Will the changes to National Minimum Wage and National Insurance affect the car scheme?

The impact of the Autumn Statement on the salary sacrifice scheme

Will the change to the National Minimum Wage affect car salary sacrifice?

It can sometimes seem that good news is not easy to come by at the moment, however, the Chancellor’s Autumn Statement did contain two positive financial gestures for workers in the UK.

The Government has cut the main rate of Class 1 employee National Insurance (NI) contributions from 12% to 10% and has also increased the National Minimum Wage (NMW) by 9.8% to £11.44 per hour.

While this is of course good news for low-rate taxpayers who will see more money in pockets at the end of each month, it does have an impact on employees who have access to a salary sacrifice car benefit scheme.

Does the increased National Minimum Wage affect eligibility for the salary sacrifice scheme?

As employees are able to take a car via their salary, the cost of the vehicle is taken into consideration when looking at eligibility. Any deductions for the car needs to ensure that the employees’ salary doesn’t fall below the NMW threshold.

In effect, this means that the entry point to taking a new car on a salary sacrifice benefits scheme has just become 9.8% higher. However, while this might sound like it will cut swathes of employees out of being able to take on such a scheme, hope remains!

The last 12 months has seen a huge drop in the purchase price of new EVs, with manufacturers such as Tesla dropping the price of their models by up to £8000 for the Model 3. Many other manufacturers have followed suit, lowering prices across many models. At the same time, 2024 will see a host of new and highly affordable EVs hit the UK market from manufacturers such as Citroen, Renault, BYD and smart, putting more EVs within reach of more motorists.

In short, while the NMW has gone up by nearly 10%, the starting price of new, family-sized EVs has gone down by a greater amount, so it is unlikely to affect the eligibility of employees getting a car on the Tusker car scheme.

How can I take advantage of Tusker’s Salary Sacrifice scheme?

If you are thinking about enjoying the benefits of a brand-new, safe and environmentally-friendly EV for a single affordable monthly amount, then why not take a look at some of the deals available through Tusker today?