1. What is Salary Sacrifice Car Scheme?

A salary sacrifice car scheme is a UK 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 formula:

Where:

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

Explanation: The calculation shows your take-home pay after deducting taxes, NI, and the car scheme amount from your gross salary.

3. Benefits of Salary Sacrifice

Details: Salary sacrifice schemes can reduce your taxable income, potentially placing you in a lower tax bracket. They also lower National Insurance contributions for both employee and employer.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Is salary sacrifice worth it?
A: It depends on your circumstances. While it reduces taxable income, it may affect pension contributions and mortgage applications.

Q2: How does this affect my pension?
A: Since pension contributions are often based on sacrificed salary, your pension may be affected. Check with your employer.

Q3: Are all cars eligible?
A: Typically only low-emission cars qualify for the best tax benefits under salary sacrifice schemes.

Q4: What happens if I leave the company?
A: You usually have to return the car, and your salary reverts to its original amount.

Q5: Can I opt out of the scheme?
A: Most schemes allow you to opt out, but check the terms with your employer.