SALARY SACRIFICE CAR SCHEME

Transcription

1 SALARY SACRIFICE CAR SCHEME

2 ABOUT THE SCHEME SALARY SACRIFICE PROVIDES THE OPPORTUNITY FOR ALL ELIGIBLE EMPLOYEES TO HAVE ACCESS TO A BRAND NEW CAR. Salary sacrifice allows you to pay for a car by reducing the amount you earn before tax and national insurance is applied. The main benefit is that you will save Income Tax, National Insurance and Pension Contributions once the salary sacrifice has been applied. To qualify you must be a permanent employee and be paid above the national minimum wage after your salary has been reduced. HOW TO OBTAIN QUOTES You can use our online service or contact our office for assistance. We need to know your salary and tax code to calculate accurate savings. Signing up to is quick and simple. You will have a personal welcome page where you can request new quotes and view all previous requests. Your quotes will normally be available to view within 24 hours of submission. WHAT VEHICLE CAN I CHOOSE You can choose any car that is available in the UK with your employers approval. The Public Sector gets some of the largest discounts available and we choose the best price from 8 leasing companies to ensure that you get the best deal. Low CO² & low list price = Greatest savings

3 IS THERE A LIMIT TO HOW MANY QUOTES I CAN HAVE Knowles Associates if you have a problem during the life of the contract. There is no limit to the number of quotes that you can request. However, we have a limit of five cars per session to enable us to turn round the quotes quickly. We suggest you initially request quotes for the basic model of different vehicles without too many extras for comparative purposes. Once you have decided which car you would like, you can then enhance the specification and add extras. WHO IS INSURED TO DRIVE THE CAR The car is insured for you and your partner. Additional drivers may be added at an increased cost. WILL I NEED TO PAY A DEPOSIT There is no deposit and no credit checks. CONTRACTED MILEAGE If you need advice, please contact our dedicated team on HOW DO I PROCEED WITH A CAR The annual mileage will be agreed before the car is ordered. You must submit a mileage claim each month for any business mileage travelled. If you are happy with the quote, complete your application online and follow the progress of the car from order through to delivery. PROGRESS OF MY ORDER We will automatically inform you weekly of progress or changes to the estimated delivery date. It will not be necessary for you to contact us. CONTRACT TERM The standard term is 36 months, but other periods can be arranged. WHAT IS INCLUDED IN THE CONTRACT You will be provided with a new car including insurance, maintenance and servicing. It also includes road fund licence, accident management, and breakdown and recovery services. All replacement parts such as tyres, batteries and exhausts are included in the contract (subject to being a result of fair wear and tear ). You will also have the full support of An excess mileage charge will apply if the contracted mileage is exceeded. END OF CONTRACT ARRANGEMENTS At the end of the contract you can: Replace your car with a brand new one Purchase it Return the car You will be required to return the car in a clean and tidy condition. If the car is returned with previously un-notified damage beyond normal fair wear and tear you may be responsible for any additional charges. A fair wear and tear guide is available on our website. CAR BENEFIT TAX A salary sacrifice car is a company car and all cars provided under this type of arrangement will attract car benefit tax and will affect your tax code. An estimate of your tax liability will be provided in each quote you receive. You will receive a P11D form at the end of each tax year which will confirm your taxable benefit. Sign up at or call us on

