When an employee leases or subscribes a car through a salary sacrifice scheme, cash moves between three different parties. This article provides a breakdown of the cash flow process- who pays who, what and when!
Cashflow overview
- The company pays the lease provider directly every month for the car and any related salary sacrifice costs
- The company recoups the lease payment from the employee via salary sacrifice every month
- The company pays the Administration Fees to the Scheme directly every month
- The company recoups the payment for the Administration Fees in money saved from NI and reclaimable VAT tax
Good to know
Who pays for the car?
Any payments related to the car will be paid for by the company directly each month. The company will recoup the payments from the employee via salary sacrifice each month. The lease or subscription contract is between the company and the car provider, therefore, the employee will never be expected to be invoiced by the car provider.
How do I get the details of the cashflow?
On the Employer Portal you will find the payroll and cashflow spreadsheet, which breakdown the calculations for any costs relating to the car. This includes the monthly cost of the lease, employee salary sacrifice, BIK tax, reduction in company NI etc.
Do any car payments go to The Electric Car Scheme?
ECS do not collect any payments for the lease or subscription of the car. These payments are always between the car provider and the employer.