Ownership Options - Advice welcome

[Cyclone1]

Hi All,

Firstly, this is a very welcoming and informative forum. I don’t yet have a Tesla but have been reading up on many different topics, of which they are very helpful.

I am looking for advice on driving a Tesla either from a Company Car perspective (I work for a company and don’t own it), or via salary sacrifice (the company I work for is looking at this as an option to offer employees later this year.)

Through the company car scheme and balanced against not taking my current cash car allowance, an MP3 (white/white) works out at about £560 month including insurance, breakdown and servicing. This is for 3 years and 60k miles.

Is Salary sacrifice likely to be as cost effective, so therefore worth waiting for.

It is rumoured that the government incentive of £3.5k could be removed n April, therefore increasing both ownership cost options going forward.

Advice appreciated.

 

[davidmc]

@Cyclone1

Having an EV as a company car (in my opinion!) is the best option from April. You will pay ZERO tax, nothing, zada, zilch. But next year you may pay 1% on the value.

Salary Sacrifice will come off you pay before tax and it will affect your Pension.

If all 3 were options were offered and it was a pure EV you were getting - Salary Sacrifice, Company Car or Car Allowance. I would rate them as follows in terms of best to worst off:

1. Company Car - Zero tax from April so your pay does not get affected. Basically a free car to use – Includes everything (Insurance etc). Not fuel tho unless your work gives you free electricity at both work & home.

2. Car Allowance - Addition to your salary. You would need to find an EV that fits your allowance and mileage (You have to pay for Insurance, tyres etc)

3. Salary Sacrifice - No addition to your salary (unsure?). Affects your pension, but if you are not bothered or have a backup to this then this can be Nr 2 (usually includes Insurance etc)

One thing to mind is the Business mileage rate. My work and others on here get 4p a mile, but this may differ with other work places. Diesel and petrol cars get roughly 24p a mile and this includes Hybrids!

 

[WannabeOwner]

Company Car perspective

Company gets 100% first year writeoff on EV. Basically Company gets the tax back on the initial purchase and then has the use of the money for, say, 3 years until you sell it and then Company has to pay tax on sale price - might be 50%? of the original value. But you then buy another EV and do it all over again, so that "tax on sale" is actually "Only half the tax advantage for 2nd, 3rd, ... time compared to 1st time" - what's not to like?

(Can't remember what Corporation Tax is, 18% maybe? That's the portion that company would get back ... but they do have to make a profit to benefit )

At some point the 100% writeoff will go away ...

Company Car is also "all costs through company". High insurance, kids aged 17 and about to learn to drive ... things like that favour shifting to company car.

I have two company cars (pay BiK on both, but of course that is 0% on EVs). Accountant said to put the kids cars through as Company Cars too ... I don't do that sort of stuff because employees would rightly think it stinks when they found out ... but don't let me stop anyone else!

No BiK on "Electricity fuel at work", so if you can charge at work that's free ... but with a decent overnight rate electricity cost is tiny compared to Fossil Fuel (rule of thumb you will save £100 a month for each 10K miles you drive a year. If you have a gas-guzzler that would be more like £150 per month. Assume 2p a mile for fuel in EV (assuming you have best night-rate on home electricity)

 

[davidmc]

@Cyclone1
Just to give you a rough idea of the affect it has on your finances:

Based on an assumption of £50k annual salary (£6k car allowance for calcs below) and 5% pension contribution to a private pension. No Other allowances allowed for such as Child vouchers, Benefits, healthcare etc.


1. Company Car - £50k a year - Monthly take home £2,900 (Pension contributions around £208 a month)
2. Car Allowance - £56k a year - Monthly take home £3,270 (Pension contributions around £208 a month)
3. Salary Sacrifice - Assuming a -£400 off monthly pay, my guess? - Monthly take home £2,520 (Pension contributions around £188 a month)

All above is a rough calculation but should give you an idea.

 

[Cyclone1]

@Cyclone1

Having an EV as a company car (in my opinion!) is the best option from April. You will pay ZERO tax, nothing, zada, zilch. But next year you may pay 1% on the value.

