Salary sacrifice Advice Appreciated

[Harrow Y]

I have a MYLR on order, deliver expected in August. My employer just announced a salary sacrifice scheme and MY is one of the cars listed. Unfortunately I have not got any other details as the URL for the scheme is unavailable for me to access from Germany (?).

I understand that salary sacrifice would be better from a cost per month standpoint. Any idea roughly how much this equates to per month in savings?

Second question is would I need to cancel my existing order from a different Leaseco if I go ahead with salary sacrifice or can the order be transferred ?

Thank You!

 

[pevz]

Exact same thing happened to me... I ordered, now my company is about to go live with Octopus Salary Sacrifice scheme.

Cant tell you exact saving until the thing is live hopefully next week, but the Octopus rep said they had a good relationship with Tesla and they only require your RN number to transfer the order without losing your place in the queue. Tesla also confirmed this on the web chat.

 

[Harrow Y]

Exact same thing happened to me... I ordered, now my company is about to go live with Octopus Salary Sacrifice scheme.

Cant tell you exact saving until the thing is live hopefully next week, but the Octopus rep said they had a good relationship with Tesla and they only require your RN number to transfer the order without losing your place in the queue. Tesla also confirmed this on the web chat.

Thank you@ That is very reassuring. I have ordered through a Leasing Co so not sure if they will allow me to take it away to another provider. Let’s see what the outcome is next week. Thanks again!

 

[thetallpaul]

Do you have access to a VPN to change your 'virtual' location.
I've signed up to Tusker's offering, and when I take everything into account it's a lot cheaper than privately leasing. There is the bonus that insurance, maintenance and tyres, European breakdown cover, is included.
If I was not a higher rate taxpayer the personal lease option could be cheaper overall.

 

[spdpsba]

I think there are few threads about NHS salary sacrifice and the downside in relation to pensions etc., Not sure whether any of your pension benefits gets affected. If it is a straight forward one then SS is definitely cheaper compared to private leasing. But the companies do sometime put exorbitant sticker prices and then calculate your monthly figure, so get the quote and check the sticker price.

 

[Fezza]

So, we've just set a Tusker scheme up. A lot of it depends on how your company set up the scheme as they have the option to pass any NI savings back to the employee..... or not! If they don't then it makes a big difference.

If you're a 40% tax payer and the employer gives back the savings to the employee then it's a good deal as it includes all the insurance, maintenance, lifestyle protection insurance and more. You're likely talking £500 a month, no deposit, 4 years, 7.5k a year just as an example.

If you're not a 40% tax payer and the employer keeps the savings then you can be talking £200/250 more a month on a Model Y LR.

Caveat to the above is pensions too, ours is taken out after pension is taken out so no impact, it's a big thing to check. Could make it cheaper monthly but could cost you a lot on retirement.

All depends on the setup. Hope that helps!

 

[btc1k]

Majority of these salsac deals, particularly Tusker, are a complete rip off. If you compare the prices with same car in your own company, for example, the difference can be as much as half price!

Most of them are set up to pass the savings back to the lease company, with the employer then getting to offer a "free" service of salsac.

 

[WannabeOwner]

Any idea roughly how much this equates to per month in savings?

When we started to offer to our employees I did some test quotes and my recollection is that it was something like £700 per month, and salary sacrifice (for higher rate tax payer) reduced that to £500 a month. So perhaps a saving of £200 a month.

But ... the only "deal" was "everything included". So no deposit, all service etc. included including recover and insurance. Some of which you might already have / don't want / and the insurance might work out more expensive that you could get shopping-around.

If your employer gives YOU the Employer's NI saving then it would be more saving (but dunno how they can give you that - without it becoming taxable income. But I've read suggestions that employers could do that ... might not be true.

would I need to cancel my existing order from a different Leaseco if I go ahead with salary sacrifice or can the order be transferred ?

I suspect that "depends", but I think in principle you can transfer your RN number from one leasing company to another.

downside in relation to pension

Your "pay" is reduce by salary sacrifice, and as such any "Employers pension contribution", if it is a percentage of Pay, would reduce - same for your contribution if a percentage of pay. I doubt there is anything to stop you making the original contribution you would have done, but might be your employer won't match that bit.

how your company set up the scheme as they have the option to pass any NI savings back to the employee

You are going to save the Employees part of NI for sure. Its the Employer's part that you might not (and I'm not even sure that they can give you that bit (tax free) ... but I'm no accountant)

If you compare the prices with same car in your own company, for example, the difference can be as much as half price!

have you got an example? ("same car in your own company" do you mean "company car"? 'coz we don't offer those to anyone ... employees get a car allowance instead. So for Salary Sacrifice they would get whatever tax benefit that is, and also the car allowance. But I may have misunderstood your point?

 

[WannabeOwner]

P.S> if you are really fortunate the Salary Sacrifice deduction will occur before other things - such that it might enable you to be entitled to Child Benefit ... maybe there are other wrinkles like that.