4 HOW WILL THE SCHEME AFFECT ME? It is crucial to understand what a sacrifice will mean in practical terms before entering any arrangement. You should consider the effect that a reduction in pay may have. NATIONAL MINIMUM WAGE The minimum wage is a key factor when considering salary sacrifice. This is because current legislation does not allow you to be paid below this amount. If you have a salary sacrifice arrangement that takes you below this limit you must give up the item you sacrificed. STATE PENSION, BENEFITS AND TAX CREDITS Salary Sacrifice could have an effect on your entitlement to state benefits and tax credits and so should be carefully considered before you decide to proceed. When you sacrifice cash pay in return for a car, you will not pay National Insurance Contributions (NICs) on the value of the pay you sacrificed. Although this means you will save NICs it also cuts the earning on which you pay NICs and may take your earnings for which NICs are due below the Lower Earnings Limit (LEL) ( 109 per week in ). Entitlement to some benefits is based on the amount of NICs you pay and others on the amount of your earnings. Entering into a salary sacrifice arrangement could affect current or future entitlement to a range of benefits. For most, paying less NICs may not adversely affect your benefit entitlement because you may still be paying enough NICs to qualify for benefits, you may be deemed to still be paying enough NICs or if you only sacrifice for a short time your contribution history will only be affected for that period therefore the effect on your benefit entitlement would be minimal. Salary Sacrifice may also affect your entitlement to the following: Statutory Sick Pay (SSP) Statutory Maternity Pay (SMP) Ordinary Statutory Paternity Pay (OSPP) Additional Statutory Paternity Pay (ASPP) Statutory Adoption Pay (SAP) State Pension Any means-tested benefits Tax Credits SALARY SACRIFICE AND CONTRIBUTION- BASED BENEFITS Entitlement to contribution-based benefits is related to the amount of NICs you pay. Reducing your pay by way of Salary Sacrifice may reduce the amount of earnings that you pay NICs on to below the LEL so that you are no longer paying NICs. Even if your earnings remain above the LEL, the reduction in the amount of NICs you pay could reduce your entitlement to contributionbased benefits. Contribution-based benefits include: INCAPACITY BENEFIT If your deductible earnings fall below the LEL, you may not be entitled to Incapacity Benefit, If this happens, you may be entitled to Income Support based on Incapacity which is a means tested benefit. SALARY SACRIFICE AND EARNINGS- RELATED BENEFITS Entitlement to earnings-related benefits is based on your level of earnings, not including any amount sacrificed. Earnings-related benefits include: MATERNITY ALLOWANCE If your cash earnings fall below 30 per week your will lose your entitlement to Maternity

5 Allowance (MA). If your cash earnings fall between 30 and 125 per week you will still be entitled to MA but at a variable rate. If your earnings are 125 a week or more you will receive the full standard amount of MA. SALARY SACRIFICE AND WORK-RELATED PAYMENTS Work-related payments paid by your employer are based on your average earnings over a fixed period of time before you begin receiving them. The amount sacrificed is not included as part of your average earnings for calculating these payments, so the amount you receive could be reduced as a result of the sacrifice. sacrifice schemes. STATUTORY SICK PAY/LONG TERM SICKNESS If your average weekly earnings fall below the LEL you will lose your right to Statutory Sick Pay (SSP). If this happens you may still be entitled to Income Support or Incapacity Benefit. You can stay in the scheme during periods of sickness provided that your sick pay, after salary sacrifice, does not fall below the national minimum wage. It is not advisable to enter the scheme if you know or suspect that you may need to take extended periods of leave, i.e. surgery. Work-related payments include: MATERNITY PAY The Statutory Maternity Pay (SMP) that you are entitled to is calculated based on your earnings during the eight week period leading up to the 15 th week before the baby s due date. If you are sacrificing salary during this period the SMP will be calculated on the lower amount. To ensure that your SMP is not reduced, you can decide to either; stop the salary sacrifice and return the vehicle before the SMP calculation period, or retain the vehicle but transfer the salary sacrifice to a salary deduction arrangement again before the SMP calculation period. If long term sickness develops during the period of the sacrifice, this can be treated as a life style change and the car could be retained under a salary deduction arrangement. PAYMENTS ABOVE BASIC SALARY Payments over and above the basic salary, that are based on an hourly rate, such as overtime, call out etc. will not be affected by the sacrifice. EARLY RETIREMENT In the event of an early pension due to redundancy etc. the pension may be based on the lower salary (after the sacrifice is applied), for further information contact your payroll department. If you are pregnant or expect to have a period of maternity leave you should carefully consider whether to join the scheme. Occupational Maternity Pay (OMP) calculations are not affected by salary REDUNDANCY PAYMENTS Redundancy pay may be affected by salary sacrifice, for further information contact your payroll department.

