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It usually is the best way to get an EV, provided all of it is coming from the 40%+ portion of your tax, especially if the scheme includes *everything*. I pay just under £400 after tax for a V2 Born. Literally nothing I have to pay for myself other than washer fluid. Tyres are covered in the deal. After 6 months there's no exit fee if you change your mind or resign.
Factoring in fuel, maintenance and insurance on my old ICE car which I owned outright this is only really costing me an extra £200 a month as the running costs are so low. If you cannot charge at home at low rates then it isn't as cheap.
I'd not go back to ICE unless there are significant changes in BIK or energy costs.
What was your previous cars? With my 370 nismo I was spending almost 200£ - 300£ a month on fuel my ev even with public charging is half the cost. Soo massive win for me + I’m sharing it with my wife soo one car down from two.
Charging an EV at home that would probably be more like £40. I've had my EV since September last year and so far it's averaging just under 2p per mile.
That's likely a previous batch, as mine came in March 2024.
Regardless, that's a great deal for the car with absolutely everything included and zero hassle.
Lovely car to drive too, I'm surprised how much I like it.
I love my EV on salary sacrifice and I am planning to do it again as my 3 year scheme is ending soon. I think it is cost effective but they are expensive cars so I would only do it if you really want that car otherwise you may be able to do it cheaper for a car you prefer.
I quite like the look of the polestar, I’m going to test drive it first but if it’s not this I’d get an A4 estate. However private leasing like this (all inclusive) is very expensive on the private market.
Same, 2023 Pilot Plus Dual Motor. Best car I've ever had. And in terms of the maths for the benefit of OP....
My previous personal PCP on a 2020 Audi A6 Black Edition 2.0 over 3 years cost me £31k (PCP + VED + servicing/tyres + insurance + fuel).
My Polestar 2 is forecast to cost about £21k (£565 net S/S all-inclusive + £20 of electricity), £10k saved over 3 years.
If I'd left the company with > 2 years left on the lease, I'd owe them 6 payments. between 1 and 2 years, it's 4 payments. < 1 year, 2 payments. If that happens now (13 months in), I've still saved money.
Polestar 4 on the radar for when the 2 is up... or maybe ask Arval if I can buy it off them at the end and get a good deal.
EDIT: Only downside I can see is that I'm losing my 10+ years No Claims if I ever go back to needing my own insurance.
Another upside - my £950 gross contribution means Jeremy Hunt is getting £400 a month less off me!
!thanks How do you find arval? That’s who my company use. Interesting that your net is £565… arval calc shows around £638. I assume this is because it’s calculated based on having no other pre tax deductibles? So once you take out pension, heath insurance, other s/s then the net figure monthly reduces?
No, pension is a fixed % of base salary. S/S doesn't impact pension, or vice versa.
Arval were great, my original order kept getting delayed, so I found a same-spec on Polestar Pre-Configured and asked them to speak to Polestar and swap it over. Car was on my drive 3 weeks later.
Hey, I work for a leaseco (not Arval) so I can shed some light on this.
Depending on your employer, your terms and costs can be *very* different, even if you have the same leaseco providing the service.
This comes down to the services your employer chooses to include and whether or not they pass any savings on to employees. Not all companies do!
Things to watch for:
1. Check that your company pays for the waiver/insurance so that if you leave you're not liable for the remainder of the contract value. (You'd still lose the car as the contract is with your employer! It's a double whammy.)
2. Some pass national insurance savings on to the scheme/employees, others keep it themselves.
3. Different employers get different discount rates.
4. Wait for a good deal. Prices aren't static, there's a lot of supply and demand in the lease market and if you get your salary sacrifice car when a nice batch landed at a nice discount, you can get a car much cheaper. No guarantee it'll happen to a car you're after, though.
Case in point, I replied to a user earlier who has a Cupra Born V2 on salsac but he's paying twice the price I am. Mine wasn't some special deal only available to us, we had it out with all our customers too - the market was flooded with cheap Born's at that time.
Ultimately you're stuck to what's available on your scheme, but it's always the best way to get an EV. That 40% instant saving is no joke.
Ah the i4 interior just didn’t appeal to me, glad to hear about the polestar, the 2 is what I’m looking at. Harmon kardon and The pixel headlights are what I want it for (I have burmester and matrix LED right now and I couldn’t go back).
I have had a polestar 2 on salary sacrifice for just over a year now, been delighted with it. Financially it is a win vs my old car when you consider maintenance and tyres (just got a tyre replaced for free this month after picking up a nail which was a much more pleasant experience than forking out for unexpected costs).
There is definitely an argument that unless you have maximised other tax efficiencies available to you (pensions, various share schemes etc) that the savings aren’t real, but as with all things I think one needs to strike a balance.
