Staff Car Lease Scheme

Transcription

1 Staff Car Lease Scheme Under 100g/km C0 2 = Zero Road Tax - Electric and Hybrid cars included Contact Staff Travel stafftravel@blsgroup.org Version 5 27 July 2015

2 How to apply The Trust objectives are to reduce our carbon footprint and where possible reduce air pollution. This scheme delivers both whilst offering a benefit to staff. Vehicles are leased under a salary sacrifice scheme, where the payment of the monthly rental is tax free and will reduce both NI and pension payments. Note: Benefit in Kind Taxation will apply and is directly calculated on C0 2. To qualify for the scheme you must: o Have worked for your employer for a minimum of 12 months o Be on a permanent contract or a fixed term contract with at least 24months remaining o Be in substantive employment and your salary sacrificed will not take you below the national minimum wage o Be at least 19 years of age o Have at least one years driving experience with a full UK driving licence o If you are in the 1995 NHS Pension Scheme you must be 55 years of age or less 1* o If you are in the 2008 NHS Pension Scheme you must be 60 years of age or less 1* 1* We are excluding these staff so that we can ensure that the retirement pension for staff in the 1995 and 2008 NHS Pension scheme are not reduced as a result of the salary sacrifice scheme. IMPORTANT INFORMATION FOR STAFF IN THE NHS PENSION SCHEME PLEASE READ AND ENSURE YOU UNDERSTAND THE IMPLICATIONS ON YOUR FUTURE RETIREMENT PENSION BEFORE PROCEEDING Important changes that affect employees in a salary sacrifice scheme: o o o o From 1 st April 2015 the scheme changed to a Career Average Revalued Earnings (CARE) Pension scheme. This means that every payment made from April 2015 to an employee in the NHS Pension Scheme contributes to their final pension. Employees in a salary sacrifice scheme will have monthly pensionable earnings which are less than they would have been if they were not in a salary sacrifice scheme. The effect of this is that, for pension purposes, a lower earnings figure will be credited to an employee s pension each time their pay is reduced by a salary sacrifice payment. The further effect of this is that the amount of pension the employee earns each year will be reduced if they are in a salary sacrifice scheme, which will lead to a lower pension when they retire. Staff who retain membership of 1995 or 2008 scheme will also need to take into account the impact of any lease on their pension i.e. o o Previously the scheme was a final salary scheme where the pension was calculated by using the best annual pay from the last three years of service Employees in salary sacrifice schemes only needed to ensure that they were not in a salary sacrifice scheme during the best of their final 3 years of service for the salary sacrifice scheme to have no negative impact on their pension. The following is taken from the information provided by the NHS Business Services Authority who administers the NHS Pension scheme. Please see the members section of for information about which scheme you are in and specific information on salary sacrifice schemes.

3 Salary Sacrifice implications for 2015 Scheme members What impact will entering into (or continuing with) a salary sacrifice arrangement have on my 2015 Scheme benefits? A salary sacrifice arrangement is an agreement between an employer and an employee, where the employee gives up some of their contractual entitlement to cash earnings in return for noncash benefits. In a Career Average Revalued Earnings (CARE) scheme, like the 2015 NHS Pension Scheme, pension benefits are built up on a year by year basis based on your actual pensionable earnings in each year. Therefore entering into any salary sacrifice arrangement (e.g Childcare Vouchers, Lease Car Schemes etc) that reduces your gross pensionable earnings will have a negative effect on the amount of pension you are able to build up in that year. The overall effect from participating in any salary sacrifice scheme would be to reduce the amount of final benefits you earn. Below is a simple example to illustrate how salary sacrifice could affect the amount of pension benefits you build in the 2015 Scheme (all figures are rounded to the nearest pound for illustration purposes only): Tom earns 18,000 a year. For the purpose of this example we assume that Tom s pay doesn t change year on year. Year 1 Year 2 Year 3 Year 1 Pension * 357* Year 2 Pension N/A * Year 3 Pension N/A N/A 333 Total Pension to date ,035 Now lets presume Tom obtains child care vouchers through a Salary sacrifice scheme for the same three years, which reduces his pensionable earnings by 1200 a year reducing his annual pensionable earnings to 16,800. His pension benefits would be: Year 1 Year 2 Year 3 Year 1 Pension * 333* Year 2 Pension N/A * Year 3 Pension N/A N/A 311 Total Pension to date * revalued at 3.5% assuming 2% CPI + 1.5% So you can see from the example the reduction in pension benefits payable that being part of salary sacrifice scheme will cause. It is important that you understand the implications this scheme will have on your pension contributions and ultimately on pension payments on retirement. Neither the Trust nor the Lease supplier can advise on your pension. For further information please see the members section of