6 SALARY SACRIFICE FAQ WHAT HAPPENS IF MY EMPLOYMENT AT THE TRUST ENDS FOR WHATEVER REASON? If you choose to leave the scheme early a termination charge may apply. The charge will depend on the car and when it is returned. An indication of the early termination charge is provided on the quote. If you leave your post with the Trust for whatever reason, the agreement will also terminate. Under the terms and conditions of the agreement any outstanding amounts can be taken from your final salary as a net payment. If your final salary does not cover the outstanding balance we will send you an invoice requesting payment. Please note that if the invoice is not paid the Trust will request the services of a debt collection agency to recover the outstanding balance. This also applies if you terminate your contracted post and you only work on the bank. WILL JOINING THE SCHEME AFFECT MY ABILITY TO CLAIM WORKING FAMILY TAX CREDIT? It might but each working family situation is unique therefore if applicable you should always take advice regarding Working Tax Credits. Tax credit information is available at or by calling the helpline on WILL THE SCHEME AFFECT MY APPLICATION FOR LOANS AND MORTGAGES? The lender will write to the Trust for a reference. We will give the lender details of your pre sacrifice salary (which is your salary before the salary sacrifice reduction), which the majority of lenders will accept. For the benefit of other lenders we will also show separately the annual amount of each salary sacrifice scheme you may have. For example if your pre salary sacrifice salary is 20, per year and you have 2 salary sacrifice schemes, one for the Car and one for the Voucher Scheme, the information will look as follows: Annual Salary 20, per year Salary Sacrifice Car 3, per year Salary Sacrifice Voucher Scheme 1, per year

7 WILL JOINING THE SCHEME AFFECT MY NHS PENSION? 1995 NHS PENSION SCHEME CURRENT ARRANGEMENTS If you are a member of the 1995 NHS Pension Scheme your pension benefits are based on your best year of the last 3 years prior to retirement. This means that should you have the reduced salary in force when you come to retire or receive benefits, these benefits will be affected. You need to decide if this could apply to you. Nearer your chosen retirement date you may consider leaving the salary sacrifice scheme NHS PENSION SCHEME CURRENT ARRANGEMENTS If you are a member of the 2008 NHS Pension Scheme your pension benefits are based on an average of the best three consecutive years in the last 10. WHAT IMPACT WILL THIS HAVE ON MY PENSION UNDER THE PROPOSED PENSION SCHEME BEING INTRODUCED IN 2015? The new NHS Pension Scheme will be introduced from April 2015 It is a career average scheme rather than a final salary scheme You accrue pensionable earnings for every year you participate in the NHS Pension Scheme Your pension will accumulate in 1/54ths of your pensionable earnings. Further information on the New NHS Pension Scheme can be found on NHS Employers Website. STATE PENSION The State Pension is a contribution-based benefit and the Additional State Pension is an earnings-related benefit and as such one or both of these could be affected by joining the Scheme. The State Second Pension forms part of the State Pension. Salary Sacrifice can affect the State Second Pension as the value is calculated based on your annual pay after sacrifice. Further information on the State pension can be found on the UK Government website. Please note this booklet is a guide only and provides information about the scheme. It is not the terms and conditions of the scheme or the scheme rule book. Employees should always seek independent advice if unsure about the suitability of the scheme to them.

8 SCHEME BENEFITS: Opportunity of leasing a brand new car No deposit or credit check Significant cost savings over providing a private car Access to public sector discounts Flexible periods of hire Option to purchase at the end of the contract ALL VEHICLES INCLUDE: Fully Comprehensive Insurance Mechanical and electrical repairs Routine Servicing Replacement tyres, exhaust, glass, excise duty Breakdown and Recovery Service Accident Management Courtesy car - Accident Repairs Knowles Associates Total Fleet Management Red Lion House The Green Great Bentley Colchester Essex CO7 8QG Tel: Fax: quotes@knowlesfleet.com Office hours Mon-Fri 8am - 6pm Sat 9am - 12pm