Salary Sacrifice Cars | How does it work and is it even worth it?
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- čas přidán 28. 05. 2024
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Salary Sacrifice an EV | How does it work and is it even worth it?
In this one we look at a company Salary Sacrifice scheme for EVs, is it worth it and what do you need to know about Salary Sacrifice before you sign on the dotted line? Is it better than leasing a car personally?
#salarysacrifice #carleasing
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Great Video. When I worked for a UK bank their Salary Sacrifice scheme was awful with prices so high most didn’t bother with it. Later I got told the bank were taking a massive cut of the money, no one was surprised.
Thanks for sharing. I’ve seen some bloody awful SS pricing too. I have a feeling that some agents or employers like to “wet their beaks” at times as even with the same provider the rates can vary wildly between employers.
Great video. I’m straying over 100k earnings even after my salary sacrifice pension is taken into account and the salary sacrifice car lease seems like a no brainer. I’m going round in circles with it however. Usually things that look too good to be true… are and the impact on my pensionable earnings and cumulative pension effect seems like an unknown entity.
Like you mention above it seems insane that I am considering getting a salary sacrifice to lease a 60/70/80k EV to reduce my earnings so that I’m then entitled to tax free and free childcare hours! This system is bonkers.
For reference on our lease scheme at work. I can get a BMW i5 Touring M Sport Pro for £550 net take home pay reduction. Incredibly reasonable for an 85k car.
Don’t get me started, don’t forget 100k-123k is basically 60% tax as you lose your tax free allowance. Then people say big earners should pay their “fair share” - that’s a laugh!!! In my last year of traditional employment my income tax alone was £47k, they were charging me £900 per month tax on a D3 Volvo XC40 that I was doing 25k business miles in 😂
@@PhilAinsworth-qy4ns
I hear what you are saying and I assume you are suggesting that earning over 100k means I don’t NEED help with childcare. However I just want to make two points. Firstly - people always exploit tax breaks/advantages when they can even the super rich so why shouldn’t I, regardless of how bizarre it seems. Secondly - if a couple both earned £99,999 a year they would still be entitled to tax free childcare and free childcare hours without having to do anything to exploit it. What needs to change is the childcare entitlement needs to be based on household income and not an individual income.
The fact it it includes fully comp could be a biggie given how much insurance has rocketed up last couple of years.
Since I made this a mate showed me his SS rates for the same thing from the same company and it was about 20-30% more expensive so I’m guessing the employer or an agency of some kind is taking a profit on some of these SS schemes to beware.
Eye opener. Great useful video.
Glad it was helpful!
I wasn’t planning to go EV, but when I got quotes for a new version of car I got via PCP in June 2020, it just wasn’t affordable. APR and insurance made it out of budget. I had a look at my employers sal sac scheme and could get the EV equivalent model with insurance, maintenance, tyres all included for the same as I’d paid back in 2020 when averaged out to a monthly figure. Like you say, the benefits will start to roll off over the coming years.
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This has been a useful video Jim. I've been pushing people to ask about their works Sal sac schemes, but as you said there are a lot of benefits and possible pitfalls to consider.
Yes Marv, the actual provider and employer seems to make a huge difference. 👍
Good explanation. I may have to go over it once or twice again to get the subtleties.
BTW, clicked on your link and spat out my red wine when I read this line:
"Over 18's only please, I've never worked for the BBC..." 🤣🤣🤣
...or Glasgow Ceptic FC, for that matter. Jimmy Savile's favourite team with a history to match all the way back since their dodgy founder.
I try 😉
👍👍👍. Thanks Jim
Thanks buddy
nice video. something to add as I'm in the process of getting an EV via sal sac is that it also take you out of the child benefit tax charge threshold.
Oh yes, very nice!
The more I sea about finance I realise the Mobility scheme is outstanding value for money great video jim
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Great video. That deal on the Ariya I didn't think was great. What works out best is if you earn between 100k and 125k as you are effectively paying 60% tax on the difference between 125k and 100k. So the best savings on SS is if you are in that bracket.
If you do some quotes on cars in this bracket you can get a Q8 for around £600 pm.
Great video. Maybe do examples of all tax brackets, 20%, 40%, 100k to £125k, £125k+
That’s me done on the subject for the foreseeable. The pricing of any examples are utterly irrelevant as your scheme WILL differ
I’m on my 5th salary sacrifice car - 3x fuel cars from 2012 to 2020 and then 2x EV’s. Works for me 😊
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Hi. NHS Fleetsolutions is really good. It's worth looking into. 👍
Someone showed me an ID3 deal on that a while ago and it wasn’t very good to be honest but I know others swear by it 👍
I did have salary sacrifice which started in 2021, but when I was looking for a renewal this year I found that within our scheme the price of the cars had been pushed up, I was looking at a Skoda Enyaq but price was £730 per month on 10000 miles and 4 years, even a Nissan leaf was £360 on same mileage and term, neither of these stacked up when I looked at personal lease, I have switched one of the cars I had to an ORA on a personal lease, £137 per month, got mine in March, insurance and breakdown was £71 per month, the other car I had I have switched too a 3 year old ID4 from a vw Eup, finance works out at £30 more a month than extending the up but mileage see at 15000 miles per year than the e up, so my own experience has told me to move away from salary sacrifice due to inflated prices which wipe out any tax savings, but as was said it depends on the scheme available where you work but they had no competition on price so the deals now are not worth it
Often the case
RE: model Y, where did you get your salary sacrifice quote from and that where one is required to put 3 grand down ? I’m interested in both. 🙏
From a viewer; he’s got a very good work scheme. Yours may well not be.
