Salary sacrifice leasing

[SWoll]

WhiskyDisco said:

Hi folks. I'm trying to get my head around this. Assuming that I earn a decent whack and I have been putting money away for pension etc, but I am still lucky enough to earn £115k a year.

If I were to sacrifice £1,290 a month (£15,380 a year) for the car below I would effectively be able to drive around in a car that I choose to "swap" a net £516 a month for. £15,380 x 0.40 = a take home of £6,192 (or £516 a month).

So the question isn't really would you sacrifice £15k a year it's more like would you sacrifice £6k a year take home pay for a car like this.

Yep. As mentioned earning between £100-125k and keeping the entire gross cost between those figures is the ultimate sweetspot for salary sacrifice as with the loss of personal allowance between those figures you're avoiding a marginal tax rate of 60%.

If you were earning £100k then the same car would be costing an additional £150-200 per month.

McAndy said:

I’m am not good at understanding personal tax terms as a simple PAYE, never had to really think about it. We are evaluating an EV scheme at work. Please can somebody explain the gross and net in simple terms? Is it how much leaves your pay check, vs how much that is actually “worth” once you add in the increased “value” of that money through not paying tax on it?

The comcar calculator does a decent job of demistifying it, but in simple terms you are correct.

https://comcar.co.uk/taxtools/salarysacrifice/

Edited by SWoll on Friday 7th October 23:29

[McAndy]

Thanks SWoll

[SWoll]

McAndy said:

Thanks SWoll

[jgrewal]

Tempted by this route to get a fully loaded Ioniq 5 through Tusker on NHS for £565 net on my wife's salary sacrifice scheme. Few things put me off though - impact on her pension for the reduced income (she is 40% tax payer) and the fact we cannot keep our no claims from her current car on the insurance as I assume insurance is centrally managed at fleet level.

Loads cheaper than a private lease (£5k deposit, £490 per month, insurance + servicing, tyres on top). While of course this would be all in! Anyone had a bad experience with this?

Edited by jgrewal on Sunday 9th October 22:25

[Heres Johnny]

Most of the above calculations seem to be missing BIK. On a £120k car is £2400 a year, £200 a month and at 50% tax it adds £100 to your tax bill each month. Still a good deal (unless you buy the car personally, lose very little in depreciation over its life, a current bubble that will however eventually burst, and are getting 45p and not 5p per business mile).

[anonymous-user]

Heres Johnny said:

Most of the above calculations seem to be missing BIK. On a £120k car is £2400 a year, £200 a month and at 50% tax it adds £100 to your tax bill each month. Still a good deal (unless you buy the car personally, lose very little in depreciation over its life, a current bubble that will however eventually burst, and are getting 45p and not 5p per business mile).

I’m with Zenith and the BIK is factored into the net monthly price quoted.

[Harry Flashman]

jgrewal said:

Tempted by this route to get a fully loaded Ioniq 5 through Tusker on NHS for £565 net on my wife's salary sacrifice scheme. Few things put me off though - impact on her pension for the reduced income (she is 40% tax payer) and the fact we cannot keep our no claims from her current car on the insurance as I assume insurance is centrally managed at fleet level.

Loads cheaper than a private lease (£5k deposit, £490 per month, insurance + servicing, tyres on top). While of course this would be all in! Anyone had a bad experience with this?

Edited by jgrewal on Sunday 9th October 22:25

Is that really "loads cheaper" though? You are paying an extra £75 a month for the sacrifice scheme, or £900 a year. Depending on your actual mileage and insurance quote, it may not be very much cheaper at all.

Our Leaf does 3000 miles a year, and insurance is £350 a year. Servicing at just over £100 a year when evened out over the three year term. Doubt we will need new tyres at our mileage.

Work on the use case, not just assumptions!

[AyBee]

SWoll said:

Yep. As mentioned earning between £100-125k and keeping the entire gross cost between those figures is the ultimate sweetspot for salary sacrifice as with the loss of personal allowance between those figures you're avoiding a marginal tax rate of 60%.

If you were earning £100k then the same car would be costing an additional £150-200 per month.

Or indeed £140k-£165k if you were to maximise pension allowance too.

[SWoll]

Harry Flashman said:

jgrewal said:

Tempted by this route to get a fully loaded Ioniq 5 through Tusker on NHS for £565 net on my wife's salary sacrifice scheme. Few things put me off though - impact on her pension for the reduced income (she is 40% tax payer) and the fact we cannot keep our no claims from her current car on the insurance as I assume insurance is centrally managed at fleet level.

Loads cheaper than a private lease (£5k deposit, £490 per month, insurance + servicing, tyres on top). While of course this would be all in! Anyone had a bad experience with this?

Edited by jgrewal on Sunday 9th October 22:25

Is that really "loads cheaper" though? You are paying an extra £75 a month for the sacrifice scheme, or £900 a year. Depending on your actual mileage and insurance quote, it may not be very much cheaper at all.

