Salary Sacrifice for a car and Universal Credit

[MaureenAtHome]

Hi
Please can someone give me advice on what I need to do if I join the work car scheme with NHS Fleet Solutions. I recieve Universal Credit and information online suggests that as my wage slip will show a lower take home pay, then my Universal Credit will increase. I did ring the DWP to ask directly, as surely that would not be right, and the advisor said he had never heard of this before until he googled and then agreed that it would increase, so I cant really trust what I've been told. Do I need to notify the DWP if I join the scheme? If anyone has joined the scheme and also recieved UC please can you advise me?
Thanks
M

I have limited experience with this but in a nutshell if you are on uc do not do it. There are a significant amount of pitfalls here - one being that people tend to think ther are “taking out a car through work”. NHS fleet solutions are a private company, nothing to do with the NHS and at least a few years ago were not regulated by the financial ombudsman. In addition if for whatever reason things go wrong you cannot get out of the contract - I know of people who lost their job Soto ill health and were unable to continue driving but continued to be liable for the payment (which at that point ballooned as the salary sacrifice advantage was gone). It also can impact on your tax code and does impact on your pension contributions.
More importantly- if you claim NHS mileage you will be put on a significantly lower mileage rate ( it is one of the annexes in the AFC terms and conditions handbook).
I would be very cautious. If you really need a brand new car, look at a normal lease and claim mileage.

I have leased for years. Would NEVER EVER do it through a work scheme. Its always more expensive, the mileage rate you get is lower because its considered a company car even though you pay for it.
You may not be able to leave the contract if you change or lose your job.
Are you avoiding leasing privately because of being on UC? If not i'd suggest looking around for a better deal

Thanks for your responses. I dont claim mileage as I am office based and the low mileage that they offer would actually work for me. Financially, it looks like I can get a brand new for around £500, no deposit, insurance and maintenance included. Whereas the same car on a private lease would require over £6,000 deposit. Also my job is very secure. I only plan to be on the scheme once so that woukd impact my pension much. Do you still think its not a good idea?

No, it is probably not. It will completely mess up your universal credit - you need specialist advice. It will change your tax code etc. I looked into it years ago and while it initially looked like a great deal and I would have loved a nice shiny car it would have totally messed up my (then) tax credit, entitlement to support with childcare etc.

I can’t see how this could mess up the OP’s universal credit. Salary sacrifice will lower her salary so she will actually receive more universal credit per month. Provided her job is secure and she can afford the payment it will be very tax efficient.

If you pop over to Reddit
look for the benefit dwp & universal
credit groups

they have DWP / universal credit workers mods that run the groups so you will get an accurate answer

you can post the question in one group and you can cross post it so all the groups see it

you get an auto reply initially but then later someone will reply

I think it also depends on how much you earn because if it would take you below minimum wage, you can’t join the scheme.

Why not get a decent second hand car? You can't be on a huge wage if you get UC, so why are you thinking about buying new? £500 pcm is a lot for a car. I have a 2nd car that I paid £2500 for 3 years ago, it is fine.

New cars are for rich people 😁 stick to that mentality and you'll probably be fine!

Hi, thanks for replying. I cant afford a new car hence waiting to join the scheme. It would be convenient if I could save on things like insurance/service/repair etc

Thanks, I checked this out and it won't take me below the min wage

Thanks I didn't know this

Hi thanks, this is what I have seen online. But now worried if it will cause issues with my uc.

My lease car costs me £250 a month with a £800 deposit. If you’re looking at a car for £500 a month, that’s a high spec vehicle. If you’re receiving UC, how could you possibly afford such an expensive car?

Thanks everyone, I will join the scheme and then notify the DWP and hope for the best.

Hi, thabks for your reply. I cant find any cars online for leasing around the price you stated, please could you share more info. The price I was quoted is typical on the scheme for a non EV vehicle. I checked private leasing whoch require heavy deposits which I dont have. My understanding is I will be taxed less as my wage will be lower too?

Look forward to the info about your lease.

I thought the same! I paid 3k euros for my car a few years ago, pay 300 a year for insurance and that's it. I'm happy that I don't have to worry about payments or anything else. I earn more than nmw but no stability, so it suits me well.

That sounds fab, however I do not have money for a deposit or to buy a car, my insurance is around £1500 a year too. So with the scheme, the insurance is included.

Mine is through a lease company. It doesn’t include insurance, but my insurance is only £400 a year anyway.
Having just read up on this, there isn’t a definitive answer but there’s information about SS cars being considered as benefits in kind, so DWP has to be notified. That will impact your income tax to a degree. In addition, the cost of the lease cannot take you below the National minimum wage of £12.71 per hour, and your employer will check this on your application.

If you don't have money for a cheap 2nd hand car, realistically you don't have money for an expensive new car, even if you are paying monthly. You're better off getting a used car even if you need a loan for it

Hi thanks for your reply. I require an automatic large vehicle, which does cost more than a manual/small vehicle, as stated in a previous response, my insurance is high too - I would not be able to afford repairs etc too, with the scheme my tax would reduce too, so I would be saving there too.

£500 is a lot of money per month, double the cost of a decent second hand car loan (not lease) where you own it after 3 years. Shop around for insurance too, unless you are under 21 it seems very high, mine is a fraction of that, even my DD’s is only £800. Save up for a few months and you will have the deposit you need. I’m a debt counsellor and so many clients are in trouble because of cars, misunderstanding the true cost

Hi thanks so much for your response. Sadly, I chose to buy and finance a second hand car. After 4 months I had already repaired the car over 6 times and the repairs and maintenance were just too much, my insurance was high too. The car then totally stopped and I couldn't afford the repair it needed. I am now still paying that finance off and still have £7,000 left to pay, which I am paying off slowly. So I dont want to go down this route again. Thanks though for your input.