Salary Sacrifice

[Billbo]

Tesla seems to be suggesting here that I can buy a car through my pre-tax earnings via a salary sacrifice scheme; basically meaning the cost is reduced significantly.

Salary Sacrifice

Has anybody any experience with this?

I work for an SME with no official leasing partner, but I do use my personal car for business purposes (for which I receive mileage and a car allowance)

I contacted LeasePlan but they said they only run the scheme for businesses with 100+ employees. A few other firms I emailed didn't respond.

Is this scheme too good to be true? Am I missing out by working for an SME?

If this is as suggested; this could be a massive boon for EV's in general, but the execution seems to be the hurdle.

Any suggestions?

 

[WannabeOwner]

Not sure it will add anything useful, but just in case; this thread discusses whether my company could encourage employees to buy an EV

Company Employee Loan For Ev Purchase?

 

[Lasairfion]

Perhaps have a chat with an accountant.

 

[Billbo]

Yeah an accountant was on my to do list.

You would think companies would be dying to sell Model 3's with this method.

 

[Billbo]

Thanks for the link Wannabe owner.

I'll check out Octopus EV. Could be promising

 

[WannabeOwner]

You would think companies would be dying to sell Model 3's with this method.

My issue is "What happens when an employee leaves, with salary sacrifice car purchase partially paid off"

If they take the car, and the debt, with them I'll be happy, of course, but how much Admin / Legal am I going to have to put in place to take care of that (in my case: we don't have a company car system at all at present)

 

[Rob R]

Tesla seems to be suggesting here that I can buy a car through my pre-tax earnings via a salary sacrifice scheme; basically meaning the cost is reduced significantly.

Salary Sacrifice

Has anybody any experience with this?

I work for an SME with no official leasing partner, but I do use my personal car for business purposes (for which I receive mileage and a car allowance)

I contacted LeasePlan but they said they only run the scheme for businesses with 100+ employees. A few other firms I emailed didn't respond.

Is this scheme too good to be true? Am I missing out by working for an SME?

If this is as suggested; this could be a massive boon for EV's in general, but the execution seems to be the hurdle.

Any suggestions?

This is something that must be set up by an employer and HMRC. I have it at my Scottish local authority. We got it for lease cars first, now AVC pension contributions too. Your payments are not just passed over pre-tax, they are pre-NI as well, so in effect HMRC pays those for you into your car lease or AVC. Employers save NI as well, so it is a no brainer for employers.
I love that I can make the Chancellor do my bidding!

 

[Billbo]

My issue is "What happens when an employee leaves, with salary sacrifice car purchase partially paid off"

If they take the car, and the debt, with them I'll be happy, of course, but how much Admin / Legal am I going to have to put in place to take care of that (in my case: we don't have a company car system at all at present)

Yeah, the devil is in the details. If I needed to pay it off in full if it got to that point I would. Planning to be at my employer for a few years yet due to promotion opportunities.

 

[Billbo]

This is something that must be set up by an employer and HMRC. I have it at my Scottish local authority. We got it for lease cars first, now AVC pension contributions too. Your payments are not just passed over pre-tax, they are pre-NI as well, so in effect HMRC pays those for you into your car lease or AVC. Employers save NI as well, so it is a no brainer for employers.
I love that I can make the Chancellor do my bidding!

You Scots get all the best government incentives.

Yeah, it sounds like a sizable discount; and one that would justify going for the LR model as I could potentially sell it for what I paid (If I ever felt the need)

 

[fuzzywuzzy]

This is interesting, I'd never heard about it before. It sounds a good idea still for EVs but although there's plenty of companies offering to do it as a managed full service (inc. insurance, servicing and roadside recovery) I'm still not sure what the pricing would be or how to calculate it
Anyways, have asked our HR dept. if they'll consider providing it (I can't see it would be much more hassle for them then offering the cycle2work scheme via a managed provider)...

 

[Billbo]

My research suggests Salary Sacrifice can only ever get you to a lease situation. If anybody knows if it is possible to get to a purchase situation that would be amazing?

