Budget 2024 Analysis: The Future of Salary Sacrifice Schemes
It’s already that time of year again! While you were working (or playing) hard, we were hanging on every word of the budget 2024 to give you the spin on how it impacts our customers. Someone has to do it! Politics is never the most exciting but it does matter, so here’s the scoop.
The headline of this budget was an additional 2% reduction in NI.
Just a few months ago, most of us paid 12% NI; now it’s 8%, which is huge! This means a salary sacrifice car will cost you a little more as the savings have been reduced slightly, but this will only be around £10/month more. But don’t despair, you’ll get an extra £35, so you’re still £25 better off in your take-home pay!
However, this isn’t quite the giveaway it seems.
Recently, we’ve not seen an increase in our tax-free ‘personal allowance’. This freeze continues and more of us are either seeing our tax bill increase or even falling into the 40% band.
The only good news here is that if you become a 40% taxpayer, you will save 42% on your salary sacrifice car (40% tax, 2%NI).
You may also be able to reclaim child benefits if you have dependent children. Currently, you can claim some help up to £80,000 salary. If you salary sacrifice for anything, such as a car or pension, it can bring you back into the band where you qualify for these benefits.
All in all, your current costs are fixed gross.
You’re protected from many of the price rises we are seeing, but it’s even better for new orders. Manufacturers are bringing in big discounts for new orders and have renegotiated motor insurance to lower renewals while all other insurance policies are skyrocketing. Your re-order will typically be 15% cheaper than your current car at a time when most costs are up!
The rest of the budget was disappointing.
We still have to pay 20% VAT when we charge publicly and no subsidies for charge points or cars. But remember, with salary sacrifice, you can factor in that charge point saving tax and NI. With home charging, electricity companies are reintroducing specialist EV tariffs, meaning you can get an extra 200-mile charge for around £5! Even more, general electricity bills are also dropping by 12% from 1st April.
Bottom line, it’s a frustrating time.
With a big decision coming up, neither party are fully behind going green and neither wants to promise genuine change.
However, you can make the real change here.
If you’ve already moved to electric motoring, you’re a real hero. You’ve made the decision to help lower our impact on the environment already and benefitted from some financial savings too!
If you’re on the fence about moving to EVs, check out our mega blog on busting the myths around electric cars. It might just put all your worries away.
It’s something to smile about amongst the political bartering to come. Traditionally, debates seem more akin to playground banter from protagonists who have little interest in the planet or you any further than your vote!
That’s our say on the Budget 2024! Are you looking to bring your business into the future? Check out our Employer Guide to Salary Sacrifice below to find out more.
Tags : budget 2024, Salary Sacrifice