4 How to Apply 1) Read the Frequently Asked Questions: To qualify you must be a permanent Trust employee with over 12 months service and have passed your probation period (if applicable). Employees who are on fixed term appointments must also have at least 24 months left of their employment. 2) Visit to find out: Full details of the scheme On line quotations Potential savings that can be made 3) Quotes: You should obtain a quote from the online system and then apply by completing all sections of this application pack 4) Fill in the payroll reduction request form: Include the monthly payment to be made under the agreement- and send the completed pack to staff travel. Remember to complete all sections 5) Ensure you initial all points on the checklist (page 10) 6) Signing a Contract: You are required to sign the application and contract. The contract will be sent to you within two weeks providing your application is successful. 7) Delivery: Once all correctly completed documentation has been received and approved the order will be raised. Delivery of the vehicle will vary according to lead times etc. The lease company will advise you of the delivery status Frequently Asked Questions 1. Why is the Trust providing this scheme? The initiative operates under a salary sacrifice scheme for staff to acquire new lease car. A new car will bring many benefits to the individual and make a significant improvement to the environment, reduction in C0 2 and improved air quality. 2. How does the scheme work and what are the benefits? This allows staff who participate in the scheme to take advantage of the exemptions to their tax and national insurance contributions (NIC), offered by HMRC (Inland Revenue). What you would have paid in tax and NIC is used to offset the cost of the car lease. This will result in a reduction in your contractual salary for the term of the lease arrangement. 3. How does the lease arrangement work? The Trust is working with a lease provider who can provide a range of vehicles for business and/or domestic use. The lease is a formal contract for the use of a vehicle over a period of time and the employee pays through their salary a monthly rental fee

5 4. Who owns the vehicle? The vehicle is owned by the leasing company and is returned to them at the end of the contract period, which is either two or four years. You may be able to purchase the vehicle at the end of the contract but this is not guaranteed. 5. What do I pay? You are liable for the monthly rental fee, which includes the rental of the vehicle, road tax, maintenance, breakdown cover, tyres, and motor insurance. The car is registered to the lease company so that if you incur a fine for parking or a traffic offence then it is sent to the lease company and they pay it to stop the cost escalation and recover the cost from your monthly payment. 6. How long is the contract? There are two terms, 24 or 36 months. When you select the length of contract you also need to estimate the distance you will travel per annum (p.a). It is very important to get this right, otherwise at the end of the contract you would have to pay excess mileage charges. You can change your mileage at any time during your contract to avoid this shock. If you have overestimated you can reduce your rental cost by reducing your annual mileage. 7. How much do I pay? This will depend on the choice of car, accessories, length of contract and annual mileage. It is important to set a budget and stick to it. You can access an online quoting system at 8. Am I eligible to join the scheme? To qualify for the scheme you must: Have worked for your employer for a minimum of 12 months Be on a permanent contract or a fixed term contract with at least 24months remaining Be in substantive employment and your salary sacrificed will not take you below the national minimum wage Be at least 19 years of age Have at least one years driving experience with a full UK driving licence If you are in the 1995 NHS Pension Scheme you must be 55 years of age or less If you are in the 2008 NHS Pension Scheme you must be 60 years of age or less 9. How much are the savings? The savings that you could make vary according to your salary and whether or not you are in the NHS pension scheme. We have negotiated discounted prices and you also gain the benefit from tax and NI reduction. Typically the savings are about 30% but you should compare prices with the high street but remember to compare on a like for like basis. 10. Which dealership can I use? The Lease Company will arrange delivery and tell you where to collect the vehicle from.

6 11. What car can I choose? There are no limits to the choice of car other than what is available on the website. Additional discounts have been negotiated for electric and hybrid vehicles. Part of the application process checks if after the rental payment you still exceed the minimum wage so this may limit your choice. 12. Can I leave the scheme at any time? You are in a contract for the term of the lease, either 24 or 36 months. If you terminate early for any reason a termination charge will apply. i. Change in working hours ii. Likely long term sickness of employee iii. Pregnancy 13. What happens if my employment ceases? Your participation within the scheme can only continue whilst you remain in the employment of the Trust. Therefore, if you leave you will be required to terminate your lease contract. The outstanding amount may not qualify for inclusion under the salary sacrifice scheme if it causes your final months salary to fall below the national minimum wage. If this is the case, it will be deducted from your net pay or you will be required to settle the outstanding payments by cheque. 14. What happens if I become pregnant? Statutory and occupational maternity pay is based on your actual salary after the reduction for any salary sacrifice. The new arrangements may therefore reduce any maternity pay. 15. I currently receive Working Tax Credit. Can I join the scheme as well? The tax credit calculation is based on your taxable (P60) income. Therefore, by signing up to a salary reduction (e.g. for provision of a lease car) your P60 income will be reduced and therefore your tax credit entitlement may increase. Given the complexities involved in calculating entitlement to tax credits we would recommend that if you have any queries you go to for more information or contact HM Revenue and Customs helpline on What happens if I go on long term sick leave? Whilst on sick leave and receiving full pay, deductions will continue to be made as per the lease contract. However, if you are absent through long-term sickness, this could be regarded as a life change event and you would be advised to leave the scheme any payments due early termination of the lease would then be immediately payable by you. 17. What if I take unpaid leave or take a drop in salary, etc? You should advise the Trust as soon as possible, but you remain liable for the lease contract until it expires or you can terminate but will have to pay termination costs.

