EV via Salary Sacrifice - indicative monthly cost?

[ucb]

Mr E said:

I don’t understand this charge - is this purely because the NHS pension is a defined benefit scheme and not just a pot of money you have to live off when you retire?

Essentially yes
The pension input amount each year isn't based on pre-tax salary contributions but on the growth in your fund each year. Hence a rise in salary/ change of payscale changes your salary and you've also contributed a further year, ergo growth in fund along with the dynamising factor applied.
The problem with NHS salary sacrifice is that it is applied before pension contributions so taxable benefits change depending on your choice of car. However it also means that the quoted price by NHS employees of salary sacrifice vehicle is an illusion. Examples copy and pasted below:

Salary Sacrifice 

Monthly Gross Salary Sacrifice:£ 592.56

Savings on NI:£ -11.85

Savings on Tax:£ -205.03

Savings on Pension:£ -80.00

Total savings per month:£ -296.88

Monthly Take Home Pay reduced by:£ 295.68
Monthly Car Tax Liability:£ 19.60

Total cost per month:£ 315.29

[Mr E]

Understood (sort of). So be aware if you’re nhs (or similar). For those of use with more normal pension schemes it’s an easier calculation (but the raw monthly cost will be higher)

[anonymous-user]

My pension is salary sacrifice, does anyone know if the ev salary sacrifice effects the salary that the pension is calculated from?

Eg. Say £60,000 pa worth 20% to pension, does this become £60,000 less EV at 20%?

[gangzoom]

custardtart86 said:

Here is a really good Twitter thread about implications of salary sacrifice cars for NHS people. In short, be careful!

Link below: https://mobile.twitter.com/goldstone_tony/status/1...

Great tool, NHS employees really should make this a mandatory checklist item for anyone signing up to any kind of NHS salary sacrifice scheme!!

In my case the final cost pretty much doubles the quoted 'net cost'. No wonder NHS employers are pushing these 'deals' so hard and can afford to advertise such low net cost figures.

For every NHS employee that signs up the government is saving £££££ in pension costs, whilst all the Unions are making a massive noise about 1-3% gross salary increases not a single one of them is warning their members about the true cost of these schemes......

[gangzoom]

J1mmy90 said:

Prices at my work are more than double the NHS prices on most cars. are others getting close to NHS prices?

sebdangerfield said:

My old work scheme was tusker and my mates was NHS. I never found a tusker car on my scheme less than double what his was. No idea how they compete.

Having put my own figures into the posted Twitter spreadsheet, the answer is pretty obvious, pension savings for the employer.

So any NHS SS deal that is anything less than 50% of normal SS deals is a massive rip off. Our trust is charging £760/month for a Model 3 LR - final costs actually work out at £1100/month......£1100/month to rent a Model 3 for a few years with zero chance of actual ownership, No thank you.

[Pit Pony]

Nobby 2 said:

Other quotes for 36months and 9k miles per year from NHS were as follows:

Telsa model 3 performance - £452
Taycan 4s - £520
BMW i4 Gran Coupe M50 - £494
Polestar 2 with plus & pilot packs - £394
Merc EQC Premium Plus AMG - £441

I was talking to an old manager about a job, some distance from home. And I calculated a weekly commute of 500 miles. Or 23k a year. Above 12k a year the cost ramps up considerably.

[J1mmy90]

Thanks for the prices Nobby. My works prices are way higher, anyone else other than NHS getting anything similar? Is this subsidised by the NHS?

[Lee540]

I'm not NHS. Prices are way higher!

I'll share some shortly if it helps. I'm still better off financially with my diesel car and paying all my own bills/maintenance.

Shame really, I'd be tempted by a Tesla M3 LR

[Lee540]

Tesla Model 3 Long Range
12k per annum
36 months

£486/month

[J1mmy90]

Thanks Lee, that's a great price for the M3 LR. Seems a good deal for that car as the cost to you will be even less dude do the tax saving so of your a higher rate payer it's cheap motoring.

My quote is 70 percent more.

[CheesecakeRunner]

NHS fleet prices are not representative of the wider salary sacrifice market for private companies.

Fwiw, I pay 700 net (1150 gross) for a 2021 Model 3 Performance, 36 months, 15k miles per annum, maintained, insurance for me and my spouse, recovery, and any tyres needed. I’m a 40% taxpayer. The car is supplied by Arval.

[anonymous-user]

CheesecakeRunner said:

NHS fleet prices are not representative of the wider salary sacrifice market for private companies.

