Negotiating Remuneration Package
Discussion
Currently negotiating a remuneration package with a prospective employer and wanted to get peoples thoughts/experiences to help in regards to the provision of a car allowance or company car.
Previous employers haven’t provided the option of a company car/salary sacrifice and instead have offered car allowances (typically around £5-6k), which are treat as ‘salary’ and therefore subject to normal income deductions.
The employer I’m in discussions with has put the following on the table.
Option 1
Split of Basic Salary £72k & Car Allowance £6k
Or
Option 2
Car Allowance added to Basic Salary £78k
The obvious benefit I can see is a larger Basic Salary contributing to the Employers Pension Contributions (Employer 7%) and bigger bonus (10%)? Is there anything I’m missing or should take into consideration?
The alternative is opt into a Salary Sacrifice Scheme, however there is no detail of the scheme (I’m effectively their first employee) and therefore would need to wait till I’m in employment to see what the scheme had to offer.
They have included the following wording in the draft contract.
“You will be entitled to use your car allowance towards the leasing of a company car with the balance of monthly payments being derived from salary sacrifice. Further details of this scheme will be shared following commencement of your employment”
As above, Company Cars or Salary Sacrifice Schemes are new territory to me. Is this the norm?
The benefit of going down the SSS is allowing the private sale of my current car, freeing up cash and into a new car. Although I appreciate there will be BIK and other deductions I will need to consider once I known more about the scheme.
I will be looking to negotiate and arrive at a higher basic/allowance (say £8-10k), which I feel will give me some float to play with when it comes to looking at the SSS.
Anything I’m overlooking? Anything else worth considering when assessing the options?
Thoughts welcome.
Previous employers haven’t provided the option of a company car/salary sacrifice and instead have offered car allowances (typically around £5-6k), which are treat as ‘salary’ and therefore subject to normal income deductions.
The employer I’m in discussions with has put the following on the table.
Option 1
Split of Basic Salary £72k & Car Allowance £6k
Or
Option 2
Car Allowance added to Basic Salary £78k
The obvious benefit I can see is a larger Basic Salary contributing to the Employers Pension Contributions (Employer 7%) and bigger bonus (10%)? Is there anything I’m missing or should take into consideration?
The alternative is opt into a Salary Sacrifice Scheme, however there is no detail of the scheme (I’m effectively their first employee) and therefore would need to wait till I’m in employment to see what the scheme had to offer.
They have included the following wording in the draft contract.
“You will be entitled to use your car allowance towards the leasing of a company car with the balance of monthly payments being derived from salary sacrifice. Further details of this scheme will be shared following commencement of your employment”
As above, Company Cars or Salary Sacrifice Schemes are new territory to me. Is this the norm?
The benefit of going down the SSS is allowing the private sale of my current car, freeing up cash and into a new car. Although I appreciate there will be BIK and other deductions I will need to consider once I known more about the scheme.
I will be looking to negotiate and arrive at a higher basic/allowance (say £8-10k), which I feel will give me some float to play with when it comes to looking at the SSS.
Anything I’m overlooking? Anything else worth considering when assessing the options?
Thoughts welcome.
ARF8885 said:
StevieBee said:
Is the car essential to your role - or is it being offered as an inducement or perk?
Role would be the majority of the time WFH with up to 2 days based on-site/client offices. Aside from the use of public transport, I would say essential. Do the sums and whatever option leaves you with the most amount of money paid into you bank account each month is the right option. Unless you're looking at EVs, my understanding is that the SSS is likely to be the most preferable on this.
A third option to consider is whether they'd consider you opting out of any car scheme and instead you, using your own car for work as and when needed for which you claim from them at the HMRC rate (45p per mile last time I looked).
StevieBee said:
OK then. In which case, you need to judge your best option based upon the BiK.
Do the sums and whatever option leaves you with the most amount of money paid into you bank account each month is the right option. Unless you're looking at EVs, my understanding is that the SSS is likely to be the most preferable on this.
A third option to consider is whether they'd consider you opting out of any car scheme and instead you, using your own car for work as and when needed for which you claim from them at the HMRC rate (45p per mile last time I looked).
Difficultly with comparing the Car Allowance with the SSS is I have zero detail of what the SSS looks like, costs etc. Their only stipulation is that if going down the route of the SSS is that the could would need to be EV to benefit from the low BIK.Do the sums and whatever option leaves you with the most amount of money paid into you bank account each month is the right option. Unless you're looking at EVs, my understanding is that the SSS is likely to be the most preferable on this.
A third option to consider is whether they'd consider you opting out of any car scheme and instead you, using your own car for work as and when needed for which you claim from them at the HMRC rate (45p per mile last time I looked).
The third option you refer to is effectively taking the car allowance (or combine the allowance into basic salary) and using my current car, they have confirmed mileage claims will be in line with HMRC rate of 45p. So yes that is an option and the car allowance would effectively be used as additional income.
I'd be asking for the details of the SSS given that it appears necessary for you to make a decision on salary option.
However, the fact that you're their 1st employee and they're not offering any detail on the scheme, suggests they probably currently don't have a scheme and would only start looking into it if/when you opt for it.
However, the fact that you're their 1st employee and they're not offering any detail on the scheme, suggests they probably currently don't have a scheme and would only start looking into it if/when you opt for it.
