Salary sacrifice for EV

[impact]

Might be worth exploring if circumstances allow. Some saving if it's possible.

The electric car salary sacrifice tax break that can save you 40%

The little-known salary sacrifice tax break for electric cars combined with a new zero rate benefit-in-kind rate could be a game-changer for green motoring.

www-thisismoney-co-uk.cdn.ampproject.org

 

[Cooper]

The saving potential is great and it’s incentives like this, more choice, better infrastructure and the 0% BIK that really will grease the wheels of EVs in NI.

 

[Odhran]

This would definitely tempt me in future.

 

[davyk31]

There will be complications over who actually owns the car and how long it has to be run before ownership can transfer to the driver with tax liabilities occurring if it’s too short a period. All of this exists with cycle to work schemes but it’s a bit easier got round with a bike and it’s still something like 6 years before the bike can be transferred to the employee tax free because at that point HMRC deem the bike to have no value.
Still huge advantages in savings if it can be worked properly. Also BIK will slowly rise on electric cars as they become popular. Happened the same with hybrids which used to be 2 or 3% and now are 16 to 18%.

 

[svensktoppen]

Was thinking the same, you effectively rent from your employer until HMRC decide there isn't enough value left to count as a taxable benefit.

With car values being higher than a bike, for example, the potential liability for both employer and employee is much greater. Even just changing job might leave you with a bill for residual value, and that bill will come out of taxed money.

With bikes the values are generally so low it doesn't matter and a lot of blind eyes are turned.

That won't be the case for cars.

Same with BIK, "free" charging, etc. That will all change if electric really does take off. At the moment it's something like 1-2% of total car ownership so these "freebies" cost nothing to HMRC. If that changes significantly then falling tax revenue from combustion cars will have to be found elsewhere.

 

[j44nty]

Interesting. I remember the cycle to work scheme well as all the bais kids in office got a new bike for Christmas. If I could get into one of those funky new electric hondas coming out for less than 200 a month on salary sacrifice id commute in one happily.

 

[Jonny_W]

Reading that a Tesla would work our round the £300 mark and I would change the car in the morning.

 

[EVANI]

Some examples here for local NHS workers - £70K Audi eTron from £249 / month, £0 deposit, include tyres and insurance.

 

[Philljdm]

Some examples here for local NHS workers - £70K Audi eTron from £249 / month, £0 deposit, include tyres and insurance.

My sister has the etron ordered. Cheap monthly payments for a 70k audi

 

[stevieturbo]

From what you are all saying though...you'll be paying all that money, and never own the car, and likely no prospect of owning it ?

Although the Audi above sounds cheap if actual running costs were very low.

The next DLA car lol

Kinda dispels the myth the NHS is on it's knees and short of cash though handing 70k cars out.

 

[svensktoppen]

In fairness nobody will ever "own" an electric car. They'll all be rented full service jobs with automatic trade-up after a couple of years when the batteries begin to suck and something newer and shinier comes along.

Every single one coming out is style lead and defined by other things than traditional "car" values. Basically identical underneath, there are only so many ways you can put together a battery and a couple of electric motors. So it's all about style and "tech" and all that instead. And with that built-in obsolescence just like phones, etc.

Doesn't make them bad cars, not at all.

Just means the economies and the way they're sold and "owned" is different.

 

[neil-c]

I looked into salary sacrifice for NHS staff but it didn't make as much sense unless you were a high earner with a big pension pot. When you take into consideration the fact that your employer doesn't pay into your pension for the sacrificed sum it doesn't add up to the same savings. Effectively you're also losing pension contribution worth 16-20% of your sacrificed sum.

 

[davyk31]

As regards the comment above about paying all that money and not owing, yes that is correct as it’s a lease. But that a pretty common position for most new cars sold now on any type of finance whether leased or PCP. For some it’s a bad thing but for others it’s normal and you effectively just “rent” a car for a few years.