Fwiw, I pay 700 net (1150 gross) for a 2021 Model 3 Performance, 36 months, 15k miles per annum, maintained, insurance for me and my spouse, recovery, and any tyres needed. I’m a 40% taxpayer. The car is supplied by Arval.

I’m still waiting for more details of the scheme that my employer is going to be offering but I anticipate the prices being similar to the above. My main concerns are about how it affects my salary sacrifice pension and current cash car allowance. Have a ordered a new Touareg in the meantime as I don’t think the prices will be competitive for non private companies.

[Jag_NE]

CheesecakeRunner said:

NHS fleet prices are not representative of the wider salary sacrifice market for private companies.

Fwiw, I pay 700 net (1150 gross) for a 2021 Model 3 Performance, 36 months, 15k miles per annum, maintained, insurance for me and my spouse, recovery, and any tyres needed. I’m a 40% taxpayer. The car is supplied by Arval.

Why are the NHS ones so cheap?

[CheesecakeRunner]

Jag_NE said:

Why are the NHS ones so cheap?

I imagine a combination of volume discounts, special pricing, and perhaps the effect on pension is also taken into account. I believe NHS Fleet are the actual purchaser too, so maybe there is also no lease company looking to make a profit.

[J1mmy90]

CheesecakeRunner said:

NHS fleet prices are not representative of the wider salary sacrifice market for private companies.

Fwiw, I pay 700 net (1150 gross) for a 2021 Model 3 Performance, 36 months, 15k miles per annum, maintained, insurance for me and my spouse, recovery, and any tyres needed. I’m a 40% taxpayer. The car is supplied by Arval.

I don’t understand why it’s so high. That comes to 42K in payments over three years and is over 70% of the value of the car. Seems like the lease company is making a killing.

[gangzoom]

Jag_NE said:

Why are the NHS ones so cheap?

NHS ones aren't cheap at all once in factor in pension reductions, you need to just about double the advertised NHS costs to get the true cost.

For NHS trusts they have pay 14% in pension contributions, so any reduction in employee pensionable pay saves them quite a bit of money.

[CheesecakeRunner]

J1mmy90 said:

I don’t understand why it’s so high. That comes to 42K in payments over three years and is over 70% of the value of the car. Seems like the lease company is making a killing.

Remember it’s an all-inclusive price. Insurance will be around 1000 per year, and it’ll need a set of tyres per year at 1000 too. Recovery and any maintenance is also included. So you need to knock off around £4500 from the total paid.

As far as the net payment goes, which is all that matters to me, given I work for a private company so it doesn’t affect any of my other benefits, £700 all-inclusive for an M3P is a bloody bargain. £25,200 over the term is all I actually pay, you couldn’t lease one privately for an all-in cost anywhere near that. The only thing I need to do is put electricity and screen wash in it, and even that gets expensed.

[alfaeejit]

We've got the tusker SS scheme (local authority) and we don't seem to get the same deals as the NHS schemes. I think there were some real bargains a couple of years ago (etron etc) but they seem to have dried up. If you hunt there are some good looking deals though - a 40kwh leaf for 220ish a month (net) for 24 months seems decent and there was a launch edition e-mokka for 240 for 24 months. The ix3 was also available for 450 for 48 months but that's shot up now

I've also noted that the 40 q4 etron is actually coming in cheaper than the bigger battery version of the id4 and enyaq which is quite temping at 440 for 48 months and a similar amount gets you an ioniq 5 AWD.

[TwigtheWonderkid]

itz_baseline said:

pavarotti1980 said:

Straight salary deduction would be £795. Obviously massive pension implications.

Interesting. Nothing has been mentioned about pensions. How does this impact pensions?

Pension is against gross salary, not gross salary-salary sacrifice for car.

I’m not an expert so genuinely interested to understand how this might impact me down the line.

Most of the time, your gross salary is the post salary sacrifice salary. That's where the tax savings come in for the employee. So instead of earning say £60K, and paying tax on £60K, your official salary is now £50K, and your death in service, pension, amount you can declare if applying for a mortgage, is all based on £50K. In addition, they also spend £10K of their money running a car for you. That's why it's called salary sacrifice, you are sacrificing some of your salary.

[CheesecakeRunner]

And that’s why it’s a big deal for NHS drivers.

If their gross used to be 60k and NHS put 10% into their pension they got £6000 a year into pension (ignoring tax for the purposes of an easy example).

When their gross changes to 50k because of the car, they only get £5000 per year into the pension. Over the term of the car, and the term of the pension, this can cause quite a negative impact.

For me, working for a private company, my company contribute 10% of whatever my contract base salary is, so the car doesn’t effect it.