 

[btc1k]

When we started to offer to our employees I did some test quotes and my recollection is that it was something like £700 per month, and salary sacrifice (for higher rate tax payer) reduced that to £500 a month. So perhaps a saving of £200 a month.

But ... the only "deal" was "everything included". So no deposit, all service etc. included including recover and insurance. Some of which you might already have / don't want / and the insurance might work out more expensive that you could get shopping-around.

If your employer gives YOU the Employer's NI saving then it would be more saving (but dunno how they can give you that - without it becoming taxable income. But I've read suggestions that employers could do that ... might not be true.



I suspect that "depends", but I think in principle you can transfer your RN number from one leasing company to another.



Your "pay" is reduce by salary sacrifice, and as such any "Employers pension contribution", if it is a percentage of Pay, would reduce - same for your contribution if a percentage of pay. I doubt there is anything to stop you making the original contribution you would have done, but might be your employer won't match that bit.



You are going to save the Employees part of NI for sure. Its the Employer's part that you might not (and I'm not even sure that they can give you that bit (tax free) ... but I'm no accountant)



have you got an example? ("same car in your own company" do you mean "company car"? 'coz we don't offer those to anyone ... employees get a car allowance instead. So for Salary Sacrifice they would get whatever tax benefit that is, and also the car allowance. But I may have misunderstood your point?

I meant comparing prices say for an employee leasing via salsac arrangement - or a company owner/director leasing a vehicle and providing it to themselves for personal use (my car is through my own LtdCo as director). It's less than half the price (post tax), of a comparable salsac.

 

[Fezza]

When we started to offer to our employees I did some test quotes and my recollection is that it was something like £700 per month, and salary sacrifice (for higher rate tax payer) reduced that to £500 a month. So perhaps a saving of £200 a month.

But ... the only "deal" was "everything included". So no deposit, all service etc. included including recover and insurance. Some of which you might already have / don't want / and the insurance might work out more expensive that you could get shopping-around.

If your employer gives YOU the Employer's NI saving then it would be more saving (but dunno how they can give you that - without it becoming taxable income. But I've read suggestions that employers could do that ... might not be true.



I suspect that "depends", but I think in principle you can transfer your RN number from one leasing company to another.



Your "pay" is reduce by salary sacrifice, and as such any "Employers pension contribution", if it is a percentage of Pay, would reduce - same for your contribution if a percentage of pay. I doubt there is anything to stop you making the original contribution you would have done, but might be your employer won't match that bit.



You are going to save the Employees part of NI for sure. Its the Employer's part that you might not (and I'm not even sure that they can give you that bit (tax free) ... but I'm no accountant)



have you got an example? ("same car in your own company" do you mean "company car"? 'coz we don't offer those to anyone ... employees get a car allowance instead. So for Salary Sacrifice they would get whatever tax benefit that is, and also the car allowance. But I may have misunderstood your point?

Yes, to clarify, I was talking about them passing back the Employers NI savings, you'll definitely get the Employee NI savings. It's possible and the Employer has the option of giving it all back (effectively a pay rise on top of your wage or something I guess as it comes out pre tax etc), none of it back, or anywhere in between.

 

[WannabeOwner]

Yes, to clarify, I was talking about them passing back the Employers NI savings

Thanks. I need to make sure that our scheme is doing that (in the hope / expectation? that it will encourage more up-take)

 

[Fezza]

Thanks. I need to make sure that our scheme is doing that (in the hope / expectation? that it will encourage more up-take)

Yep, without it happening you’ll have much less of an uptake from lower rate tax payers so worth checking.

 

[spdpsba]

When we started to offer to our employees I did some test quotes and my recollection is that it was something like £700 per month, and salary sacrifice (for higher rate tax payer) reduced that to £500 a month. So perhaps a saving of £200 a month.

But ... the only "deal" was "everything included". So no deposit, all service etc. included including recover and insurance. Some of which you might already have / don't want / and the insurance might work out more expensive that you could get shopping-around.

If your employer gives YOU the Employer's NI saving then it would be more saving (but dunno how they can give you that - without it becoming taxable income. But I've read suggestions that employers could do that ... might not be true.



I suspect that "depends", but I think in principle you can transfer your RN number from one leasing company to another.



Your "pay" is reduce by salary sacrifice, and as such any "Employers pension contribution", if it is a percentage of Pay, would reduce - same for your contribution if a percentage of pay. I doubt there is anything to stop you making the original contribution you would have done, but might be your employer won't match that bit.



You are going to save the Employees part of NI for sure. Its the Employer's part that you might not (and I'm not even sure that they can give you that bit (tax free) ... but I'm no accountant)



have you got an example? ("same car in your own company" do you mean "company car"? 'coz we don't offer those to anyone ... employees get a car allowance instead. So for Salary Sacrifice they would get whatever tax benefit that is, and also the car allowance. But I may have misunderstood your point?

