Model 3 Leasing UK

[gangzoom]

This isn't an issue with Tusker specifically. Not everyone who uses Tusker has their pension affected by the arrangement, we certainly don't see an effect. It's something that needs considering on an individual basis.

Everyone on the NHS schemes will have their pensions effected.

The NHS to be frank pays all its staff poorly, my pay rate is £43/hr and am nearly at the top of the NHS pay scale.

However the pension scheme blows virtually all private pensions out of the water. Even on the current CARE scheme which is far less generous than the old final salary scheme, if I was to START my pension contribution today at the age of 37, by the time I retire I will have a pension of £60-80K per year assuming no lump sum, or £40-50K if I take out a lump sum £270-300K.

These figures ignore already pre-existing pension contributions which started some 15 years ago.

I haven't done the figure, but the amount you need to pay into a private pension to achieve that kind of pension return with only 30 years of growth will be crazy - I would estimate easily £1500+/month. This is my main 'issue' with the NHS salary sacrifice schemes, you are potentially giving up the most valuable part of your NHS pay reward for short term gain.

 

[Mrbailey]

£520 per month net for a M3P with 10k miles. It depends on tax band etc, but your quote for a standard range sounds very expensive.

possiblg my tax band and annual salary are taken into consideration, that’s probably why it’s so high. They also can’t do the existing customer discount on Tesla’s which is a shame.

 

[Plagued]

Why does the calculation on "Effect on net salary" not take into account the reduction in pension payment if the deductions are made before the NHS pension calculations?
I'm just trying to get my head around what it actually all means.
Lets say you earn £35k that means your pension contribution is 9.3% and the NHS 14.3%
So (roughly) before tax the salary is £2916 a month, from that you get £417 of pension contribution and also get deducted £271 of contributions - so £688 goes into the pension pot.
Now if you get a quote of £648 (and effect on net salary of £341) for your car, we're saying that this is quite possibly deducted before pension. Making your salary drop to 2268 a month and therefore the NHS pension contribution drops £92 and you're paying £60 less , so your pension pot loses out £153 a month .... however you're paying out less contribution so surely this should be deducted from the effect on net salary... so that £341 deduction is nearer £300..... but you're losing out on £92 a month of NHS contributions, and really you should bump up your personal contributions....

 

[audigex]

The NHS salary sacrifice deals are in effect a con for most people, the £400/month figure doesn't factor in loss in future pension contributions.

Our trust has a P Model 3 lease deal at £630/month including all running costs + insurance, sounds great doesnt it?? But by the time you factor in future lost pension that figures is about £1100/month, so far from cheap.

The main beneficiaries of the NHS lease deals is the NHS employer/trust, as they don't have to pay the mandate 14.3% pension contributions on the gross salary sacrifice cost + reduction in NI costs, its not going to do with giving NHS employees a good deal.

Run that one by me again? Because those numbers aren't even CLOSE to what I'm seeing

My P3D is costing me £300 net, and I'm losing pension equivalent to 1/54th of £6800 (the sacrificed amount), or £126, for each year I have the car

So essentially for each month I have the car, I lose £300 out of my takehome, and £10/year of pension once I retire. Over 3 years of ownership, that means I lose £360/year of pension (in which time I'll accrue £1800/year of pension)

Obviously that does mean there's a hit to the pension... but at the same time I'm still saving nearly £300/month on the cost of the car compared to a private lease... so in the same 3 year period I can invest £10,800 elsewhere... enough to make up that £360/year pension shortfall for 30 years

The hit to the pension is there, but it seems to be massively overstated unless I'm missing something...

