Salary sacrifice leasing
Discussion
riskyj said:
interstellar said:
Oh I didn’t know that. Is that the same for all SS car schemes?
No, many (most?) schemes do not affect pension. NHS is one of the common ones which does. If you earn 50k and you employer pays 5% into your salary, that's a pension contribution of £2,500.
If you sacrifice 5k of your salary on a vehicle, then your employers pension contribution will be 5% of 45k, so £2,250. A reduction of £250 per year.
rudester said:
riskyj said:
interstellar said:
Oh I didn’t know that. Is that the same for all SS car schemes?
No, many (most?) schemes do not affect pension. NHS is one of the common ones which does. If you earn 50k and you employer pays 5% into your salary, that's a pension contribution of £2,500.
If you sacrifice 5k of your salary on a vehicle, then your employers pension contribution will be 5% of 45k, so £2,250. A reduction of £250 per year.
Paul_M3 said:
rudester said:
riskyj said:
interstellar said:
Oh I didn’t know that. Is that the same for all SS car schemes?
No, many (most?) schemes do not affect pension. NHS is one of the common ones which does. If you earn 50k and you employer pays 5% into your salary, that's a pension contribution of £2,500.
If you sacrifice 5k of your salary on a vehicle, then your employers pension contribution will be 5% of 45k, so £2,250. A reduction of £250 per year.
riskyj said:
phpe said:
Same on mine - base salary before any adjustments is used for pension, death in service, etc
And mine. Sample of 3 I appreciate, but illustrates that indeed not all ss schemes affect pension. NHS and teachers are the only two I’m aware of where pension is affected.
I even checked when there was chatter about an getting a SS car impacting pension - no impact here.
Cupid-stunt said:
riskyj said:
phpe said:
Same on mine - base salary before any adjustments is used for pension, death in service, etc
And mine. Sample of 3 I appreciate, but illustrates that indeed not all ss schemes affect pension. NHS and teachers are the only two I’m aware of where pension is affected.
I even checked when there was chatter about an getting a SS car impacting pension - no impact here.
Every salary sacrifice scheme I’ve been involved in designing, or come across, has been structured so that there is a notional salary which is unaffected by salary sacrifice. And this notional salary is used for benefits such as pension. It’s a key part of the design to avoid distortions.
It seems a big flaw in the public sector schemes that they don’t do this. If it affects the salary figure on which pension is calculated, there could be an enormous hit on the future value of a defined benefit pension.
It seems a big flaw in the public sector schemes that they don’t do this. If it affects the salary figure on which pension is calculated, there could be an enormous hit on the future value of a defined benefit pension.
Zigster said:
Every salary sacrifice scheme I’ve been involved in designing, or come across, has been structured so that there is a notional salary which is unaffected by salary sacrifice. And this notional salary is used for benefits such as pension. It’s a key part of the design to avoid distortions.
It seems a big flaw in the public sector schemes that they don’t do this. If it affects the salary figure on which pension is calculated, there could be an enormous hit on the future value of a defined benefit pension.
I’d say it’s more of the flaw the other way around - it’s illogical that if you sacrifice (so it’s taken away as if it never existed) some of your salary that your employer would still make pension contributions on it.It seems a big flaw in the public sector schemes that they don’t do this. If it affects the salary figure on which pension is calculated, there could be an enormous hit on the future value of a defined benefit pension.
Sheepshanks said:
Zigster said:
Every salary sacrifice scheme I’ve been involved in designing, or come across, has been structured so that there is a notional salary which is unaffected by salary sacrifice. And this notional salary is used for benefits such as pension. It’s a key part of the design to avoid distortions.
It seems a big flaw in the public sector schemes that they don’t do this. If it affects the salary figure on which pension is calculated, there could be an enormous hit on the future value of a defined benefit pension.
I’d say it’s more of the flaw the other way around - it’s illogical that if you sacrifice (so it’s taken away as if it never existed) some of your salary that your employer would still make pension contributions on it.It seems a big flaw in the public sector schemes that they don’t do this. If it affects the salary figure on which pension is calculated, there could be an enormous hit on the future value of a defined benefit pension.
It’s a big flaw for NHS schemes and it’s really difficult to accurately work out the true long term cost along with how that is offset by tax savings etc. logical solution would be to pay the amount lost from the pension into a seperate private SIPP but how many people will actually do that?
Anyway trying to decide between a Q4, ix3 or Q8…decisions.
Anyway trying to decide between a Q4, ix3 or Q8…decisions.
nufcfan said:
It’s a big flaw for NHS schemes and it’s really difficult to accurately work out the true long term cost along with how that is offset by tax savings etc. logical solution would be to pay the amount lost from the pension into a seperate private SIPP but how many people will actually do that?
Anyway trying to decide between a Q4, ix3 or Q8…decisions.
Surprised the iX didn't make the shortlist TBH. Ground up EV and AWD unlike the iX3, great interior, decent efficiency etc.Anyway trying to decide between a Q4, ix3 or Q8…decisions.
nufcfan said:
It’s a big flaw for NHS schemes and it’s really difficult to accurately work out the true long term cost along with how that is offset by tax savings etc. logical solution would be to pay the amount lost from the pension into a seperate private SIPP but how many people will actually do that?
You'd have to pay in loads more as the employer contribution is massive.One of my daughters is a teacher in an academy school. The LA offers salary sacrifice but academy schools are separate entities and the school has always said no - until now, when they've suddenly realised they can save a chunky amount of money in pension contributions and employers NI.
Now they're all for it - but the staff have said they're not interested, most of them run cheap cars and the SS case hasn't been helped by the bonkers pricing examples Tusker has provided.
