Work bringing in an Electric Car scheme - Benefit in Kind

DannyCarey

My work is actively working on bringing in an electric car scheme. I only know that this will work with benefit in kind, maybe through salary sacrifice? 

The scheme won't be available until the start of 2024, so I have no other details yet... but I would love to hear from people here who have seen this before or actively in a deal.... can you tell me about the benefits, things to be aware of etc. I want to do some research to know if its a good deal and find out all the "gotyas"

Would be greatly to also see some example deals to know what sort of figures I would be paying for a saloon car such as a Tesla, VW, BMW etc. 

Brie

I looked into this a couple of years back when my employer had EVs available through a salary sacrifice scheme.  I contacted them to find out how much it would cost to get an EV equivalent to my VW up.  The prices looked a bit better than going to a dealership and buying one outright but not be a huge amount.  Might have been £40 a month which was a result of the salary sacrifice as obviously they had to factor in the other bits of what they were selling - no MOT or service for 3 years etc.  It all was sounding like maybe a good idea and then things began to fall over. 

First was that a car would not be available for 6 months minimum while I knew I could walk into the dealership and get one the next day. 

Secondly because of the type of finance deal they could only tell me what I would pay (aka have deducted from my pay) for the 3 years from when the car would be delivered assuming that it was being delivered then rather than in 6 months.  So no real info on what it would cost if the car's price had gone up before delivery. 

Finally they said that after 3 years they would tell me what the car's value would be and how much I'd need to pay to keep it.    

So it was a case of signing up to buy something when I didn't know how much it was going to cost me.  So not at all like walking into a dealership and buying a car really.

And then there was a the minor issue that the deal would be ended if I left the company (any buy out costs???) and it didn't matter if I left, was fired or made redundant - which is exactly what happened a few months later.  So glad I didn't sign up.

DannyCarey

Brie said:

I looked into this a couple of years back when my employer had EVs available through a salary sacrifice scheme.  I contacted them to find out how much it would cost to get an EV equivalent to my VW up.  The prices looked a bit better than going to a dealership and buying one outright but not be a huge amount.  Might have been £40 a month which was a result of the salary sacrifice as obviously they had to factor in the other bits of what they were selling - no MOT or service for 3 years etc.  It all was sounding like maybe a good idea and then things began to fall over. 

First was that a car would not be available for 6 months minimum while I knew I could walk into the dealership and get one the next day. 

Secondly because of the type of finance deal they could only tell me what I would pay (aka have deducted from my pay) for the 3 years from when the car would be delivered assuming that it was being delivered then rather than in 6 months.  So no real info on what it would cost if the car's price had gone up before delivery. 

Finally they said that after 3 years they would tell me what the car's value would be and how much I'd need to pay to keep it.    

So it was a case of signing up to buy something when I didn't know how much it was going to cost me.  So not at all like walking into a dealership and buying a car really.

And then there was a the minor issue that the deal would be ended if I left the company (any buy out costs???) and it didn't matter if I left, was fired or made redundant - which is exactly what happened a few months later.  So glad I didn't sign up.

Sounds like you got fairly unlucky with stock levels at that time, but I suppose that's time and company dependent.

If the deal ended (you left the company for example), presumably you have to give the car back and the deal dies? Or are you still on the hook for it as a contract? 

Brie

DannyCarey said:

First was that a car would not be available for 6 months minimum while I knew I could walk into the dealership and get one the next day. 

And then there was a the minor issue that the deal would be ended if I left the company (any buy out costs???) and it didn't matter if I left, was fired or made redundant - which is exactly what happened a few months later.  So glad I didn't sign up.

Sounds like you got fairly unlucky with stock levels at that time, but I suppose that's time and company dependent.

If the deal ended (you left the company for example), presumably you have to give the car back and the deal dies? Or are you still on the hook for it as a contract? 

Yes - but stock levels seemed to be only an issue with this scheme, not the market in general which I thought was odd. 

As I understood it I had to hand the car back in as there was no way for me to continue to pay as I would no longer be on the payroll.  So I might potentially pay for a car for nearly 3 years and miss out on actually purchasing it due to leaving the company.  But this was less of a worry to me than not actually knowing at the beginning how much it was all going to cost me.

And like everything - there's likely loads of people that think this is a sweet deal.  

Grumpy_chap

When the OP receives all the figures for the SS scheme, which will allow more informed comment and consideration of the option, one important thing to understand is whether the SS scheme will have any impact to pension accrual.

The value of the scheme may well vary whether the OP was likely to acquire a new car in the near future or only acquiring the use of a new car because of the SS scheme being offered.

DrEskimo

My company offer salary sacrifice EVs, and we have a quote engine, so if you want some representative quotes I would be happy to run them for you to give you indicative quotes?