Our Leaf does 3000 miles a year, and insurance is £350 a year. Servicing at just over £100 a year when evened out over the three year term. Doubt we will need new tyres at our mileage.

Work on the use case, not just assumptions!

You appear to have mised the £5k deposit required for the personal lease? Assuming a 3 year deal that means it's actually costing the equivalent of £615 a month before insurance etc.

[Sheepshanks]

jgrewal said:

... and the fact we cannot keep our no claims from her current car on the insurance as I assume insurance is centrally managed at fleet level.

I wouldn't worry about that - insurers seem to go mainly on driving record. When I opted out of a company car some would give 5yrs introductory bonus but there was no great price difference with those who wouldn't.

[jgrewal]

Thanks for the feedback guys. Not bad on the insurance aspect then and yes need to factor on the hefty deposit (which is not needed on the salary sacrifice).

[SWoll]

jgrewal said:

Thanks for the feedback guys. Not bad on the insurance aspect then and yes need to factor on the hefty deposit (which is not needed on the salary sacrifice).

Also would need to confirm for yourself, but most SS deals have insurance against early termination baked into the cost so are a lot easier to walk away from at short notice should circumstances change than with a personal lease.

[AyBee]

SWoll said:

jgrewal said:

Thanks for the feedback guys. Not bad on the insurance aspect then and yes need to factor on the hefty deposit (which is not needed on the salary sacrifice).

Also would need to confirm for yourself, but most SS deals have insurance against early termination baked into the cost so are a lot easier to walk away from at short notice should circumstances change than with a personal lease.

Which is an interesting concept in itself. I think my scheme can hand back 10 cars per year with no cost (company of <100 employees) so I'd be better off on a 4-year deal than a 3.

[SWoll]

AyBee said:

SWoll said:

jgrewal said:

Thanks for the feedback guys. Not bad on the insurance aspect then and yes need to factor on the hefty deposit (which is not needed on the salary sacrifice).

Also would need to confirm for yourself, but most SS deals have insurance against early termination baked into the cost so are a lot easier to walk away from at short notice should circumstances change than with a personal lease.

Which is an interesting concept in itself. I think my scheme can hand back 10 cars per year with no cost (company of <100 employees) so I'd be better off on a 4-year deal than a 3.

Assuming your company was happy to agree to it then you would likely save 10-15% on your monthly payments based on quotes I've seen.

[z4RRSchris]

i'm waiting for a Y, works out just under £600pm on a 45% taxpayer.

My man maths was i get a new car for £600pm and my range / z4 combo is costing around £500pm.

still waiting.

[Harry Flashman]

SWoll said:

Harry Flashman said:

jgrewal said:

Tempted by this route to get a fully loaded Ioniq 5 through Tusker on NHS for £565 net on my wife's salary sacrifice scheme. Few things put me off though - impact on her pension for the reduced income (she is 40% tax payer) and the fact we cannot keep our no claims from her current car on the insurance as I assume insurance is centrally managed at fleet level.

Loads cheaper than a private lease (£5k deposit, £490 per month, insurance + servicing, tyres on top). While of course this would be all in! Anyone had a bad experience with this?

Edited by jgrewal on Sunday 9th October 22:25

Is that really "loads cheaper" though? You are paying an extra £75 a month for the sacrifice scheme, or £900 a year. Depending on your actual mileage and insurance quote, it may not be very much cheaper at all.

Our Leaf does 3000 miles a year, and insurance is £350 a year. Servicing at just over £100 a year when evened out over the three year term. Doubt we will need new tyres at our mileage.

Work on the use case, not just assumptions!

You appear to have mised the £5k deposit required for the personal lease? Assuming a 3 year deal that means it's actually costing the equivalent of £615 a month before insurance etc.

AH!! Good point - I did. OK, that makes a lot more sense now.

[silent ninja]

Harry Flashman said:

AH!! Good point - I did. OK, that makes a lot more sense now.

You do get through tyres quicker on EVs due to their weight. So I'd factor that in.

I also like the insurance perks - on my scheme, anyone that I give permission to (that has a valid UK licence) can drive the car at no additional cost. So not just spouse, but friends or anyone from work.

[theboss]

silent ninja said:

You do get through tyres quicker on EVs due to their weight. So I'd factor that in.

I also like the insurance perks - on my scheme, anyone that I give permission to (that has a valid UK licence) can drive the car at no additional cost. So not just spouse, but friends or anyone from work.

I'm not noticing my EV tyres wearing any faster than previous cars - is that an exception to the norm? Or maybe my ICE cars have all been puddings as well

[Seven8Seven]

My EQC got to 15k miles before the front tyre sidewalls showed signs of wear and I got a puncture, so changed them both. Tyres included in my SS payment

[theboss]

I've kept my e-tron on its winters all year. Quite funny when it was 30+ degrees. They still have plenty of wear left and will see me through to the lease end when I can still the 3mm summers back on for the handover.