7 18. How will the salary reduction be shown on my personal payroll and tax documents? You will see the reduction on your monthly payslip. Your P60 will however reflect your taxable salary, i.e. your gross salary minus salary sacrifice. 19. Will I pay additional income tax for the car? A car leased through a salary sacrifice scheme is treated like a company vehicle so you will pay additional income tax on the car. You can check the tax liability at the quote stage. 20. Although I will be better off financially, my gross salary will be less. How will this affect my credit status e.g. applying for a mortgage? In replying to credit reference checks the Trust will inform other companies of the situation with regard to your total remuneration package. Financial institutions usually recognise salary sacrifice and understand how this impacts on your salary, however all lending companies are different and we can make no guarantees on this issue. 21. In addition to my basic salary I also get extra duty payments. Will these be affected? No. In calculating all other payments to you such as overtime or extra duty payments, your total remuneration package will be used i.e. your new basic salary plus the value of the lease package. 22. What happens when there is a pay rise? You will receive any relevant pay awards based on your original salary, before the reduction for the lease package. 23. I am currently paying back a student loan, which is 9% on my earnings over 15k. Will this alter? Yes, it will alter as the trigger point is based on the salary on which you are liable to pay NI contributions. Under this scheme your total gross salary on which NIC is paid will reduce, hence your loan repayments will decrease. 24. What happens if I am made redundant? Any redundancy pay would be based on your original salary, before the reduction for the lease package. 25. How do I join the scheme? Read through the checklist that is provided by the Trust and t h a t y o u u n d e r s t a n d t h e i m p a c t o n y o u r p e n s i o n i f y o u a r e a m e m b e r o f t h e N HS P e n s i o n s c h e m e t h e n go to the staff travel website at

8 Application Process Stage 1 - Applicant to complete Please initial against each statement on the checklist on page 10 to indicate your agreement/compliance with it. Stage 2 - Applicant to complete Proceed with this stage, if you have initialed against all the statements and signed off the Checklist Form in Stage 1. a) Go to the staff travel website and select the vehicle you want. b) You may only purchase your vehicle under this Scheme from the staff travel website. c) Once you have selected your vehicle. d) Send this form together with the completed/signed Payroll Reduction Request Form to Staff Travel - please take a photocopy for your own records. Please note that incomplete forms will be returned and there will be a subsequent delay in your application. Stage 3 - Applicant to complete a) Once the Trust has authorised the application the lease company will an employer/employee copy of the hire agreement containing the variation to terms and conditions of employment. b) The hire agreement will be ed to you and you should read, sign and return to Staff Travel. c) If you do not make contact within fourteen days of receipt of the hire agreement then the Trust will assume that you do not wish to proceed with the application and this will be cancelled. d) On receipt of both the employee and employer copy of the hire agreement: Counter sign the copy of the Hire Agreement and keep this on file. Send a copy of the scheme payroll reduction request form to the payroll department Stage 4 End of contract Three months before the end of the contract the lease company will contact the employee and employer to advise of the end date and return process. If there is any damage or you have exceeded your mileage allowance you must contact the lease company and make them aware of any issues. They will advise you of what to do to minimise your end of contract costs.

9 Employers Check List 1. The applicant has initialled against all the statements and signed off the Checklist Form in Stage 1 2. The amount being applied for through the website and that on the Payroll Deduction Request Form is the same. YES/NO YES/NO 3. The applicant has been in employment for at least 12 months YES/NO 4. The applicant is on a permanent or fixed term contract with a minimum of 24 month remaining 5. The applicant s salary will not fall below the national minimum wage after deduction as indicated on the payroll checklist. This calculation will not take into account overtime or salary from any other employer/source. YES/NO YES/NO 6. All attached documentation has been received to allow an order to be placed. YES/NO 7. No outstanding overpayments of salaries owing YES/NO HR signature: Name: Date: Finance signature: Name: Date: Approval to Raise Order Signature: Name: Date:

