Salary sacrifice leasing

[Pistonheadsdicoverer]

I am getting 1021 gross on 42/7.5 and 619 net

[SWoll]

Pistonheadsdicoverer said:

I am getting 1021 gross on 42/7.5 and 619 net

For a RWD Model 3?



You can lease one on better terms (36/8k miles) for half that gross cost. Madness, that's almost £43k over 3.5 years for a car that costs £39,990..

Edited by SWoll on Tuesday 9th April 13:41

[MikePRT90]

SWoll said:

For a RWD Model 3?



You can lease one on better terms (36/8k miles) for half that gross cost. Madness, that's almost £43k over 3.5 years for a car that costs £39,990..

Edited by SWoll on Tuesday 9th April 13:41

The gross is almost irrelevant, it’s the net cost that is important. My M3 RWD is £875 gross (42/7.5k) but only £360 net as the salary sacrifice deductions are all at marginal tax rate of 62%…plus with the lease comes with insurance and maintenance. Not saying the lease companies aren’t raking it in however, just the gross costs can’t be compared to gross cost outside of salary sacrifice.

[SWoll]

MikePRT90 said:

The gross is almost irrelevant, it’s the net cost that is important. My M3 RWD is £875 gross (42/7.5k) but only £360 net as the salary sacrifice deductions are all at marginal tax rate of 62%…plus with the lease comes with insurance and maintenance. Not saying the lease companies aren’t raking it in however, just the gross costs can’t be compared to gross cost outside of salary sacrifice.

To the end user yes, but that gross figure is preposterous and is just price gouging because they can get away with it. At the end of the day If they charged a more reasonable amount you'd also being paying considerably less per month so should still be annoyed despite being one of the fortunate few in the golden zone for tax savings (£100-125k)

[MikePRT90]

SWoll said:

To the end user yes, but that gross figure is preposterous and is just price gouging because they can get away with it. At the end of the day If they charged a more reasonable amount you'd also being paying considerably less per month so should still be annoyed despite being one of the fortunate few in the golden zone for tax savings (£100-125k)

Totally agree with you, the gross is outrageous, but at least there is some upside for the end user…and just enough to keep people happy otherwise demand would drop and gross pricing would have to come down.

[cj2013]

SWoll said:

You can lease one on better terms (36/8k miles) for half that gross cost. Madness, that's almost £43k over 3.5 years for a car that costs £39,990..
[/footnote]

"But you get all your servicing, insurance, tax, and tyres for that" *




[*] (even though the servicing costs is minimal, tax is free for at least another, the company (I believe) must pay for the insurance, and you'll get only one set of tyres)

Edited by cj2013 on Tuesday 9th April 17:04

[nufcfan]

Any fellow Scots know if the Tusker calculations take into account the 45% rate in Scotland from £75k upwards?

I am in the NHS pension scheme which comes off gross, leaving a net earnings of around 90K. Which gives a good chunk of my income within the new bracket.

[Tractor Driver]

Re Tusker, our SS scheme is with them. To work out accurate net costs, we have to take the gross monthly figure and the BIK from the Tusker website and then put those figures into a spreadsheet that the employer has created.

This includes the car allowance amount (depending on grade in the company) and your location in the UK re tax band. That then gives a (supposedly) accurate net monthly cost.

Re price gouging, Tusker get their car serviced outside the dealer network too!

I’m still on our previous company car scheme and Lex always fitted premium tyres. Awaiting a response from HR to confirm that Tusker will fit decent branded tyres, but wouldn’t be surprised if they’re comfortable with a nice set of Landsail rubber. It’s all about cutting costs!

[phpe]

Tractor Driver said:

I’m still on our previous company car scheme and Lex always fitted premium tyres. Awaiting a response from HR to confirm that Tusker will fit decent branded tyres, but wouldn’t be surprised if they’re comfortable with a nice set of Landsail rubber. It’s all about cutting costs!

Colleague of mine just had tyres replaced. Tusker won't allow unless less than 2mm, but fitted premium Continental tyres with no hassles at all.

[Tractor Driver]

Thanks phpe. Good to hear they’re fitting decent tyres.

The 2mm requirement is a big gripe of mine.
0.4mm between that and illegality! Lex would allow replacement at 3mm and here we are with heavy, generally higher performing EVs and we’ve got to get the tyres down to 2mm before they’ll change the ruddy things!

[SWoll]

Tractor Driver said:

Thanks phpe. Good to hear they’re fitting decent tyres.

The 2mm requirement is a big gripe of mine.
0.4mm between that and illegality! Lex would allow replacement at 3mm and here we are with heavy, generally higher performing EVs and we’ve got to get the tyres down to 2mm before they’ll change the ruddy things!

Now come on, at current rates they're only making 10's of thousands of profit on pretty much every car they supply, you can't expect miracles man.

[TheDrownedApe]

SWoll said:

Now come on, at current rates they're only making 10's of thousands of profit on pretty much every car they supply, you can't expect miracles man.

i get your sarcastic reply but i thought some quick man maths would help me understand their margins.

My 23 plate C40 poverty spec cost £47630. One assumes Volvo didn't charge them the P11D price so lets knock...say £5k off the price. They "owe" £42630.

