Salary Sacrifice for Cars Scheme
Discussion
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.
Deva Link said:
I imagine with vans they're probably worked quite hard so you'll get a fair number of issues.
Running a car for 3yrs shouldn't throw up the same level of hassle. The only thing that used to bother me was getting tyres changed was always a palava - they usually won't change until 2mm, and they'll often fit a mid-market brand, whereas ideally I'd want like for like which practically never happened, so the car would feel different, and not always in a good way!
You do have to get used to the idea that the vehicle isn't yours, and not be so precious about it. This has the downside (or possibly upside, depending on your point of view) that you tend not to be so bothered about looking after it generally.
We are very gentle with our vans compared to most. Running a car for 3yrs shouldn't throw up the same level of hassle. The only thing that used to bother me was getting tyres changed was always a palava - they usually won't change until 2mm, and they'll often fit a mid-market brand, whereas ideally I'd want like for like which practically never happened, so the car would feel different, and not always in a good way!
You do have to get used to the idea that the vehicle isn't yours, and not be so precious about it. This has the downside (or possibly upside, depending on your point of view) that you tend not to be so bothered about looking after it generally.
We've had problems as follows:
PITA getting tyres, like you say. You can't just leave a punctured spare with them as the vehicle has to be present, they will only use certain tyres from stock, which they will get from another depot but you can't reserve them once they arrive. Actually the best way (this is Kwikfit) is to call the mobile service as they are much easier to deal with.
Ridiculous level of penalties at the end of the lease, esp. for vans that are taken straight to Blackbushe for auction.
Utter inflexibility on lowering the monthly price if we extend the lease a bit.
Random refusal to do work. My van is a VW with flexible servicing, but supplying garage has not set it up right so it comes up every 10,000 miles. Lease company occasionally won't authorise the service because the "light hasn't come on yet" when it has.
Once randomly refusing to let an accredited garage replace a clutch. They actually sent a lorry and took the van away to another garage, without even telling me where it had gone to (a garage 30 minutes away) then made me go and collect it when it was done.
So now we buy our vans on finance (which costs ~the same per month) and at the end of the equivalent period of ownership, we sell the van.
Deva Link said:
mrmr96 said:
Salary sacrifice for a car is perfectly legal, and is therefore "tax avoidance" and HMRC won't care about you doing it, so long as the scheme is legal.
I think you're missing the point. It's fine at an individual level, and anyone offered such a deal should grab it with both hands.But, trust me on this, the bigger picture is that there are people sitting in HMRC wailing and gnashing their teeth about salary sacrifice schemes in general, and the car one specifically. Whether that comes to anything, who knows?
You can see the issue:
Quinnaay said:
i save £100 in tax and NI then i pay £30 back for BIK
The wife's employer has just started offering a salary sacrifice car lease scheme. Yes, you have to pay BIK but that should work out less than income tax and NI.
On her scheme, IIRC, if you want to leave early then the financial penalty is quite steep. So you have to be pretty sure that you're going to go the distance with the lease. If you leave the job, you either hand the car back (and pay the penalty) or continue the lease to its conclusion without the tax benefits. Its the same if you're made redundant, except you don't pay the penalty to return the car.
As with the OP, pretty much everything except the fuel was included - VED, tyres, servicing.
The company offering the scheme had some superb offers on specific cars. However, the prices for other vehicles were quite variable. For example, a Hyundai i20 1.2 (not on offer) would cost more to lease than the Civic 1.8 that was on offer! So its great if you're happy with whats on special, perhaps not such great value if you're after something very specific.
When we get around to replacing the wife's car then we'll definitely consider this scheme. With her scheme a car can also be purchased for your partner (can't remember if its 1 car for either the employee OR their partner or 2 cars for both the employee AND their partner).
On her scheme, IIRC, if you want to leave early then the financial penalty is quite steep. So you have to be pretty sure that you're going to go the distance with the lease. If you leave the job, you either hand the car back (and pay the penalty) or continue the lease to its conclusion without the tax benefits. Its the same if you're made redundant, except you don't pay the penalty to return the car.
As with the OP, pretty much everything except the fuel was included - VED, tyres, servicing.
The company offering the scheme had some superb offers on specific cars. However, the prices for other vehicles were quite variable. For example, a Hyundai i20 1.2 (not on offer) would cost more to lease than the Civic 1.8 that was on offer! So its great if you're happy with whats on special, perhaps not such great value if you're after something very specific.
When we get around to replacing the wife's car then we'll definitely consider this scheme. With her scheme a car can also be purchased for your partner (can't remember if its 1 car for either the employee OR their partner or 2 cars for both the employee AND their partner).
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.mrmr96 said:
Deva Link said:
mrmr96 said:
Salary sacrifice for a car is perfectly legal, and is therefore "tax avoidance" and HMRC won't care about you doing it, so long as the scheme is legal.
I think you're missing the point. It's fine at an individual level, and anyone offered such a deal should grab it with both hands.But, trust me on this, the bigger picture is that there are people sitting in HMRC wailing and gnashing their teeth about salary sacrifice schemes in general, and the car one specifically. Whether that comes to anything, who knows?
You can see the issue:
Quinnaay said:
i save £100 in tax and NI then i pay £30 back for BIK
I've had a chat with one of the guys I work with who specialises in setting up these schemes for companies. He's not aware there are any suggestions within HMRC that opting for cars through salary sacrifice is being reviewed. As a whole, HMRC are okay with salary sacrifice - most big companies do it to a greater or lesser degree and HMRC has openly come out and clarified that some (e.g. pensions) are completely acceptable. Where HMRC gets a bit twitchy is where the schemes aren't set up properly - one was challenged (Heaton v Bell from a quick google?) because employees could opt in or out largely at will rather than waiting for certain pre-defined "lifestyle" events.
Also, with the tax avoidance/evasion thing, within the realms of avoidance there is a wide range from paying money into a pension/buying a low emissions car which the Government absolutely intended by legislation to the pretty aggressive things bordering on evasion and which the Government wants to close down (I'm looking at you, Mr Carr).
Deva Link said:
SS4C said:
I think you are mistaken with your comment above...
Do you, and similar companies who spam these threads, deliberately set out to make yourselves look stupid? Zigster said:
I thought SS4C's post was well-written and in like with my understanding of these arrangements. Which part of it did you think made him look "stupid"?
The fact that it's already been answered multiple times and the OP admitted he made a mistake.It would be well written - it's an advert.
Deva Link said:
Yes, they see salary sacrifice as tax avoidance. Not officially, obviously. But it's pretty hard to argue they're not as the whole point of them is for the employee to mitigate their tax bill.
Laws are never black and white and there's always people trying to work around tax law, and the Revenue, as has been seem from various court cases, will spare no expense to try and stop them. Their recent VAT win on salary sacrifice is seen as significant.
Are you referring to the Astra Zeneca ruling when you say that the recent VAT win on salary sacrifice is seen as significant? Laws are never black and white and there's always people trying to work around tax law, and the Revenue, as has been seem from various court cases, will spare no expense to try and stop them. Their recent VAT win on salary sacrifice is seen as significant.
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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