Wage.

Q5: Can I cancel a salary sacrifice agreement?
A: Typically only in limited circumstances like life-changing events. Check your employer's policy.