EV salary sacrifice

fancyabrew

I'm after a EV to replace my current car and my employer has a salary sacrifice scheme so I'm looking at which is best to do, a straight PCP or go via the salary sacrifice.  The thing that is confusing me at the moment is my tax status.  I'm not a 40% tax payer as far as my salary is concerned, BUT I have a rental property and when I add that in I go in to the 40% bracket, but of course the quotes I get via the salary sacrifice scheme are based on my salary not my gross income including the rental.  So what happens in this scenario? Do I fill in my self assessment as normal and get a tax refund that way? and roughly how much is it likely to be?

Dazed_and_C0nfused

fancyabrew said:

I'm after a EV to replace my current car and my employer has a salary sacrifice scheme so I'm looking at which is best to do, a straight PCP or go via the salary sacrifice.  The thing that is confusing me at the moment is my tax status.  I'm not a 40% tax payer as far as my salary is concerned, BUT I have a rental property and when I add that in I go in to the 40% bracket, but of course the quotes I get via the salary sacrifice scheme are based on my salary not my gross income including the rental.  So what happens in this scenario? Do I fill in my self assessment as normal and get a tax refund that way? and roughly how much is it likely to be?

Why do you think you would be due a "refund"?

Won't you be agreeing to a reduced salary and in return have additional income in the form of a company car (benefit in kind)?

You avoid paying tax and NI on the salary you no longer have but have tax to pay on the benefit.

Or is that not how you see it?

Veteransaver

You need to consider your total taxable income, salary plus rental profit.
If the total is over £50,270 anything over that is taxed at 40%.
Ideally you'd want to make sure the EV salary sacrifice amount is all getting the 40% relief as otherwise in my experience they aren't generally worth it for most, versus what you can get leasing privately.
Obviously as a basic rate taxpayer you would also save NI at 8% too.

TheSpectator

A lot of car salary sacrifice schemes are not value for money. Compare how much you are sacrificing, including tax/NIC savings but then add on the taxable benefit of the car. Compare this against a lease deal you could get yourself.

silvercar

I agree with other posters. Often the leases are at inflated prices, in the hope that you will see it as a better deal than leasing privately.

EV benefit in kind is very low compared to leasing a non EV car, but see if the numbers make sense. The fact that the leasing companies give you illustrations of the savings based on your tax band is for illustration only. If you have sufficient income at the higher rate of tax, use that illustration. 

We have 2 EVs on salary sacrifice. Looking back the deal wasn’t as amazing as we first thought. We’ve only done well because we’ve been able to buy one of the cars at the end of the lease period. Due to low residuals, the price was very reasonable, making the deal overall worth while (ie a lot cheaper than if we’d bought the car from new). If you don’t plan to do this, then just compare the private lease prices against salary sacrifice allowing for the tax benefits.

Veteransaver

I checked my firms EV plan. By way of an example a ford explorer was £768 gross a month.
I found a lease deal for under £400.
Even with the tax saving at full 40%, it would mean a net cost of £491, rising £15 each year as the BiK rate rises.
Is insurance and maintenance worth an extra £91, £106 then £122 a month?
Probably not.

silvercar

Veteransaver said:

I checked my firms EV plan. By way of an example a ford explorer was £768 gross a month.
I found a lease deal for under £400.
Even with the tax saving at full 40%, it would mean a net cost of £491, rising £15 each year as the BiK rate rises.
Is insurance and maintenance worth an extra £91, £106 then £122 a month?
Probably not.

Maintenance on EVs is generally low, insurance can be high. But I agree, it’s probably not worth those figures. For someone who would face a high insurance cost and maybe doesn’t have much NCD it can be worthwhile.