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Salary exchange details

A salary exchange takes place when you agree to give up the right to receive part of your pay in return for your employer providing some form of non-cash benefit, in this case the lease of a car. Savings are made because salary exchange reduces your gross salary, before any tax or NI has been deducted, so the amount of tax and NI paid is less than usual.

Please note that if the CAMbens salary sacrifice brings your salary below the level for which you are required to pay NI/tax, the savings you make under this scheme will not be as high as illustrated (because you will not be making a tax/NI saving on the monthly rental charges).

Salary exchange and its effect on student loan payments

Student loan repayment is based on a percentage of earnings over an allocated amount. This will alter as the trigger point is based on the salary on which the individual is liable to pay National Insurance Contributions (NICS). Under salary exchange the total gross salary on which NI is paid will reduce, so the loan repayments will reduce.

Salary exchange and its effect on Childcare Tax Credit

Current advice from the Inland Revenue suggests that individuals can still apply for Childcare Tax Credit whilst being in a salary exchange scheme. For more information check with the Inland Revenue advice line on 0845 300 3900.

Salary exchange and its effect on Working Tax Credit

The vast majority of staff will benefit from joining the scheme. However, personal circumstances may mean that it is not beneficial. This is most likely to be the case for those on a low income affected by Working Tax Credit, which may cancel out the savings made on Income Tax and National Insurance Contributions. Please seek advice from the Inland Revenue Tax Credits helpline on 0845 300 3900.

Salary exchange and its effect on out of hours payments paid on top of salary

In calculating all other payments to you such as out of hours payments, your reference pay before your salary reduction will be used.

Salary exchange and its effect on pay awards

You will receive any relevant pay awards based on your reference pay before your salary reduction.

Limits of the amount of salary exchanged

In order that we comply with National Minimum Wage Legislation there is a restriction on the amount your salary can be reduced by. Once you have signed and returned your order confirmation the CAMbens Cars Helpdesk will verify with the Payroll department that your selection does not take your salary below the national minimum wage. If your salary will be reduced to be lower than minimum wage you will be notified and you may be able to select an alternative vehicle.