 

[Cyclone1]

Run that one by me again? Because those numbers aren't even CLOSE to what I'm seeing

My P3D is costing me £300 net, and I'm losing pension equivalent to 1/54th of £6800 (the sacrificed amount), or £126, for each year I have the car

So essentially for each month I have the car, I lose £300 out of my takehome, and £10/year of pension once I retire. Over 3 years of ownership, that means I lose £360/year of pension (in which time I'll accrue £1800/year of pension)

Obviously that does mean there's a hit to the pension... but at the same time I'm still saving nearly £300/month on the cost of the car compared to a private lease... so in the same 3 year period I can invest £10,800 elsewhere... enough to make up that £360/year pension shortfall for 30 years

The hit to the pension is there, but it seems to be massively overstated unless I'm missing something...

£300/month net impact on take home pay? That’s ludicrously cheap (pardon the pun). What does your package include (mileage/insurance/service/breakdown and tyres)? Plus over what duration? I guess you’re a higher tax payer?

 

[audigex]

Why does the calculation on "Effect on net salary" not take into account the reduction in pension payment if the deductions are made before the NHS pension calculations?
I'm just trying to get my head around what it actually all means.
Lets say you earn £35k that means your pension contribution is 9.3% and the NHS 14.3%
So (roughly) before tax the salary is £2916 a month, from that you get £417 of pension contribution and also get deducted £271 of contributions - so £688 goes into the pension pot.
Now if you get a quote of £648 (and effect on net salary of £341) for your car, we're saying that this is quite possibly deducted before pension. Making your salary drop to 2268 a month and therefore the NHS pension contribution drops £92 and you're paying £60 less , so your pension pot loses out £153 a month .... however you're paying out less contribution so surely this should be deducted from the effect on net salary... so that £341 deduction is nearer £300..... but you're losing out on £92 a month of NHS contributions, and really you should bump up your personal contributions....

My main advice to anyone thinking about the NHS scheme is TO FORGET THE WORD CONTRIBUTIONS. It's entirely, completely, 100% irrelevant. How much your employer pays in makes NO difference to your pension, nor does how much you pay (although how much you pay is linked to the sacrificed amount, you shouldn't think about it as a contribution)

The NHS scheme is a defined benefit scheme, not a defined contribution scheme. Your contribution is literally just a membership fee, and your employer's contribution is essentially them paying for previous employees. It makes zero difference to anything: your employer could change their contribution to 0% or 100% (assuming the government let them) tomorrow and your pension wouldn't change by so much as a penny.

ALL that matters is your gross salary, and whether you pay your membership fee.

Take your gross annual salary, divide it by 54. Every year you are a member of the scheme, you "accrue" that amount per year of pension. So on £35k, after 1 year you have £648/year in your pension (meaning your pension will pay you £54/month after you retire). Alternately, if you prefer to work things out monthly, the maths is the same: divide your gross monthly by 54 and that's how much pension you accrue every month.

So let's run the numbers...

If you sacrifice £5k on a car, you "accrue" based on £30k, rather than £35k. You now accrue £555/yr of pension, meaning you will now be paid £46 a month instead of £54/mo when you retire, in exchange for being a member of the scheme this year

So the actual "pension cost" of your car is 1/54th of your sacrificed amount. If you sacrifice £5k, you lose £92/yr, or £7.70/mo, once you retire.

However, you're saving money on that £5k every year too, because you don't have to pay:

- 12% National Insurance (£600)
- 9.3% Pension (£456)
- 20% Tax (£1000)
- Possibly 9% student loan (£450)

So each year, you're saving yourself £2056 in Tax/NI/Pension payments, or £2506 if you have a student loan.

Stick that £2500 in a bank account and you can pay the £92/yr pension "shortfall" for 27 years after retirement....(22 years without student loan)

If you sacrifice £5k/yr for 40 years of your career, you'll lose out on £3700/yr of pension, but you'll have £82k (closer to £100k with student loan, exact amount depends on whether you'd pay it off or when it would be written off) in the bank. I'm ignoring inflation here because you'd get interest on your savings and the pension is re-valued with inflation anyway, so we can just look at the base numbers.

