How Does the Autumn Statement Impact Salary Sacrifice?
Hot on the heels of the autumn statement, we thought it would be wise to share the impact on salary sacrifice.
Firstly, nothing has changed on benefit in kind or salary sacrifice rules. The benefits are still huge on electric cars, though the intricacies have changed in 2 ways.
1. Minimum Wage
As you know while salary sacrifice is hugely beneficial, there are rules around eligibility which can impact your employee base. Significantly, minimum wage will increase to £11.44 from April. This means employees cannot reduce their salary below £11.44 per hour. For most of our customers, annual increases will counteract this. But this is something you need to check.
2. National Insurance
After many years of tax increases, the 2% drop in national insurance is welcomed. However, this will reduce the savings from salary sacrifice slightly; employees paying 20% tax used to save 12% NI will now save 10% NI. This could increase the net cost of the typical car by £10 per month. For 40% taxpayers, there will be no impact. Of course, with the wider savings from the budget, employees will be better off overall.
The potentially great news from the budget as a continued commitment to green and cars, hopefully, will lead to Gigafactories and more innovation. It’s not just about saving money, it’s about saving the planet.
Tags : Autumn, budget, Salary Sacrifice