I've tried Octopus and am expecting a call back.

Salary sacrifice cars work for sme's - Fleet Evolution

Anyone working for an SME; these guys were the most helpful people I've spoken with so far.

 

[IanB]

I read this with great interest, but is it really not going to cost my company any money, and in fact they will actually be better off by saving on their NI contributions?

All sounds too good to be true.

I get to lease a Tesla and the lease costs are taken out of my salary before Tax and NI, thus saving me a small fortune over the 3 years? and my company saves too?

 

[WannabeOwner]

All sounds too good to be true.

The way i see it: Government is putting money into Eco / reducing Glboal Warming. How they choose to do it is up to them ... whether you can benefit is up to you.

saving me a small fortune

I reckon that your idea of a fortune ...and mine ... are different

 

[Rob R]

I read this with great interest, but is it really not going to cost my company any money, and in fact they will actually be better off by saving on their NI contributions?

All sounds too good to be true.

I get to lease a Tesla and the lease costs are taken out of my salary before Tax and NI, thus saving me a small fortune over the 3 years? and my company saves too?

My employer definitely saves NI by doing it. There is an administration cost, but if your employer has staff doing this stuff anyway, that would be minimal.

 

[MrBadger]

There were a few salary sacrifice schemes where it was talked about clamping down on them - hell, they even talk about clamping down on pension contributions too.

I don't know if car purchase schemes was one of these, and what happened with this talk, but consider what would happen if the scheme was stopped and you had to fund it fully out of net yourself.

The other thing to consider with salary sacrifice, and some companies may have their own additional limits, is that you cannot sacrifice more income than would take you into minimum wage territory. So small/med salary and/or large car payment and/or large pension etc may start limiting options.

 

[Rob R]

You Scots get all the best government incentives.

Yeah, it sounds like a sizable discount; and one that would justify going for the LR model as I could potentially sell it for what I paid (If I ever felt the need)

You Scots get all the best government incentives.

Yeah, it sounds like a sizable discount; and one that would justify going for the LR model as I could potentially sell it for what I paid (If I ever felt the need)

Only reason I'm not doing it to lease a LR Model 3 is I'm retiring next week! But it is lease only, in my office anyway. BTW, this is not restricted to Scotland I don't think.

 

[IanB]

Only reason I'm not doing it to lease a LR Model 3 is I'm retiring next week! But it is lease only, in my office anyway. BTW, this is not restricted to Scotland I don't think.

Congrats on retiring, another 12 years for me

 

[Rob R]

There were a few salary sacrifice schemes where it was talked about clamping down on them - hell, they even talk about clamping down on pension contributions too.

I don't know if car purchase schemes was one of these, and what happened with this talk, but consider what would happen if the scheme was stopped and you had to fund it fully out of net yourself.

The other thing to consider with salary sacrifice, and some companies may have their own additional limits, is that you cannot sacrifice more income than would take you into minimum wage territory. So small/med salary and/or large car payment and/or large pension etc may start limiting options.

The minimum wage thing is the law, all salary sacrifice schemes have this. But by the time you hit it, you will probably be a non tax payer, so all you save is some NI. Best to limit your payments to keep your income at your tax threshold.

 

[MrBadger]

The minimum wage thing is the law, all salary sacrifice schemes have this. But by the time you hit it, you will probably be a non tax payer, so all you save is some NI. Best to limit your payments to keep your income at your tax threshold.

You may have ended up as a non tax payer, but you started off as one so you still have saved the tax you would have paid.

Say you earned £5k above tax threshold and your salary sacrifice was £6k/year. You still saved the tax on £5k even though you are no longer a tax payer. Some salary sacrifice schemes may prevent this scenario in addition to statutory restrictions.

 

[IanB]

I already sacrifice a large portion of my salary into a top-up pension scheme, it would just mean instead of 25% sacrifice going into this fund, it would be more like 12.5%, with 12.5% going to the car scheme, ok, I may have to work an extra year or two (always planned to retire at 57) but hey ho, that life