So there is a pension hit, but it's nowhere near as big as people make out... and the "But I'll lose out on 13.5% of employer contributions" angle is complete nonsense to be ignored because it's entirely, completely, 100% irrelevant to how your pension is calculated

 

[Plagued]

Thanks for clearing that up! it makes it a lot more palatable put like that.
Although does my original question still stand .. if we completely ignore any impact on contributions, then assuming the car payment is deducted BEFORE the pension (as stated in some posts on here), then does my contribution reduction still stand, and I'm in theory £60 before tax better off as well due to having less taken off me as my contribution?

 

[philgods]

Yep I reckon those with access to the NHS deals should just go for it. The pension rules will change another 5 times before retirement.
Enjoy a M3P while you can. You're a long-time dead!

 

[gangzoom]

Run that one by me again? Because those numbers aren't even CLOSE to what I'm seeing

Thats because the gross salary reduction on a P Model 3 with Tusker is £1100/month, nearly double what your trust scheme is offering you!!! So in effect the deal you have access to is half the cost what our trust offers.

The sum you loss in your pension now also loses the inflation+1.5% of 20years risk free growth.

As for having £10k 'spare' to invest by leasing, please go ahead and show me what product your going to invest in. For our trust Tusker offering buying out right is actually a much better deal.

I'm not saying the don't lease on the NHS salary sacrifice scheme, but make sure you fully understand the financial consequences, its certainly not as simple as taking the headling figure offered by your trust and assuming its a good deal.

Dont forget NHS schemes are NOT comparable the figures you quote are simply not valuable to any one outside your trust.

 

[audigex]

£1100? Jesus, that's insane: you're right, that's very nearly double what we're seeing. My sacrificed amount is £570, which is slightly more than a private lease but with insurance and no deposit, so that seems fair enough

That sounds like Tusker taking the piss, though, rather than some intrinsic "Leasing isn't worthwhile for NHS employees" or anything related to the pension. There's no justification for Tusker's £1100/mo

 

[yuvrajShridhar]

£1100? Jesus, that's insane: you're right, that's very nearly double what we're seeing. My sacrificed amount is £570, which is slightly more than a private lease but with insurance and no deposit, so that seems fair enough

That sounds like Tusker taking the piss, though, rather than some intrinsic "Leasing isn't worthwhile for NHS employees" or anything related to the pension. There's no justification for Tusker's £1100/mo

Is that a business lease? seems great if thats for performance

 

[Cyclone1]

£1100? Jesus, that's insane: you're right, that's very nearly double what we're seeing. My sacrificed amount is £570, which is slightly more than a private lease but with insurance and no deposit, so that seems fair enough

That sounds like Tusker taking the piss, though, rather than some intrinsic "Leasing isn't worthwhile for NHS employees" or anything related to the pension. There's no justification for Tusker's £1100/mo

Does your £570 include maintenance eg tyres and breakdown cover etc?

Plus how many miles per year and what’s the length of your Salary sacrifice lease deal?

 

[audigex]

Does your £570 include maintenance eg tyres and breakdown cover etc?

Plus how many miles per year and what’s the length of your Salary sacrifice lease deal?

7500 private miles/yr, 10p + VAT excess mileage - so £100 if I do an extra 1000 miles. Business mileage is excluded as long as I submit a mileage claim, which I would do anyway because I get paid for business miles. Total expected mileage will be 9-10k/yr, but my costs are calculated on the 7500 private miles.

All maintenance/tyres/breakdowns/servicing and insurance, 36 months, no deposit, sacrifice amount £568.47/month for a Model 3 Performance (no options, "free" white paint, black interior, no FSD)

I'm expecting a net payment from my salary of £293.10/month after savings from: Inc.Tax@18% (£103.12), NI@12% (£68.22), [email protected]%(£52.87), and Student Loan@9% (£51.16). Total savings of £275.37... I'm not sure why my lease company has calculated IT savings at 18%, though, so either I'm missing something in how that's calculated (I guess my pension is taken first, so the 18% is them accounting for that) or it should be slightly less than that figure.

