Hi and thanks in advance to everyone, I have been paying maintenance based on 42k salary for 3 years and have now decided to get a car to make my life easier. I work for the NHS and travel 80 miles to collect my little one and reckon that the best option for cost reasons is to go with NHS Fleet solutions as for around £300 a month it is a new reliable car with no further costs involved (other than electricity to power it)
My monthly gross salary sacrifice is £490 ish made up of car £298 plus savings on tax, pension, and NI making up the extra.
I am genuinely NOT trying to reduce my income for maintenance purposes but want to go in with my eyes wide open so my question is that as this is technically classes as a company car will my maintenance cost increase in any way? All I know is that the list price of the car is £40,000 and the BIK is currently 0% then 1% in 21/22 (£10 per month) and 2% in 22/23( £20 per month) I have tried finding the answer out for hours and really cant make head or tale of the system.
Thanks so much.
Not an expert on this but there is mixed info online re Benefits in Kind and Company Cars especially.
The below link explains a little based on the old scheme and references the new scheme. I would suggest that it would involve having to appeal to tribunal to get it looked into. Looks like the HMRC info the CMS will get will include an increase in taxable income which is the equivalent of the company car. In essence CMS will use P11D rather than P60 to based your income.
from what i read on here from other dads, they have company car allowance/fuel allowance, and for that they end up paying more in maintenance. you could ring up CMS and ask for advice about it. easier to message them from online account.
only real deductions CMS consider are pension contributions, overnight stays with kids. or special expenses such as fuel for long distance travel to collect/drop kids, or if your paying private/boarding school fees etc
Hi thanks for replies, yes I get a reduction for around 3/7 stays and my pension. I find it all so confusing and I just want clarification on how a reduced income from salary sacrifice and low rate BIK tax would affect my payments. I have just entered my question on my CMS portal so will be curious as to how it all works, I will of course post back to help future people in the same position.
another thing is you can try speak to your HR/payroll team and ask exactly what amount they report to HMRC as your income, monthly/yearly and how it will appear with this salary sacrifice/car stuff. they will probably give you a better answer. usually CMS people just blindly follow whatever amount is showing on your tax records.
Excellent idea, funnily enough I did that this afternoon as I thought that cms went off what is my gross salary as told by HMRC, as I said I’m not trying to set about looking for reductions just wanting to pull the plug if I think it’ll screw me over that’s all.
I have a very similar situation. Electric Vehicle via NHS Fleet.
The rules about the BIK and CMS are clear on the government website. BIK is an income that is used in your annual assessment.
But don't be alerted as you have an electric car.
The BIK for this year is 0% which means £0
By next April/May your employer will have sent HMRC a form called P11D which includes your BIK for the tax year ending 6th April 2020 alongside with your P60 for that year. The Salary Sacrifice will be deducted and the BIK will be added when calculating the annual income
The £10 pcm you mentioned is actually the tax you should pay on the BIK not the BIK itself.
The BIK is calculated by multiplying the P11D Value of your car (the market price plus any extras and delivery) by a percentage set by the government. Which is 0 % for 20/21 and 1% (around £400 a year for a car worth £40k) 21/22 and £800 a year for 22/23 and 23/24.
So in practical terms. Your annual statement will have £5880 (490x12) deducted and £0 /£400 /£800 added over the next 4 years ....
No less than £5000 reduction per year !
Make sure you spend the savings on the kids when they are with you.
Hope this helps. Please don't hesitate to ask me if this sounds complicated.