 

[mightymetro]

We're about to start making some enquiries in work for an employee salary sacrifice scheme for EVs given this new change for zero benefit in kind.

My main concern is that it has to be tied to a scheme provider, e.g. Octopus - has anyone any experience re how competitive they (or any other providers of the workplace schemes) are when compared to standalone business or personal leasing?

I don't want to set something up that ties us/employees to them to save 20-30% etc in tax and NICS if their top line price is uncompetitive by a similar margin when compared to the open market lease price. Very few / none of the employees who might take up on it are going to be top tax bracket so no-one is going to be saving 40% out of the box.

Has anyone any experience in this?

 

[svensktoppen]

Obviously the provider will get their arm in somewhere, they're running a business.

It's the usual, only way to know is get all the numbers and details and do the maths. There may be differences in spec, etc., as well.

And then consider what happens if you change jobs and all that.

 

[AlpineF30]

Work has just informed us today that they will be starting a salary sacrifice EV scheme next week.

They are offering 2% BIK and claim up to 40% off retail with an Company called Octupus EV’s.

Is it still worth it?

 

[davyk31]

Whilst BIK stays low it has to be a good deal. Rates I think are announced for the next few years so should be ok.

 

[svensktoppen]

The "up to 40% off retail" sounds like your tax rebate from the salary sacrifice. How much it actually is depends on your income and tax rate. Basically the more you earn the bigger the rebate.

The 2% BIC is what you pay in tax instead.

So yes, still a massive saving, especially if you were changing anyway. And pay higher rate tax.

All depends on how long the 2% BIC lasts. I belive it is set to last a few years but not sure how many. And no idea if someone might decide to change it again. Its obviously a huge tax dodge so it won't last forever. But good while it lasts.

 

[davyk31]

They set the BIK rates 3 or 4 years ahead so that people taking a lease for that length of time don’t get a nasty surprise half way through.

 

[Kerzo]

Work has just informed us today that they will be starting a salary sacrifice EV scheme next week.

They are offering 2% BIK and claim up to 40% off retail with an Company called Octupus EV’s.

Is it still worth it?

Did you do a quote? Tried to put my post code in through our work scheme but wasn’t valid so put in an old Belfast address which seemed to work!

Unfortunately I can’t avail for another few months as I’m only recently in the door but will have a think about it again nearer the time.

 

[AlpineF30]

Did you do a quote? Tried to put my post code in through our work scheme but wasn’t valid so put in an old Belfast address which seemed to work!

Unfortunately I can’t avail for another few months as I’m only recently in the door but will have a think about it again nearer the time.

Not yet they don’t have the portal online for us yet.

Supposedely you put in your salary then it works out your new salary based on the car you select.

My wife has caught wind of this and is very keen on a Mercedes EQA.


Does anybody know this? If I get a car through the salary sacrifice does that appear on my credit file?

 

[svensktoppen]

To be honest they're all pretty much the same, very little real "brand" difference. It's basically like choosing a phone. Choose size and range within budget and that's pretty much it. Pay for a "brand" if you want, or save cash.

For budget purposes use 2/3 of the official WLTP range. Don't get hung up on silly acceleration times. Also think about how you will charge it.

There are also a few not so obvious EV specific things to make sure are ticked in the spec list, like heat exchanger.

 

[svensktoppen]

If I get a car through the salary sacrifice does that appear on my credit file?

A lease is a lease, doesn't matter how it's paid for. It's still a financial obligation. Any regular outgoings will certainly be taken into account if you apply for a mortgage, for example.

Make sure it's clear what happens if you leave or lose your job. Different schemes treat this differently. Just so you know what you might be liable for.

 

[AlpineF30]

Thanks everyone for their input.

Scheme opened on Monday got a deal I couldn’t turn down.

So have submitted an order for a Mercedes EQA

 

[kevinmc]

I work for the NICS.
How can I get access to a deal like this?
Seems like the Health Service had one recently.