The NHS SS scheme is slightly misleading as it has many downsides in relation to pension but not been adequately discussed or explicitly explained. Especially if you are a high rate tax payer. I am not an expert on this but there are dedicated websites discussing this aspect.

 

[_MJF_]

I understand that salary sacrifice would be better from a cost per month standpoint. Any idea roughly how much this equates to per month in savings?

Most of the points I'd make have been covered, but for example :-

• be prepared for the gross figure to be higher than you could find it for yourself, as the leasing companies tend to hike the prices up in the knowledge it'll still be cheaper overall
• be prepared that you might have to take the bundled insurance, maintenance and breakdown cover whether you want it or not, and it be more expensive than you're expecting it to be
• be prepared to lose your existing No Claims Bonus (unless you insure another car or can get around it somehow)

But, having said the above it'll still probably be the cheapest way to get a brand new Tesla by a fair amount. Also, depending on your circumstances you could get to keep some Child Benefit that you might otherwise have lost, which is a benefit that's not obvious.

 

[gangzoom]

The NHS SS scheme is slightly misleading as it has many downsides in relation to pension but not been adequately discussed or explicitly explained.

Slightly misleading is putting it mildly, irresponsible and if it was a commercial product open to all, almost certainly be open to 'miss selling' litigation claims.

The NHS pension growth is directed linked to CPI+1.5%, guaranted. So potentially you are looking at near 10% increase this year regardless of what the stock market is doing, its mind boggling how generous it is.......Unless you have a very good reason for it, giving up any amount of NHS pension for a rental car is financial madness.

There is also the very real risk of breaching the £40k tax free annual contribution once you exist the SS scheme, as the annual contribution rate is calculated using some formula that makes some assumptions based on rate of pension contribution changes in the last 12 months.

 

[gangzoom]

it'll still probably be the cheapest way to get a brand new Tesla by a fair amount.

Given how little deprecation any of these cars are seeing at present I cannot see how this statement is correct.

The cheapest used Model 3 onsale right now is a 2019 car at £36k, say the owner got £33k trade in. The original price was £41k ish, so over 3 years its cost the original owner £8k, or £222/month.

Best of all, if bought out right there is no reason for the original owner to sell at 3 years. Where as on a rental scheme effectively you have to keep on paying £££/month forever.

Far from been 'cheap', any lease scheme (SS or not) has probably been one of the most expensive ways to own a Tesla over the last few years!

 

[GeorgeSymonds]

As others have said, gross cost of company car leases tend to be much higher than personal leases. Lots of reasons given, but there’s also a cost associated with (the risk of) early termination as employers don’t want to carry on paying for your company car if you decide to leave them.

The comparison also only really works on lease v salary sacrifice. My last car which I bought used from Tesla went up in value by nearly 4k when I traded it in, and my current MY is almost certainly worth more than I paid for it. That’s unusual for sure, not everyone can buy the car outright, but residuals are bonkers on all cars at the moment but it’s not been reflected in the lease prices.

People who do highish company miles can also be stung. A salary sacrifice is just a way to fund a company car. It’s a company car so a small BIK charge applies, but the potential kill is the approved mileage rate for fuel which is 5p. It does depend on expenses policies, but on 10k miles it could be the difference between £500 (5p a mile) and £4500 (45p a mile) in tax free payments to the employee towards fuel and running costs. As an employer, you might quite like not paying that extra £4k. I say it depends on expenses policies because some stick to government rates while others, especially those who own the company, claim actual charging costs etc, but as an employee it’s something to check. I had my first Tesla back in 2015 and at that time the approved rate was 0p a mile, I couldn’t claim anything off my employer, thankfully free supercharging saved that one.

So my tips would be..if they’re not stating the obvious:

Work out the total cost for the car you’d run outside the company car scheme including how funded, insurance, tyres, depreciation, fuel although that might be the same if you’re just comparing a company Tesla to a privately owned one, and deduct company mileage payments if you do many company miles.

Do the same for the company car and work out net cost after tax savings, but be mindful of other consequential changes like pension, death in service benefits etc.

See if the difference makes it worth doing. It’s not a given that it will be in all cases.

 

[WannabeOwner]

it could be the difference between (5p a mile) and (45p a mile) in tax free payments to the employee towards fuel and running costs

If Employer pays less than 45p I believe you can claim the difference (between Employer's rate and 45p rate) against tax

Obvious a lot less hassle if Employer pays the 45p rate ...

 

[GeorgeSymonds]

If Employer pays less than 45p I believe you can claim the difference (between Employer's rate and 45p rate) against tax

Obvious a lot less hassle if Employer pays the 45p rate ...

You can if its your car, if its a company car you can't, and a salary sacrifice is effectively a company car, you can't.