10 To: SBS Payroll Payroll reduction request form The following member of staff has elected to participate in the car lease scheme offered by Surrey and Sussex Healthcare NHS Trust. Please start making deductions from their gross pay for the next 24 or 36 months on a monthly basis from the date indicated below. They have agreed to a variation in their contract through a salary sacrifice arrangement with the Trust. Surname: First name: Department: Payroll number: National Insurance number: Monthly rental fee (Gross):. Monthly deduction from pay over: 24 or 36months (please delete as appropriate) Deposit of..to be deducted in (..state month) First payment to be deducted in (state month) DECLARATION BY EMPLOYEE I agree to the above amount to be deducted from my gross pay and in accordance with the terms and conditions of the Salary Sacrifice Agreement. I fully understand and agree that this salary sacrifice scheme has implications on my pension contributions, and will reduce future pension payments. I further agree that should I leave Trust employment or otherwise terminate my lease arrangement early that any amounts outstanding to the lease company will be deducted from my final salary or become payable by cheque to the lease company. Employee Name:..... Employee s signature: Date:. SASH PAYROLL LIAISON I confirm that, on the date below, a check has been undertaken by SBS to confirm that the amount to be deducted will not result in the individual s pay falling below the current National Minimum Wage as of 2014/15: for workers aged 21 years or more: 6.50 per hour for workers aged 18 to 20 inclusive: 5.13 per hour for workers aged under 18 (but above compulsory school age): 3.79 per hour for apprentices aged under 19 or aged 19 and over, but in the first year of their apprenticeship: 2.73 per hour Payroll advisor s name: Payroll advisor signature: Date:.

11 Employee Checklist The following checklist has been designed to ensure that the appropriate criterion has been met and that you are eligible to participate in the scheme, prior to a formal application being made. Stage 1 Applicant to complete Please initial against each statement on the checklist to indicate your agreement/compliance with it. Checklist Please Initial 1. I confirm that I meet the criteria of the scheme. 2. I have been informed of and accept the changes that will apply to my pension, by applying for a lease vehicle under this scheme 3. I confirm that I understand that by signing the lease contract that I am entering in to a legal contract for the duration of the contract 4. I am not aware of any reason at the time of applying for this lease contract why I should be terminating early 5. I have looked at all the information provided and I am satisfied that I want to apply for this scheme 6. I have passed my probationary period (if applicable). 7. I have been in employment with the Trust for at least 12 months. 8. I am on a permanent or a minimum of 24 month fixed term contract. 9. I attach a copy of the payroll reduction request form which has been discussed and completed by payroll liaison and myself. I can confirm that my pay will not fall below the national minimum wage after deduction on current levels. The amount shown on the form must be the actual and final amount applied for under the scheme. The calculations will not take into account overtime or salary from any other employer/source. If my circumstances change during the course of the lease hire agreement, I undertake to advise the Trust immediately of this change. If the change results in my salary falling below the national minimum wage, I understand that I may be unable to continue to participate in the scheme and may have to terminate the lease agreement and pay any termination costs. I agree to repay any outstanding balance under this scheme should my employment end for any reason. I agree that the Trust may recover the balance through a direct deduction from my salary. If this is insufficient to cover the full amount outstanding, I understand that I will be invoiced directly for the remaining sum and agree to repay this amount. 9. I confirm that I have sought information via SBS sbs.esd@nhs.net and/or on the impact of this salary sacrifice scheme on my pension and associated benefits, maternity pay and any other salary related benefits. 10. I confirm that I have read the lease hire agreement provided to me and I am aware of the contents therein. Signed Date.

12 Car Buyers Guide Set your budget before looking at vehicles and make sure you stick to it. It is very easy to creep and pay more than you wanted. Remember you are tied to the contract for two or three years. Ignore the badge on the front of the vehicle and keep an open mind on the manufacturer. Don t rush in to a decision, it is a big decision and you need to make sure that you are ordering what you need. Decide what type of car you want before looking at the manufacturers. Make sure the vehicle fits with your lifestyle, for example electric vehicles are becoming very popular because of their low running costs but you must have access to 240v socket at home. You are liable for end of contract costs so it is in your interest to tell the lease company if your mileage changes. Make sure you get any damage on the car repaired before the vehicle is returned. Keep the vehicle clean inside and out. If you allow animals in the car make sure you protect the interior. Keep the vehicle maintained in line with the manufacturer s recommendations. Consider the running costs of the new vehicle, e.g. hybrid and eco have very low running costs and far cleaner exhaust emissions than a diesel engine. The salary sacrifice scheme includes the car, breakdown cover, maintenance, tyres and 5 s t a r insurance for you and your direct family members providing they are named drivers. Please tell us what car you are replacing so we can calculate the C0 2 saved Make Model Year Annual Mileage Fuel Type Useful Contact Details Staff Travel stafftravel@blsgroup.org Web: MyCar Help desk Tel: sashmycar@leasedrive.com