I pay them (well i pay someone) £678 a month (gross) so they get £8k a year off me or £24408 over the term.

They then owe £18k @ 3yo.

The car is new so there are no 3yo examples to base a used list price off but there is one similar (age, spec and mileage) car on AT at £27600 one year old. I suspect that after 2 more years and triple the mileage (30k) the car will be worth about £20k (no experience, finger in the air guess).

So the lease company has made £2k. However i need to get the car serviced and new tyres during this period; lets call that £1k profit left. The they insure it for me - i can't see, even with my generous £5k haircut, where they make a profit.



However another, popular example the Tesla M3 LR, but simplified as we all know where this is going.

£50k P11D - lets give the same £5k haircut = £45k cost
£1200 gross cost x 36 = £43200

They then owe £1800 @ 3yo. Work out the maint and insurance etc but plenty of used examples well over £20k = dealer plenty in the black.


Hey, Swoll, you were right; they are making plenty.

So i've wasted 10 mins doing this nonsense and i'm hovering over the [submit] button thinking "what a pointless post". yup

[Bloxxcreative]

I thought the same looking at some of the prices. The lease on an eqb is about £200 less than a tesla or polestar with 10-15k list price difference.

[cj2013]

TheDrownedApe said:

i get your sarcastic reply but i thought some quick man maths would help me understand their margins.

My 23 plate C40 poverty spec cost £47630. One assumes Volvo didn't charge them the P11D price so lets knock...say £5k off the price. They "owe" £42630.

I pay them (well i pay someone) £678 a month (gross) so they get £8k a year off me or £24408 over the term.

They then owe £18k @ 3yo.

The car is new so there are no 3yo examples to base a used list price off but there is one similar (age, spec and mileage) car on AT at £27600 one year old. I suspect that after 2 more years and triple the mileage (30k) the car will be worth about £20k (no experience, finger in the air guess).

So the lease company has made £2k. However i need to get the car serviced and new tyres during this period; lets call that £1k profit left. The they insure it for me - i can't see, even with my generous £5k haircut, where they make a profit.



However another, popular example the Tesla M3 LR, but simplified as we all know where this is going.

£50k P11D - lets give the same £5k haircut = £45k cost
£1200 gross cost x 36 = £43200

They then owe £1800 @ 3yo. Work out the maint and insurance etc but plenty of used examples well over £20k = dealer plenty in the black.


Hey, Swoll, you were right; they are making plenty.

So i've wasted 10 mins doing this nonsense and i'm hovering over the [submit] button thinking "what a pointless post". yup

My issue is more that the lease companies have successful (I assume) models based on this, and yet the SalSac stuff claims to save you "upto 40%" on those.

But it doesn't. It's just the same model with - if anything - a very minor [i]net[/] saving. The extra £££ they make from the gross is not representing anything like a 'cycle-to-work' type SalSac saving at all.


I don't particularly like the idea that my SalSac is simply propping up a really badly run lease company (in that the extra pre-tax cash makes up for their inability to make a profit from procurement deals or otherwise)


From what I understand (at least from octopus), the insurance is only covered if your company offers it - so I'm not so sure that they are covering that cost

[Basil Brush]

They are not providing the scheme management for free as well.

[ian_c_uk]

cj2013 said:

From what I understand (at least from octopus), the insurance is only covered if your company offers it - so I'm not so sure that they are covering that cost

We are with Octopus including insurance... and it is Octopus that arranges (and pays) for the insurance, not our business.

For everyone that feels they are making "too much" profit, you have spotted a golden opportunity - I'm sure you will dominate the market with your super keen pricing.

[cj2013]

ian_c_uk said:

We are with Octopus including insurance... and it is Octopus that arranges (and pays) for the insurance, not our business.

For everyone that feels they are making "too much" profit, you have spotted a golden opportunity - I'm sure you will dominate the market with your super keen pricing.

Ah that fallacy. Instead, the matter is that people just won't use them.

As per the previous point, it isn't the fact that it is not good value that bothers me - it's the false claim that it saves you loads of money. It doesn't.



It is currently cheaper to buy a nearly new EV on PCP than it is to use their 'nearly new' offering, for example.

[essayer]

cj2013 said:

I don't particularly like the idea that my SalSac is simply propping up a really badly run lease company (in that the extra pre-tax cash makes up for their inability to make a profit from procurement deals or otherwise)

this is the key thing for me. SS providers should be dominating the lease market and getting the best deals on cars. Why aren't they?

[SWoll]

essayer said:

this is the key thing for me. SS providers should be dominating the lease market and getting the best deals on cars. Why aren't they?

Who says they aren't? They're gaming the system and price gouging because they can get away with it, and then people will make fatuous arguments defending it as above.

[z4RRSchris]

cj2013 said:

Ah that fallacy. Instead, the matter is that people just won't use them.

As per the previous point, it isn't the fact that it is not good value that bothers me - it's the false claim that it saves you loads of money. It doesn't.

It is currently cheaper to buy a nearly new EV on PCP than it is to use their 'nearly new' offering, for example.

It does save me money, and judging by the amount of EVs around me in mayfair, everyone is using them.