Cheers Jim/ Also, if you change jobs. You have to buy the gross figure when you leave. Big consideration.
Some you do, some you don’t. You just give it back with the scheme in this video built your one could well be very different
I've got a deal with NHS fleet solutions for a fully maintained and insured MG4 SE 51kwh, 3 years, 6k miles its £300 a month, no deposit, and a home charger. I'm a 20% tax payer. But do shop around some of the deals are more expensive than Leaseloco.
Yes 👍
What mileage were the deals on? That can impact the price quite heavily as people are worried about battery long term performance
10k; irrelevant really as your work scheme could be twice the cost. You give the car back after 2/3 years so anything long term should not worry anyone as it’s not theirs 🤔
In January my colleague managed to get a Merc 350 EQB for £360pcm on our Tusker scheme. Seems like a crazy good deal considering it's a £60k vehicle.
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I would have liked more calculations tbh to properly compare them if it was possible. Like lets say using the cheapest lease price with maintenance included and using average monthly insurance cost for that car etc.
I’d like my hair to grow back
@@DefinitelyNotAGuru Then use finasteride, minoxidil, microneedling, RU, etc or wait some years for hair cloning hair transplants.
Doesn’t work for alopecia I’m afraid
@@DefinitelyNotAGuru Depends what type, androgenic alopecia it'll work for. The other kinds it won't.
Yes, I’ve had it 27 years so have become fairly expert
My wife is a 45% tax payer. I’ve done the sums and it often isn’t worth it even at that ‘discount’. You really do have to do the maths.
Pricing varies massively between employers and schemes
I had the option of SS through work. On a RAV4 it worked out as £600/m all in (insurance up to 4 people, servicing, tyres, tax etc)
Lease is £592/m (1month down & 6k)
Obviously up front cost is better with SS, however I can only claim 10p per mile through work via SS. Meaning it wouldn’t be worth using the car for work.
Lease I can claim 45p per mile (as it’s not a company car) so I can offset the cost of fuel and wear via that route.
I’m also not likely to be hit hard with early repayment fees if I moved job.
Don’t get me wrong. I chased the car, not the deal. (Don’t shoot me down Jim! 😂).
I know there were some cracking deals with SS, especially their in stock ‘deals’.
Sweet spot is 125K. Just took out a Model Y performance and Tesla couldn't match our SS scheme.
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Wife gets the MG4 6000 miles for 2 years at 250 per month includes insurance through salary sacrifice. Brilliant deal
👍 the renewal might not be so great but enjoy it while it lasts
@@DefinitelyNotAGuru why would that be? Is that not a risk with any lease scheme? And thanks for replying.
The real figures for sal sac are 32% and 42% for basic rate and higher rate taxpayer. There's still a fair difference between the deals, but it's not double once you take into account NI (which you should!)
Ah yes
Since NI is now 8% is the basic rate not 28% these days rather than 32%?
There’s an opportunity cost. You can reap the same tax benefits if you made pension contributions instead and your pension is more likely to be an accumulating asset, unlike a depreciating car.
Unless you die early. You still need a car too. I’m not in love with SS but some schemes are very attractive and a good way of running a hassle free car for those who want one.
I can never make the figures work - if you did a video like you do on lease v cash v pcp with all the figures in, I bet most cars would struggle to make sense on salary sacrifice. The reducing tax bit just means your paying money to the lease company rather than to the government - you're not keeping it yourself.
Some schemes / employers offer good deals, others seem to get their feet under the table and then crank up the rates.
I had company cars between 2000 and 2016 before Sal sacrifice was a thing. Stopped then as BIK was too high, but I’ve been back in since 2022 with an EV.
I pay under £400 with no deposit and it includes everything apart from electric - leasing, insurance, servicing, tyres, gap insurance (lifestyle protection), breakdown cover etc., pensionable salary not affected. As BIK is tiny it’s fantastic value. 40% tax payer.
I will say though that Tesla’s are very expensive on our scheme due to insurance groupings. I’m sure BIK rates will keep rising though and it might not be worth it again in a few years when the government start taxing EV’s more.
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The BIK rate is set to rise by an additional 1% each years from April 2025 to 2028 reducing the savings each year. That’s on the assumption that a new government in a few weeks time doesn’t see this as a way of clawing back some money.
What's BIK and it's effect on these schemes!?
Watch the video linked at the end of this one
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Worth noting, you keep pointing out the 40 or 20% taxpayer - but a 20% taxpayer is most likely going to save 12% NI not 2%. The 2% is the saving on earnings over £45k. Up to that point, you pay 12%. So the 20% tax payer can save 32% on a salary sacrifice car!
Yes 👍
Can my company make me.use the car for company business???
You'd have to ask them, I would assume so but you'd obviously be compensated if so.
These terms seem rubbish to me even as a higher rate taxpayer. This is just third party company, creaming off your tax for their own benefit.
Interesting
The benefits of salary sacrifice as an employee - No credit check against the employee for the lease, no deposit, wear and tear (if included), insurance - EV insurance isn't cheap and it's fixed for the term regardless of claims, damage buffer (£500 for Octopus), free charger installed too - You have to do the calculations too.
Yes, pricing varies massively between employers / schemes.