ARF8885 said:
StevieBee said:
Is the car essential to your role - or is it being offered as an inducement or perk?
Role would be the majority of the time WFH with up to 2 days based on-site/client offices. Aside from the use of public transport, I would say essential. xx99xx said:
I'd be asking for the details of the SSS given that it appears necessary for you to make a decision on salary option.
However, the fact that you're their 1st employee and they're not offering any detail on the scheme, suggests they probably currently don't have a scheme and would only start looking into it if/when you opt for it.
That did occur to me, yeah! Initially it was the offer of a car via business lease, but that’s since changed to the SSS. However, the fact that you're their 1st employee and they're not offering any detail on the scheme, suggests they probably currently don't have a scheme and would only start looking into it if/when you opt for it.
I have asked, see what comes through.
Been a long time since I had a company car and thereafter always had a car allowance in lieu of.
Not added to salary as then non pensionable but the advantage was when pay gradings done HR always seemed to forget about the car allowance.
Maybe in your case just asking for a flat all inclusive salary of say £80k - £85k might be “ better “ and allow you then buy whatever car you want.
Good luck in your negotiations.
Not added to salary as then non pensionable but the advantage was when pay gradings done HR always seemed to forget about the car allowance.
Maybe in your case just asking for a flat all inclusive salary of say £80k - £85k might be “ better “ and allow you then buy whatever car you want.
Good luck in your negotiations.
randlemarcus said:
Worth a read of the SSS threads on here to gauge whether they look like good value. To my untrained eye, it looks remarkably like 80s double glazing salesmen are now leasing cars to mugs.
I’ve been a lurcher on a few of the threads. The SSS’s don’t appear all that good, of course depends on what savings the employer is prepared to pass onto the employee through the scheme. alscar said:
Been a long time since I had a company car and thereafter always had a car allowance in lieu of.
Not added to salary as then non pensionable but the advantage was when pay gradings done HR always seemed to forget about the car allowance.
Maybe in your case just asking for a flat all inclusive salary of say £80k - £85k might be “ better “ and allow you then buy whatever car you want.
Good luck in your negotiations.
Thanks! I’ll be pushing for a little more salary and allowing myself a little more for if the likes of a salary sacrifice scheme does come up. Not added to salary as then non pensionable but the advantage was when pay gradings done HR always seemed to forget about the car allowance.
Maybe in your case just asking for a flat all inclusive salary of say £80k - £85k might be “ better “ and allow you then buy whatever car you want.
Good luck in your negotiations.
CheesecakeRunner said:
They’ll want you to pay for the lease on the salary sacrifice car using your car allowance. It’s not like you can say I don’t want the allowance I’ll have the SS car instead. It’s not the same as a true company car, even though you’ll be paying BIK as if it was. You’ll be able to pick a car that has a lease cost you’re comfortable with or just carry on running a private one.
Out of option 1 and 2 you’ve presented, I’d take 2 as more money would be going into pension and it’ll look better for things like mortgages.
Perhaps that’s my problem and my lack of knowledge of SSS showing, I guess the priority is achieving the best possible basic salary/allowance as possible that enables me to consider a SSS once more detail is available etc. Out of option 1 and 2 you’ve presented, I’d take 2 as more money would be going into pension and it’ll look better for things like mortgages.
ARF8885 said:
The third option you refer to is effectively taking the car allowance (or combine the allowance into basic salary) and using my current car, they have confirmed mileage claims will be in line with HMRC rate of 45p. So yes that is an option and the car allowance would effectively be used as additional income.
That’s unusual. If given an allowance that’s usually accepted to pay for the running of the car so employer often only pay approved fuel rates rather than the 45p private car rate. This is how my employer works. Edited by CheesecakeRunner on Friday 20th January 15:41
As for the 45p rate, it’s written into the contract. Previous employer who provided an allowance also gave 45p rate.
CheesecakeRunner said:
ARF8885 said:
The third option you refer to is effectively taking the car allowance (or combine the allowance into basic salary) and using my current car, they have confirmed mileage claims will be in line with HMRC rate of 45p. So yes that is an option and the car allowance would effectively be used as additional income.
That’s unusual. If given an allowance that’s usually accepted to pay for the running of the car so employer often only pay approved fuel rates rather than the 45p private car rate. This is how my employer works. Edited by CheesecakeRunner on Friday 20th January 15:41
I guess it depends on the industry and level.
Having said that, I put my first mileage claim in today in about 3 years.
deja.vu said:
Last 3 companies I've worked for have paid a car allowance and 45p per mile for the first 10k.
I guess it depends on the industry and level.
Having said that, I put my first mileage claim in today in about 3 years.
Thanks.I guess it depends on the industry and level.
Having said that, I put my first mileage claim in today in about 3 years.
It does vary. Current employer when offered a car allowance, mileage rate drops to 25p per mile I think.
ARF8885 said:
deja.vu said:
Last 3 companies I've worked for have paid a car allowance and 45p per mile for the first 10k.
I guess it depends on the industry and level.
Having said that, I put my first mileage claim in today in about 3 years.
Thanks.I guess it depends on the industry and level.
Having said that, I put my first mileage claim in today in about 3 years.
It does vary. Current employer when offered a car allowance, mileage rate drops to 25p per mile I think.
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