This might be a silly question, but has anyone ever successfully phoned up the likes of Octopus/Tusker/etc. to haggle on the price?
I was eyeing up a Jeep Avenger Summit, but for the spec I configured it came out at £512 a month net (£836 a month gross). 3 years on 10k miles with option extra bi-color metallic paint.
This just seems like they are ridiculously overmarking the gross price knowing I'll save on tax/NI, I could get a personal lease with my own insurance for way less than £836! In fact, the petrol equivalent Altitude Plus Model in the same paint comes out at around £420 a month through Lease Loco and that's with a full maintenance pack (same mileage and term with 1 month upfront).
Tempted to phone up and try and get them to lower the gross price to be more competitive with personal lease quotes.
Octopus would be getting £30,096 over the term when the car new to buy is around £37,000, if I do the math I don't think these would be worth £7k in 3 years after depreciation. Probably not even double that if you take into account insurance, maintenance etc. They must be making a killing.
I was eyeing up a Jeep Avenger Summit, but for the spec I configured it came out at £512 a month net (£836 a month gross). 3 years on 10k miles with option extra bi-color metallic paint.
This just seems like they are ridiculously overmarking the gross price knowing I'll save on tax/NI, I could get a personal lease with my own insurance for way less than £836! In fact, the petrol equivalent Altitude Plus Model in the same paint comes out at around £420 a month through Lease Loco and that's with a full maintenance pack (same mileage and term with 1 month upfront).
Tempted to phone up and try and get them to lower the gross price to be more competitive with personal lease quotes.
Octopus would be getting £30,096 over the term when the car new to buy is around £37,000, if I do the math I don't think these would be worth £7k in 3 years after depreciation. Probably not even double that if you take into account insurance, maintenance etc. They must be making a killing.
Edited by J2daG1990 on Monday 13th May 12:21
J2daG1990 said:
This might be a silly question, but has anyone ever successfully phoned up the likes of Octopus/Tusker/etc. to haggle on the price?
I was eyeing up a Jeep Avenger Summit, but for the spec I configured it came out at £512 a month net (£836 a month gross). 3 years on 10k miles with option extra bi-color metallic paint.
This just seems like they are ridiculously overmarking the gross price knowing I'll save on tax/NI, I could get a personal lease with my own insurance for way less than £836! In fact, the petrol equivalent Altitude Plus Model in the same paint comes out at around £420 a month through Lease Loco and that's with a full maintenance pack (same mileage and term with 1 month upfront).
Tempted to phone up and try and get them to lower the gross price to be more competitive with personal lease quotes.
Octopus would be getting £30,096 over the term when the car new to buy is around £37,000, if I do the math I don't think these would be worth £7k in 3 years after depreciation. Probably not even double that if you take into account insurance, maintenance etc. They must be making a killing.
I think you’re on a hiding to nothing trying to haggle, but you need to compare against the net cost as that’s what you’re actually paying. It was discussed a few pages back, but the summary was basically “someone is getting screwed, but it isn’t the lessee”I was eyeing up a Jeep Avenger Summit, but for the spec I configured it came out at £512 a month net (£836 a month gross). 3 years on 10k miles with option extra bi-color metallic paint.
This just seems like they are ridiculously overmarking the gross price knowing I'll save on tax/NI, I could get a personal lease with my own insurance for way less than £836! In fact, the petrol equivalent Altitude Plus Model in the same paint comes out at around £420 a month through Lease Loco and that's with a full maintenance pack (same mileage and term with 1 month upfront).
Tempted to phone up and try and get them to lower the gross price to be more competitive with personal lease quotes.
Octopus would be getting £30,096 over the term when the car new to buy is around £37,000, if I do the math I don't think these would be worth £7k in 3 years after depreciation. Probably not even double that if you take into account insurance, maintenance etc. They must be making a killing.
Edited by J2daG1990 on Monday 13th May 12:21
Sheepshanks said:
nufcfan said:
It’s a big flaw for NHS schemes and it’s really difficult to accurately work out the true long term cost along with how that is offset by tax savings etc. logical solution would be to pay the amount lost from the pension into a seperate private SIPP but how many people will actually do that?
You'd have to pay in loads more as the employer contribution is massive.One of my daughters is a teacher in an academy school. The LA offers salary sacrifice but academy schools are separate entities and the school has always said no - until now, when they've suddenly realised they can save a chunky amount of money in pension contributions and employers NI.
Now they're all for it - but the staff have said they're not interested, most of them run cheap cars and the SS case hasn't been helped by the bonkers pricing examples Tusker has provided.
Tesla own price @ £500 - tax and NI?
No
Magically the Tesla is now £800 - tax & NI
Some crooks are trousering a lot of cash!
There’s a surprise.
Just been looking at this myself today, ours is through Knowles fleet. Looking at a bmw 5 series hybrid and it was coming out at £680 month which I thought at first was gross cost then my savings on tax ni etc so would take it to roughly £450. But no, that £680 was what it would cost me. Then a petrol version was £840 after deductions!
Looked on select car leasing and with similar details etc it’s roughly the same cost so of no real benefit.
Looked at a 3 series and that was even more expensive at roughly £800 month even though a new one off bmw was £509 month albeit no maintenance or insurance but they don’t come out at £300 month.
Am I missing something or are these schemes bit of a con?
Thought salary sacrifice schemes were supposed to be a good deal.
Looked on select car leasing and with similar details etc it’s roughly the same cost so of no real benefit.
Looked at a 3 series and that was even more expensive at roughly £800 month even though a new one off bmw was £509 month albeit no maintenance or insurance but they don’t come out at £300 month.
Am I missing something or are these schemes bit of a con?
Thought salary sacrifice schemes were supposed to be a good deal.
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