NHS lease scheme
Discussion
There's been some discussion on the 'best lease deals' thread about the NHS scheme.
I thought it might be worthwhile having a separate thread for both the discussion of how it works and best deals.
I've never used it before and in particular don't understand the pension implications? Anybody care to explain please?
I'm on the higher end of the pay scale in the NHS and it might even be beneficial to reduce my pension pot as it will prevent me from being landed with a horrendous tax bill.
Thanks
I thought it might be worthwhile having a separate thread for both the discussion of how it works and best deals.
I've never used it before and in particular don't understand the pension implications? Anybody care to explain please?
I'm on the higher end of the pay scale in the NHS and it might even be beneficial to reduce my pension pot as it will prevent me from being landed with a horrendous tax bill.
Thanks
As well as pension implications, there are benefit in kind tax implications.
My understanding is that HMRC will tax the driver on whatever the greatest is between:
a) the Income Tax due on the amount of salary sacrificed on the finance rental of the vehicle, or
b) the Benefit in Kind charge on the car, which is determined by the P11D and CO2 emission levels of the vehicle.
My understanding is that HMRC will tax the driver on whatever the greatest is between:
a) the Income Tax due on the amount of salary sacrificed on the finance rental of the vehicle, or
b) the Benefit in Kind charge on the car, which is determined by the P11D and CO2 emission levels of the vehicle.
Fast Bug said:
It's quite often cheaper to lease a car outside of these schemes, so double check prices before you sign up
Yes, but the BIK on EVs makes them hard to resist I3s for £200/month anyone taxed, insured and maintained? Or an etron for 300.....
What is less clear to non experts is the effects on your total pension and pension tax when the lease ends
Cheers
My wife was in the scheme for years., starting with a VW Tiguan in 2008, Qashqai in 2011, then an A3 in 2014.
After the Audi in 2017 she left the scheme as the value of the car she was entitled to kept dropping. The Audis list price in 2014 was something like 20, 950 and at the time she could select from a list of cars along as the value was under 21k.
After 3 years with the Audi they had dropped this down to something like 17.5k severely limiting what we could go for. We ended up buying.
Prior to that, I'd always found the scheme pretty good. Insurance, tax and maintenance was included. I'm sure we paid about 200 quid a month for the Audi.
After the Audi in 2017 she left the scheme as the value of the car she was entitled to kept dropping. The Audis list price in 2014 was something like 20, 950 and at the time she could select from a list of cars along as the value was under 21k.
After 3 years with the Audi they had dropped this down to something like 17.5k severely limiting what we could go for. We ended up buying.
Prior to that, I'd always found the scheme pretty good. Insurance, tax and maintenance was included. I'm sure we paid about 200 quid a month for the Audi.
numtumfutunch said:
Fast Bug said:
It's quite often cheaper to lease a car outside of these schemes, so double check prices before you sign up
Yes, but the BIK on EVs makes them hard to resist I3s for £200/month anyone taxed, insured and maintained? Or an etron for 300.....
What is less clear to non experts is the effects on your total pension and pension tax when the lease ends
Cheers
Leasing the car will reduce your salary and thus contributions going into the pot.
The pot thus is now smaller and not growing as much so when you get your pension it will be less.
Our Trust Director of Finance has thus never entertained this leasing game due to the blasé attitude of the provider and the risk for employees cost wise.
Whilst the BIK is good on the EV cars, it will change in the coming years as more and more people switch to them. So you need to keep this in mind.
I've been involved in setting a few of these schemes up and for non EV products, generally they're more expensive and that's before you take in to account pension contributions.
I've been involved in setting a few of these schemes up and for non EV products, generally they're more expensive and that's before you take in to account pension contributions.
numtumfutunch said:
Fast Bug said:
It's quite often cheaper to lease a car outside of these schemes, so double check prices before you sign up
Yes, but the BIK on EVs makes them hard to resist I3s for £200/month anyone taxed, insured and maintained? Or an etron for 300.....
What is less clear to non experts is the effects on your total pension and pension tax when the lease ends
Cheers
Looking at ordering an Audi Etron all electric car on this scheme. An official quote came in @ £315 x 24 months included the home charger installed, insurance for up to 4 family members, servicing and maintenance included and the biggest saving of no fuel! Seems like a no brainer, as someone has already mentioned the petrol/ diesel equivalents are not as competitive although they all do include insurance etc too.
There's different schemes though, not all trusts use fleetsolutions, so the information you receive may not be relevant.
There's quite a bit of info here https://www.nhsfleetsolutions.co.uk/faqs/
I previously leased a Golf GTE through them, and am currently waiting for the Ioniq in April .
Cheers
There's quite a bit of info here https://www.nhsfleetsolutions.co.uk/faqs/
I previously leased a Golf GTE through them, and am currently waiting for the Ioniq in April .
Cheers
Edited by garpat32 on Sunday 26th January 09:50
Thanks for setting up separate thread Deep.
As someone else above, my wife has got an e-tron quote of about £318p/m for 8k mpa. With it being 0% BIK, I don't think there's a tax issue, it's really the pension bit I'm getting my head around. Think I'm starting to understand (slightly!) the pot contribution going down, and final pension dropping based on the 1/54th of pensionable salary calculation etc.
It really goes beyond my man maths though, and I can't get past the "£318 p/m for an e-tron" including all the extras, seems brilliant!
As someone else above, my wife has got an e-tron quote of about £318p/m for 8k mpa. With it being 0% BIK, I don't think there's a tax issue, it's really the pension bit I'm getting my head around. Think I'm starting to understand (slightly!) the pot contribution going down, and final pension dropping based on the 1/54th of pensionable salary calculation etc.
