Salary Sacrifice for Cars Scheme

[Quinnaay]

So, I have the opportunity to take out one of these Leasing schemes through work which would save my self quite alot of money as im only 20 years old. The scheme includes insurance, full maintenance, tyres, european cover. I've been looking at the brand new Fiesta 1.4TDCI colour of my choice for £234 a month for 3 years then the option to either buy it at the end or do the scheme with a different car again. Ino many of you dislike leasing/finance schemes but whats your views on the the Leases through work as these save me around £100 on pension, tax and NI.

Sorry its long winded but i think whilst insurance is a hell of a lot of money on rubbish cars this seems something that must be taken advantage of.

[Quinnaay]

Sexual Chocolate said:

What happens if you leave said place of work?

If i leave work i have to give the keys back, if its before 6 months i have to pay some money to them.

[Quinnaay]

PurpleMoonlight said:

So how does this work then?

You give up some of your gross pay and get a car in return?

Is the car then declared for BIK, if so what is the tax charge?

I give up an amount of £234 gross pay, a month there is a choice of cars mainly economical cars to make the environment better. The car is actually £364 so thats what gets paid to the company a month but i save £100 in tax and NI then i pay £30 back for BIK which means £234 a month leave my account monthly.

[Quinnaay]

sleep envy said:

Or you get made redundant?

Redundancy is covered.

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Blown2CV said:

Is 240 quid a month really cheap for that car?!

On finance its around that without Insurance for a 20 year old, full maintenance, tyres, tax, mot, and european cover. So yeah i think so.

[Quinnaay]

salmon said:

I did this for a period through my work for a BMW 118Sport - we were limited to cars <140g carbon.

At the time it was a no brainer as we were paying £250 in a loan and insurance on the 3yr old astra we had, and all in the BMW worked out as £290 fully maintained for up to 4 drivers. As already said the payment goes off your gross wage, so the gross outgoing for the beemer was £400 odd, but offset by what you save in tax/NI plus the small increase in tax cam in at £290 net.

Only advice I can give is check how much it costs to return the car early (cost us £800 a year early) due to a change in circumstances. Also although I returned my car June last year, HMRC have only just sorted my tax code and I'm still waiting on a rebate. Somethimg to do with the car being treated as a benefit so the tax free proportion of the your wage reduces so they had to wait for a P11D form from my employer which took ages...

Thanks for the advice, as far as im aware i would have to pay something to hand it in early but i dont think ill feel the need to do so.

[Quinnaay]

jatinder said:

I would go for the bigger 1.6 if your using it as daily long commute. I doubt there would be much difference in price.

There isnt the option at my salary, i cant take a car that puts me below national minimum wage gross so this must be much dearer or much worse emissions.
Oh believe me i would go for it haha.

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LooneyTunes said:

Check out what the score is regarding mileage. I know some lease deals used to leave the employee on the hook for under-estimation of mileage. Not sure if this is still the case.

The cars come with 10,000 miles a year then from 5p-6p (car dependant)per mile if you go over that unless you choose the 12,000 mile a year or even 15,000 mile a year options for obviously more money.

[Quinnaay]

Sorry to revive the thread, but im close to taking the plunge but have a question at the end of the 3 years the cost to buy the car is just under £5,000 now if i could somehow afford to buy it should i ? or should i just continue taking out the scheme for another brand new car? what would you do?

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V8mate said:

Make that decision at the time.

When I was your age I was bored with a car within a fortnight. I doubt you'll want it after 3 years.

Thats what i think mate, but am i throwing money down the drain if i dont buy it..

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V8mate said:

I'm sure you don't have to decide now. So don't.

I guess your right, might just enjoy while it lasts.

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456GT said:

Do you build up any no claims bonus under the scheme? If you do, that would be a big plus and would offset a good chunk of the costs.

Yes it builds up no claims, to be honest my insurance is £93 a month which is decent for someone my age but i just cant afford a new car and this way with insurance and everything included sounds a very good way to get one. Its around £5000 to buy the Fiesta after 3 years im just not convinced i'll have that money and wondered if i would be foolish not buying it.