 

[Southerner_]

Apologies for interrupting any conversations - are there any tax advisors/legal experts here?

I have placed an order through NHS Fleet in February, they have advised the vehicle is ready for Heathrow collection in Mid-March.

They are advising that when they quoted they were basing this on a 6th April onwards delivery and therefore if I want the vehicle in March then I would need to be re-quoted which is about 20% more on the gross deduction, for the entire 3 year lease.

They say this is due to the variables, in particular the NICs, which have to be recalculated. They advise the NICs would be fixed at 16% for the entire contract term, whereas from 6th April they are apparently less and are therefore not included in my order.
The order form and variation to contract (salary sacrifice) make no reference to any particular dates for delivery of the vehicle.

I cannot believe that the above situation can be lawful and need to act quickly before they release my matched vehicle.

 

[Lupe]

Sounds like a load of bollocks. BIK changes from 16% to 0% in April. Anything in March would just be pro rata for that month.

 

[beansnchips]

Sounds like a load of bollocks. BIK changes from 16% to 0% in April. Anything in March would just be pro rata for that month.

Is this 100% correct? This is what I understood but our accountant says that 0% is only for cars registered after 6th of April. Anything registered before carries the 16% bik. He made it sound like that the 16% carried on rather than dropping to 0% after April.

 

[audigex]

Is this 100% correct? This is what I understood but our accountant says that 0% is only for cars registered after 6th of April. Anything registered before carries the 16% bik. He made it sound like that the 16% carried on rather than dropping to 0% after April.

In this instance they are wrong, the 0% rate applies to EVs registered prior to April 2020 too.

They may be confused because BIK and VED (road tax) changes often only apply to newly registered cars after the date of change going forward (eg they aren't applied retrospectively) - but in this particular case, the 0% will apply to older cars too.

Online changes pave the way for new company car tax rates

You will pay the old 16% rate for March (probably costing you around £70-80 if it's pro-rata, I'm not 100% sure how it works for partial months though), then 0% for 2020-21, 1% (~£10/mo) for 2021-22, and 2% (~£20/mo) for 2022-23

 

[philgods]

Apologies for interrupting any conversations - are there any tax advisors/legal experts here?

I have placed an order through NHS Fleet in February, they have advised the vehicle is ready for Heathrow collection in Mid-March.

They are advising that when they quoted they were basing this on a 6th April onwards delivery and therefore if I want the vehicle in March then I would need to be re-quoted which is about 20% more on the gross deduction, for the entire 3 year lease.

They say this is due to the variables, in particular the NICs, which have to be recalculated. They advise the NICs would be fixed at 16% for the entire contract term, whereas from 6th April they are apparently less and are therefore not included in my order.
The order form and variation to contract (salary sacrifice) make no reference to any particular dates for delivery of the vehicle.

I cannot believe that the above situation can be lawful and need to act quickly before they release my matched vehicle.

Sounds like twaddle.

 

[spooksman]

Is this 100% correct? This is what I understood but our accountant says that 0% is only for cars registered after 6th of April. Anything registered before carries the 16% bik. He made it sound like that the 16% carried on rather than dropping to 0% after April.

Your accountant is wrong - there are certain differences that apply to cars registered after 06/04/2020 that apply to ULEVs (Ultra Low Emmisions Vehilcles) and a few other vehicles, but as pointed out, that doesn't effect EVs.

Up to the end of the 19/20 tax year the BiK rate is 16% for EVs, but for 20/21 it is then 0% (then 1% and 2% the subsequent years). That applies to all EVs regardless of registration date.

 

[beansnchips]

Thanks for the help. This was my understanding also. He may have generalised for all vehicles rather than differentiate EV/ICE

Another non related question - anyone out there on Drive Electric leases? They are coming in most competitive at the moment and I've seen them on Fully Charged Show etc.