The Electric Car Scheme can work with Directors whose annual salary is less than £20,000, where they are paid primarily in dividends. The only condition being, their salary must be greater than £12,570 per year after salary sacrifice.
Here's Why:
- Directors are not subject to the National Minimum Wage rule for salary sacrifice
- Directors who are paid in dividends will pay tax based on total income so salary sacrifice will save them tax on their personal tax return by reducing their total income
- Employer National Insurance will also be saved, so long as the directors salary remains above the limit where Employer National Insurance starts to kick-in (£12,570)
It is important to note that The Electric Car Scheme isn't a qualified tax advisor and we strong suggest consulting a professional advisor to understand more regarding a matter concerning tax payments.