Overall they don't look too bad, and when you consider there is no large upfront payment and it covers MOT, servicing, maintenance and insurance, it works out a fair bit cheaper than personal lease deals.

However, I already own second hand EVs outright, so when compared with the cost to run these over the last 5/6yrs, it would be substantially more expensive (albeit for a used model). Overall I am just not a fan of entering into contracts for things that restrict my use and length of ownership...I like the freedom to do what I want and not be tied down. Also the excess mileage fees looked extortionate from a colleague of mine who had one on the scheme.... 

The other thing to consider if your salary and the tax benefit. As a HRT the tax savings are quite substantial for me.

jimjames

DrEskimo said:

Overall they don't look too bad, and when you consider there is no large upfront payment and it covers MOT, servicing, maintenance and insurance, it works out a fair bit cheaper than personal lease deals.

I think this is the key for some people as it gives that fixed monthly payment with nothing else to pay. If you have a fairly new car on finance and are used to paying that each month then it probably works out a much cheaper option especially if you are a higher rate taxpayer. 

Money_Grabber13579

DrEskimo said:

My company offer salary sacrifice EVs, and we have a quote engine, so if you want some representative quotes I would be happy to run them for you to give you indicative quotes?

Overall they don't look too bad, and when you consider there is no large upfront payment and it covers MOT, servicing, maintenance and insurance, it works out a fair bit cheaper than personal lease deals.

However, I already own second hand EVs outright, so when compared with the cost to run these over the last 5/6yrs, it would be substantially more expensive (albeit for a used model). Overall I am just not a fan of entering into contracts for things that restrict my use and length of ownership...I like the freedom to do what I want and not be tied down. Also the excess mileage fees looked extortionate from a colleague of mine who had one on the scheme.... 

The other thing to consider if your salary and the tax benefit. As a HRT the tax savings are quite substantial for me.

Whereas the quotes which my employer’s car scheme gives are mental. £1,000 per month for 48 months for a mid range i4, so around £600 after the tax saving is taken into account. Feels like the kind of prices you could get just by walking into a dealership, although there would be insurance and maintenance to pay for (but that should be small in comparison to the cost of the car).

Bigphil1474

OP, as I'm sure you would expect it's all down to the figures. Where I work we can access the NHS fleet, and the prices are pretty competitive. However, as I use a car for work and get mileage and a lump sum payment, all the savings on Tax and NI are wiped out by the loss of the lump sum and the reduced mileage rate they pay. On top of that, I would lose pension payments. Obviously I would save on petrol costs with some leccy to pay, and save on insurance and maintenance, but I worked out it just wasn't worth it for me. It would work out cheaper for me to go and get one privately, paying more for it, but being better off financially. The BIK on electric cars is pretty small so not a huge factor to worry about.

It does work for your employer though who save on any pension contribution they make on your behalf and don't have any real additional costs.

born_again

One thing many people miss with these. Is should you leave the  company. You will/might have to hand the car back. I know that via our scheme that you do. Caught a few out & left them stuck when handing notice in, or retiring.

DrEskimo

Money_Grabber13579 said:

DrEskimo said:

My company offer salary sacrifice EVs, and we have a quote engine, so if you want some representative quotes I would be happy to run them for you to give you indicative quotes?

Overall they don't look too bad, and when you consider there is no large upfront payment and it covers MOT, servicing, maintenance and insurance, it works out a fair bit cheaper than personal lease deals.

However, I already own second hand EVs outright, so when compared with the cost to run these over the last 5/6yrs, it would be substantially more expensive (albeit for a used model). Overall I am just not a fan of entering into contracts for things that restrict my use and length of ownership...I like the freedom to do what I want and not be tied down. Also the excess mileage fees looked extortionate from a colleague of mine who had one on the scheme.... 

The other thing to consider if your salary and the tax benefit. As a HRT the tax savings are quite substantial for me.

Whereas the quotes which my employer’s car scheme gives are mental. £1,000 per month for 48 months for a mid range i4, so around £600 after the tax saving is taken into account. Feels like the kind of prices you could get just by walking into a dealership, although there would be insurance and maintenance to pay for (but that should be small in comparison to the cost of the car).

My quotes are coming in similar, around £600/month, but for 36months.

Looking briefly at personal lease deals, when you factor in 10k miles they are coming in at similar £600/month but also include over £6,500 upfront plus any of the admin fees.

Then as you say all the added savings from insurance, maintenance, etc.

So it's a decent saving, but not massive IMO. Perhaps if you haggled or waited for a deal you could get pretty close.

Comparing apples to apples, here is my salary sacrifice deal on an BMW I4 GRAN COUPE 210kW eDrive35 M Sport 70kWh 5dr Auto [Pro Pack]:



And a quick lease deal search of same car, with 1-month upfront and same 3-yrs/10k miles term:



So £220/month savings, or just shy of £8,000 over the term, plus all the other savings.