Salary Sacrifice - Car scheme

smk77

My employer offers a salary sacrifice car scheme but I am not convinced it's good value and I think that the lease company are benefiting more from the reduction in my tax than I would be!

Here is an example:

AUDI Q4 Q4 E-TRON ESTATE 210kW 45 82kWh Sport 5dr Auto

the GROSS cost (excluding insurance but inc maintenance) for 36 months and 10,000 miles is £980 a month...

Over a 3 year period, that's £35,280. The maintenance aspect is small will ignore that for the moment.

The P11D Value is £51,215. So, that would mean the lease company will have been paid £35k for a car worth £51k. That car would however be worth considerably more than the £16k difference. Perhaps as much as twice that amount. 


I have been in contact with another salary sacrifice provider who does this for £455 a month net including insurance based on a 60k salary. My provider is £663 so this is just over £200 a month more expensive.

For a normal non-salary sacrifice lease, at Select Vehicle Leasing, I have priced the same car for £772 including the maintenance. I have included 1/36th of the initial payment in that figure to truly compare monthly to monthly. It's about £220 cheaper! If that was a salary sacrifice, adding insurance (about £50 a month based on my company's scheme) to the £772 would give me a net similar to this other provider. 

So, it looks like my provider isn't really providing a worthwhile scheme. Any chance that any of you helpful people could do a quick check on your employers scheme as see what this car would cost?

AUDI Q4 Q4 E-TRON ESTATE 210kW 45 82kWh Sport 5dr Auto
3 year, 30k miles (10k a year)
Maintenance package
No insurance

If my employers scheme is that bad, I probably need to raise it with them!

DrEskimo

Our company stopped doing it since no one was using it.

For all the reasons you have outlined I suspect!
I imagine if I did still have access I would have seen similar costs.

DullGreyGuy

Have you looked at one car or all the cars they offer? To say a whole scheme is bad on the basis of a single vehicle on offer isn't reasonable... its common for some places to be good on some vehicles and not so good on others depending on their relationship with various suppliers, their past experience etc. 

You may also need to consider other factors... what happens if you leave the company after 6 months? In some schemes you'll get a bill, in other schemes there is nothing to pay but the damage to the vehicle, clearly the later is more expensive. 

smk77

DrEskimo said:

Our company stopped doing it since no one was using it.

For all the reasons you have outlined I suspect!
I imagine if I did still have access I would have seen similar costs.

In theory, it should be a no-brainer for anyone who is in the position to look at new cars.

Take that Audi as an example. I reckon I'd save about £120 a month in fuel and the way insurance is at the moment, another £50 a month on that. Take that £170 off the £455 this other company offer and that's £280 a month for a brand new Audi worth £50k. No need to worry about tyres, services, MOT etc...

But no, my employers scheme, and by the sound of it, possibly yours too, want to tax a cut of my taxes. Any savings from my taxes should go to me. If not, rather they went to the government!

sheramber

Remem ber, with a salary sacrafice car you will have a Benefit In Kind   Charge included in your tax due

smk77

DullGreyGuy said:

Have you looked at one car or all the cars they offer? To say a whole scheme is bad on the basis of a single vehicle on offer isn't reasonable... its common for some places to be good on some vehicles and not so good on others depending on their relationship with various suppliers, their past experience etc. 

You may also need to consider other factors... what happens if you leave the company after 6 months? In some schemes you'll get a bill, in other schemes there is nothing to pay but the damage to the vehicle, clearly the later is more expensive. 

I have compared 4 cars from an MG ZS to a BMW i4. Comparing them to Select Vehicle Leasing too.

Both fully comp insurance and early termination protection. The early termination insurance may obviously differ but essentially, there for the same purpose. 

If I look across the entire range of cars on offer, most have ridiculous gross costs. When multiplying to calculate the total repayment (i.e. what my employer gives the lease company), the total is WAY more then the expected depreciation.

smk77

sheramber said:

Remem ber, with a salary sacrafice car you will have a Benefit In Kind   Charge included in your tax due

yes, but that will be the same regardless of the provider. Also, it's not really a deal breaker...is it?!

Veteransaver

Our one isn't great value either. Is it with Tusker?
It may just about make sense if the entire amount you are sacrificing is saving you the full 42% tax and you have very high insurance costs. Or you are in the 45% bracket and losing your personal allowance or free childcare.
Even then it is probably more sensible to sacrifice that part of your salary into a pension.
But yes it mostly seems they are keeping the tax savings for themselves and chucking in maintenance and insurance, versus what you could get by shopping around for a lease privately.

GrumpyDil

Agreed. My company launched a scheme last year and I couldn't fine one car where it made sense to use the scheme. 

DrEskimo

smk77 said:

DrEskimo said:

Our company stopped doing it since no one was using it.

For all the reasons you have outlined I suspect!
I imagine if I did still have access I would have seen similar costs.

In theory, it should be a no-brainer for anyone who is in the position to look at new cars.

Take that Audi as an example. I reckon I'd save about £120 a month in fuel and the way insurance is at the moment, another £50 a month on that. Take that £170 off the £455 this other company offer and that's £280 a month for a brand new Audi worth £50k. No need to worry about tyres, services, MOT etc...

But no, my employers scheme, and by the sound of it, possibly yours too, want to tax a cut of my taxes. Any savings from my taxes should go to me. If not, rather they went to the government!

Yea exactly. I drive a used EV so making the switch was even more difficult to justify.

Going to stick to buying used EVs. Particularly with current prices.

DrEskimo

Veteransaver said:

Our one isn't great value either. Is it with Tusker?
It may just about make sense if the entire amount you are sacrificing is saving you the full 42% tax and you have very high insurance costs. Or you are in the 45% bracket and losing your personal allowance or free childcare.
Even then it is probably more sensible to sacrifice that part of your salary into a pension.
But yes it mostly seems they are keeping the tax savings for themselves and chucking in maintenance and insurance, versus what you could get by shopping around for a lease privately.

I'm fortunate to earn enough to be losing my personal allowance, and even then I couldn't justify it.
I'm currently putting as much as I can in my pension so was looking at ways to reduce my tax bill further, but this didn't make sense...