Infiniti lease... pay £45k and still don't own it?
Discussion
Saw an advert in the paper for the Infiniti M35h the other day.
The way the small print reads it seems you're on the hook for ~£45k of outlay (which is broadly in line with the outright purchase price) but, and this is the bit I don't understand, after you've made the final payment you don't technically own the car and need to pay them £50/pa for its continued use.
Am I reading things completely wrong (or is there something I don't know about leasing that means that folk can walk away without making the final payment)?
If not, what's the logic behind the approach given that the individual won't be able to sell the car? Protecting owners from hybrid battery replacement costs? Protecting residuals in the market by eliminating private sales? Something else?
Here's the details from their website:
Bit confused...
The way the small print reads it seems you're on the hook for ~£45k of outlay (which is broadly in line with the outright purchase price) but, and this is the bit I don't understand, after you've made the final payment you don't technically own the car and need to pay them £50/pa for its continued use.
Am I reading things completely wrong (or is there something I don't know about leasing that means that folk can walk away without making the final payment)?
If not, what's the logic behind the approach given that the individual won't be able to sell the car? Protecting owners from hybrid battery replacement costs? Protecting residuals in the market by eliminating private sales? Something else?
Here's the details from their website:
Bit confused...
Edited by LooneyTunes on Saturday 18th February 10:03
Possibly a very tax efficient way to keep use of the car for life, without ever buying (owning) it.
If that's the case in 4 years these will be great pool car snotters for companies, or for passing ontot he wife to use at the end of the lease and paying the £50 so no company car tax due.
If that's the case in 4 years these will be great pool car snotters for companies, or for passing ontot he wife to use at the end of the lease and paying the £50 so no company car tax due.
TooLateForAName said:
This is a hybrid isn't it? Is it a way of them continuing to cover the costs of batteries and thus protect you from £££££ of expense down the line?
That was my first thought. A nice quiet way of keeping replacement costs out of view if/when the batteries start failing?Simond S said:
Possibly a very tax efficient way to keep use of the car for life, without ever buying (owning) it.
If that's the case in 4 years these will be great pool car snotters for companies, or for passing ontot he wife to use at the end of the lease and paying the £50 so no company car tax due.
I'm not sure that that would get you round the BIK? The HMRC calculator doesn't seem to make any provision for leasing costs being met in full by the beneficiary (indeed, the cost of the lease itself doesn't even seem to be a feature): http://cccfcalculator.hmrc.gov.uk/CCF0.aspx and even if they did there'd still be employee benefit as a result of the company paying the associated costs so pretty sure HMRC would wise up to that as a scheme?If that's the case in 4 years these will be great pool car snotters for companies, or for passing ontot he wife to use at the end of the lease and paying the £50 so no company car tax due.
Still struggling with the idea that someone might be tempted to pay full price for a car and not be able to sell it (however cheaply) when they've done so!
It's so they can limit the claim when it comes to "Canyonero" time and it burns all it's occupants to death.
They don't want you selling it on and eventually once it is past is economic lifespan, they will crush it. No one will want it in 6 years basically! But they won't want that advertised when you come to sell a worthless car, so they retain the ownership and brush it under the carpet cos the truth is not very green!
They don't want you selling it on and eventually once it is past is economic lifespan, they will crush it. No one will want it in 6 years basically! But they won't want that advertised when you come to sell a worthless car, so they retain the ownership and brush it under the carpet cos the truth is not very green!
LooneyTunes said:
Here's the details from their website:
Bit confused...
This is about tax. Effectively it's aimed at people (self-employed) who want to be able to have a PCP and claim back the VAT , but retain an option to purchase. A private buyer would be nuts to choose this option, as the same rentals are available on PCP. Bit confused...
Edited by LooneyTunes on Saturday 18th February 10:03
However if you choose this you can claim back VAT on (IIRC 50%) and the whole amount as an expense, but you still have an effective option to "purchase" if you then want to keep the car longer, saving the amount on the tax. If you then decline to pay the £50 a year at some point in future, the car goes back and you lose the retained value by that point, but you've hopefully saved far more than that in tax.
Unless of course the final rental is mandatory (unlikely) in which case the whole scheme is just insane.
LooneyTunes said:
Protecting residuals in the market by eliminating private sales?
I think it's that.http://www.am-online.com/news/2010/3/17/lease-buye...
Note the comment that they think their RVs are under-rated.
It's a business lease so you can pay for the car as an operating expensive rather than a written down capital purchase.
The deal is basically contract purchase dressed up as contract hire so a business gets the tax benefits available hiring not least the ability to claim 50% of the vat back.
If the company buys a vehicle on a contract purchase basis the car becomes an asset on the balance sheet and only upto 25% of the value can written down each year for tax purposes. However if you lease the car then a business can claim 50% of the vat back on each payment... including the "final" payment and the payments can be offset against corporation tax.
The deal is basically contract purchase dressed up as contract hire so a business gets the tax benefits available hiring not least the ability to claim 50% of the vat back.
If the company buys a vehicle on a contract purchase basis the car becomes an asset on the balance sheet and only upto 25% of the value can written down each year for tax purposes. However if you lease the car then a business can claim 50% of the vat back on each payment... including the "final" payment and the payments can be offset against corporation tax.
DavidHM said:
This is about tax. Effectively it's aimed at people (self-employed) who want to be able to have a PCP and claim back the VAT , but retain an option to purchase.
<snip>
Unless of course the final rental is mandatory (unlikely) in which case the whole scheme is just insane.
I'm with Deva Link in thinking the BIK would wipe out any advantages of that if you were self employed/small LTD. And they don't say the final rental is optional - which I seem to think people usually do, just to avoid any confusion?<snip>
Unless of course the final rental is mandatory (unlikely) in which case the whole scheme is just insane.
As b0rk suggests leasing works for some firm (assuming that final rental is optional)?
Typically, annual peppercorn rentals would be charged on a finance lease which has reached the end of the primary period, and you can never own an asset that has been held on such a lease, but that has been an on-balance-sheet funding method for many, many years.
Making good the cost of the lease on a company car would not remove the BIK liability, and you don't even get the discount when the car is more than 4 years old any more.
More importantly, is there really a Nissan worth £45k?
Making good the cost of the lease on a company car would not remove the BIK liability, and you don't even get the discount when the car is more than 4 years old any more.
More importantly, is there really a Nissan worth £45k?
As private buy a business owner wouldn't be able to put fuel and maintenance through the books but rather only claim 45p per business mile for the first 10k then 25p there after. I'd expect the running costs would exceed the BIK due + total available as tax relief by some margin making a business "purchase" more economic. The market for personally purchased 40k+ saloons must be somewhat small anyway I'd imagine.
The peppercorn element on a general deal does seem a little strange I'd admit. I could understand such an option for say structure finance on a corporate executive car pool.
The peppercorn element on a general deal does seem a little strange I'd admit. I could understand such an option for say structure finance on a corporate executive car pool.
Gassing Station | General Gassing | Top of Page | What's New | My Stuff