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Salary sacrifice for your business lease car

Salary sacrifice is a great way to make some savings on your next business lease car.
Savings on business lease cars with salary sacrifice

What is salary sacrifice?

Something that might make a lease car even more attractive to your business is the opportunity to reduce your tax and national insurance payments. This is known as ‘salary sacrifice’.

Essentially, salary sacrifice is a way in which you can minimise your tax bill by using your pre-tax salary to pay for goods or services that would normally be paid for after tax. In this way, you would deduct the cost of your lease car from your gross salary which reduces your overall salary, and, in turn, you’ll pay less in tax and national insurance.

Make sense?

So, instead of seeing the car payment being deducted from your after-tax salary, it will have been deducted from the overall amount before that money even hits your bank. The reduction in your salary then makes for a cheaper tax and NI bill.

Benefit-in-Kind on business lease cars. 

Back in 2017 the government tried to cut back on the tax and NI avoidance created through salary sacrifice. They introduced the Optional Remuneration Arrangements (OpRA), making it so that all salary sacrifice cars will now receive added Benefit-in-Kind (BiK) tax.

BiK now must be paid on salary sacrifice lease cars, as well as any other non-cash extras that might be offered from an employer. The BiK tax is worked out based on the cars Co2 emissions. This means that the lower your emissions, the less BiK you’ll need to pay. Electric vehicles find themselves on the absolute minimum of BiK tax, currently sitting at 1% for 2021/2022, rising to 2% in 2022/2023.

How can I work out the Benefit-in-Kind tax for my lease car?

You can work out the BiK tax on your company car by finding the P11D value (the list price of the car, plus VAT, and any additional extras) and multiplying this by the BiK band that your car falls into, then multiply again by your tax band. Divide this by twelve to find the monthly payment.

So – P11D x BiK band x Tax band / 12 = monthly BiK payment.

Salary sacrifice lease deals.

To ensure the absolute best rates on a business lease salary sacrifice vehicle, we recommend you go for something with zero or very low emissions. We have plenty of brilliant electric vehicle lease deals here at Motorlet, including our range of Porsche Taycan lease deals, that have been incredibly popular.

Leasing a car through a limited company comes with a variety of benefits. Not only can you enjoy the salary sacrifice scheme, but you’ll also receive free UK delivery on your new leasecar, as well as an official manufacturer’s warranty on a Motorlet lease deal. You’ll also have road tax included in your monthly payments for the whole lease period.

If you’re an employer and want to learn more about salary sacrifice arrangements, you can find official guidance here.
If you want to discuss leasing and how it might benefit you, please don't hesitate by getting in contact, or completing a callback form:

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