Salary Sacrifice will come off you pay before tax and it will affect your Pension.

If all 3 were options were offered and it was a pure EV you were getting - Salary Sacrifice, Company Car or Car Allowance. I would rate them as follows in terms of best to worst off:

1. Company Car - Zero tax from April so your pay does not get affected. Basically a free car to use – Includes everything (Insurance etc). Not fuel tho unless your work gives you free electricity at both work & home.

2. Car Allowance - Addition to your salary. You would need to find an EV that fits your allowance and mileage (You have to pay for Insurance, tyres etc)

3. Salary Sacrifice - No addition to your salary (unsure?). Affects your pension, but if you are not bothered or have a backup to this then this can be Nr 2 (usually includes Insurance etc)

One thing to mind is the Business mileage rate. My work and others on here get 4p a mile, but this may differ with other work places. Diesel and petrol cars get roughly 24p a mile and this includes Hybrids!

Thank you and appreciate the clarity.

 

[Cyclone1]

@Cyclone1
Just to give you a rough idea of the affect it has on your finances:

Based on an assumption of £50k annual salary (£6k car allowance for calcs below) and 5% pension contribution to a private pension. No Other allowances allowed for such as Child vouchers, Benefits, healthcare etc.


1. Company Car - £50k a year - Monthly take home £2,900 (Pension contributions around £208 a month)
2. Car Allowance - £56k a year - Monthly take home £3,270 (Pension contributions around £208 a month)
3. Salary Sacrifice - Assuming a -£400 off monthly pay, my guess? - Monthly take home £2,520 (Pension contributions around £188 a month)

All above is a rough calculation but should give you an idea.

Thanks.

Shouldn’t option 3 also include the car allowance amount? With salary sacrifice the car allowance remains

 

[davidmc]

Thanks.

Shouldn’t option 3 also include the car allowance amount? With salary sacrifice the car allowance remains

Im not sure on that as i dont have this option at my work. If it does then it would be as follows:

3. Salary Sacrifice £56k - Assuming a -£400 off monthly pay, my guess? - Monthly take home £3,041 (Pension contributions around £188 a month)

Although it maybe the case of in one ear and out the other! You get £6k allowance and they take £6k off your salary.

If they do then it is a follows:

3. Salary Sacrifice £56k - Assuming a -£500 off monthly pay, my guess? - Monthly take home £2,948 (Pension contributions around £183 a month)

 

[Cyclone1]

Im not sure on that as i dont have this option at my work. If it does then it would be as follows:

3. Salary Sacrifice £56k - Assuming a -£400 off monthly pay, my guess? - Monthly take home £3,041 (Pension contributions around £188 a month)

Although it maybe the case of in one ear and out the other! You get £6k allowance and they take £6k off your salary.

If they do then it is a follows:

3. Salary Sacrifice £56k - Assuming a -£500 off monthly pay, my guess? - Monthly take home £2,948 (Pension contributions around £183 a month)

I think that’s more reflective in my circumstances. I get the option of taking w company car or a cash allowance. So if I did go for salary sacrifice then my cash allowance would remain on top of my salary.

This then makes option 3 attractive financially I think.

 

[davidmc]

I think that’s more reflective in my circumstances. I get the option of taking w company car or a cash allowance. So if I did go for salary sacrifice then my cash allowance would remain on top of my salary.

This then makes option 3 attractive financially I think.

best thing to do is find out the true monthly cost for the salary sac and also what your yearly car allowance would is and i can run it quickly through my excel calculator for you to give you a rough idea quickly.

 

[elastictangent]

It's worth noting that entering into a Salary Sacrifice scheme doesn't automatically affect your occupational or workplace pension scheme. An employer can decide on how to treat earnings related payments in this case and can continue to use the notional salary if they choose or amend it to take into account the new salary rate.

 

[Cyclone1]

Thanks for all of the info.

Have any other owners or prospective owners had to choose between Salary Sacrifice or Company car? If so what made you decide on either?