It really goes beyond my man maths though, and I can't get past the "£318 p/m for an e-tron" including all the extras, seems brilliant!
Yes, I seen the E-tron and it sounded a good deal but I'm not higher tax payer so it works out a lot more unfortunately.
It's not for everyone, but some people just want an "all in one " lease where only thing you need to worry about is fuel.
Not every car they offer is a good deal, but when they have special offers on you will struggle to match them anywhere
It's not for everyone, but some people just want an "all in one " lease where only thing you need to worry about is fuel.
Not every car they offer is a good deal, but when they have special offers on you will struggle to match them anywhere
Someone on the previous thread asked me to explain how an NHS lease reduces your pension, with full figures, so I'lll have a go.
The 2015 pension scheme, which anyone under around 57 years old is now on, is a career average based scheme. It is calculated by dividing your annual salary after each financial year by 54, and that amount goes into a 'pot'. You will have extra pots after every subsequent financial year. Each pot is revalued every year, at 1.5% above inflation, so if inflation was 2% in the last year, all the pots are revalued by 3.5%. Once you retire, all the pots are added up, and the total is paid to you annually.
As an example, someone earning 40K throughout their career of 10 years would gat the following pension (ignoring any future inflation):
Year 1: 40,000/54 = £740 compounded by 1.5% for 9 years = £846.11
Year 2: 40,000/54 = £750 compounded by 1.5% for 8 years = £833.60
Year 3: 40,000/54 = £750 compounded by 1.5% for 7 years = £821.29
Year 4: 40,000/54 = £750 compounded by 1.5% for 6 years = £809.15
Year 5: 40,000/54 = £750 compounded by 1.5% for 5 years = £797.19
Year 6: 40,000/54 = £750 compounded by 1.5% for 4 years = £785.41
Year 7: 40,000/54 = £750 compounded by 1.5% for 3 years = £773.80
Year 8: 40,000/54 = £750 compounded by 1.5% for 2 years = £762.37
Year 9: 40,000/54 = £750 compounded by 1.5% for 1 year = £751.10
Year 10: 40,000/54 = £750 compounded by 1.5% for 0 years = £740
Once you add the 10 pots up, it gives an annual retirement income of £7920.02
If someone takes out an NHS car lease of £300/month, that means their salary drops by £3600 to £36,400. So the pot that year will drop from £740 to £650, a £90 decrease, and will be decreased by the length of the lease e.g. 3 year lease = £90x3 = £180 less a year in NHS pension. If a person has 30 years left in work before retiring, that £180 would have been rebalanced every year by at lease 1.5%. That gives £240 less a year.
£240 doesn't sound that much, but that's £4800 on a 20 year retirement, and if you have multiple leases if can add up to much more than that.
It MAY be worth it for higher rate tax payers to take put an NHS lease, but I wouldn't do it as a 20% tax payer myself.
The 2015 pension scheme, which anyone under around 57 years old is now on, is a career average based scheme. It is calculated by dividing your annual salary after each financial year by 54, and that amount goes into a 'pot'. You will have extra pots after every subsequent financial year. Each pot is revalued every year, at 1.5% above inflation, so if inflation was 2% in the last year, all the pots are revalued by 3.5%. Once you retire, all the pots are added up, and the total is paid to you annually.
As an example, someone earning 40K throughout their career of 10 years would gat the following pension (ignoring any future inflation):
Year 1: 40,000/54 = £740 compounded by 1.5% for 9 years = £846.11
Year 2: 40,000/54 = £750 compounded by 1.5% for 8 years = £833.60
Year 3: 40,000/54 = £750 compounded by 1.5% for 7 years = £821.29
Year 4: 40,000/54 = £750 compounded by 1.5% for 6 years = £809.15
Year 5: 40,000/54 = £750 compounded by 1.5% for 5 years = £797.19
Year 6: 40,000/54 = £750 compounded by 1.5% for 4 years = £785.41
Year 7: 40,000/54 = £750 compounded by 1.5% for 3 years = £773.80
Year 8: 40,000/54 = £750 compounded by 1.5% for 2 years = £762.37
Year 9: 40,000/54 = £750 compounded by 1.5% for 1 year = £751.10
Year 10: 40,000/54 = £750 compounded by 1.5% for 0 years = £740
Once you add the 10 pots up, it gives an annual retirement income of £7920.02
If someone takes out an NHS car lease of £300/month, that means their salary drops by £3600 to £36,400. So the pot that year will drop from £740 to £650, a £90 decrease, and will be decreased by the length of the lease e.g. 3 year lease = £90x3 = £180 less a year in NHS pension. If a person has 30 years left in work before retiring, that £180 would have been rebalanced every year by at lease 1.5%. That gives £240 less a year.
£240 doesn't sound that much, but that's £4800 on a 20 year retirement, and if you have multiple leases if can add up to much more than that.
It MAY be worth it for higher rate tax payers to take put an NHS lease, but I wouldn't do it as a 20% tax payer myself.
ahm said:
It really goes beyond my man maths though, and I can't get past the "£318 p/m for an e-tron" including all the extras, seems brilliant!
You need to work out the impact on the pension cost over the life time of the retirement and add that to drop in net pay to see the true cost to the 'deal'. The one benefit of working weekend/night/public holiday shifts most clinical NHS staff do just as part of the shift rota without asking for any additional payment is the pension benefits the NHS provides. Losing £40/month through salary sacrifice on parking or similar amount is nothing compared to £300+/month on a rental car.
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