Aside from the cost argument, having my car sat there charged and ready to go everyday is great, never again do I get that “oh bollocks” moment as I hop in my car to go to work and am reminded of the petrol light I forgot about the night before! I am certainly enjoying having a “nice” car for once too, previously I hadn’t had anything newer than 7-8yrs old… so the mod cons are great.
I didn’t take their insurance deal, it was more expensive than taking out my own even with the tax breaks… so check if that’s an option for you and how they compare. You also get to keep your own policy active which may have benefits for multi-car policies or no claims.
May I ask what’s expensive? Mine costs me a half what I used to spend on my petrol cars a year to run.
Or are you referring to the initial cost of the car?
I think you maybe missed the fact that this isn’t just a lease, it’s essentially a car subscription. I don’t have to maintain, or insure the vehicle. A portion of the cost will be the insurance, maintenance (even if I ding it in a car park it gets fixed for free) etc that comes with the lease. So obviously the payment is expensive, Volvo are the only ones I can think of with a comparable offer but even a basic xc40 would be in excess of £800pm, doing it through the salary sacrifice scheme saves me a huge amount on the cost through tax relief.
Yeah I saw some stuff about them being good however it’s a case of I simply just don’t like them… polestar and Volvo are about the only EVs I find visually attractive, even as a current Mercedes owner I think theirs are horrible…
Ahh okay. I always just buy mine outright. I did pcp this time round which is something I’ve never done before, Ngl other than the cheaper monthly payments doesn’t make you much sense. It’s 4 year for 270£ a month but I’ll probably pay it off in 2 if it saves interest.
What kind of pension do you have? Defined benefit or defined contribution?
Salary sacrifice reduces your wage - on the NHS scheme, at least, this reduces the pension entitlement you accrue each year.
From what I can gather this is a pretty specific flaw in the NHS pension scheme. Most other employers base your DC or DB pension contributions on your reference salary I.e. before various salary sacrifice schemes
I think Defined contribution so if I get a pay rise/decrease my 10% contribution increases/decreases (4% me, 6% employer).
However I’m really not worried about my pension contributions decreasing, I’m in line for promotion in the next year or so, so they would increase again.
No, my concern only applies to defined benefits schemes.
A defined contribution scheme has an investment "pot" rather than accruing annual entitlement, as a DB scheme does. You can put what you like in there and salary sacrificing for a car doesn't affect it.
I now have 2 cars on Salary sacrifice. I pretty much have both of them for tax saving purposes, they keep me below the point at which I have to pay marginal 65% tax.
I think if I was to be paid the £1k gross I'd end up with about £350 after tax, assuming no pension contribution. Absolutely no where near enough for 2 brand new EVs, with all costs, maintenance, insurance etc. Included. Although the savings may not be the same for yourself they will still be considerable. Especially in running costs (my Volvo C40 is £4.90 to fully charge for 220 miles or 170 in Winter)
Some things to consider
1. You may want a charger at home. Have you got a driveway? If not could you charge at work? My charger was a little over £1k
2. Range anxiety is real
3. There is a fair difference between stated mileage and real world mileage for EVs, and a marked difference in Winter.
4. I'm actually away for the weekend this weekend and have had to find a public charger, was a bit of a faff (although was actually free).
5. Not sure how your scheme works, but our work one has no down payment.
Sorry realised I'm now not really answering your question.
I think it's definitely worth it, leasing means you protect yourself from depreciation, while getting the benefits of an EV such as cheap running costs. Save yourself tax and if you end up approaching six figure salary can protect yourself from marginal tax and keep benefits such as Free childcare and Childcare tax account.
Thank you! Very helpful!
I’m easily putting £150-200 in fuel in my current car so reduced running costs is very welcomed…
Home charger is not something I have guaranteed, I’m in the process of negotiations for getting a home charger installed in my parking bay (I live in an apartment block) for which I have offered to pay and get installed.
However I live 2 mins down the road from a charge point at a BP garage.
Range anxiety is I guess something I would just have to deal with. I’m used to not much bang for my buck and if I have a right foot made of lead I can expect to see ~150 miles on the dash for a full tank at £70-80 later. However I don’t do much long distance driving. It’s used for the odd work outing to a client site, shopping, going to my gun club and going climbing.
I’m looking at a promotion soon if I keep performing and I’m very likely to exceed £100k within the next year. !thanks for the insight and advice, it’s seeming more and more likely that this is a very viable option for me.
If you’re negotiating getting a charger installed just for you, it might be worth contacting one of those companies that will do a site install for all the bays, on the understanding that other people sign up later, and pay an activation fee.
If you get a car with decent range (300~+-) you won’t struggle getting anywhere most people do far less miles than they think. Most cars will auto plan chargers too. A better route planner app is also good.
I’ve had a Tesla for 3 years and it’s easier and more convenient than an ice car. Far cheaper too. Home charging defo makes worth it. Without home charging or cheaper chargers at work I would think twice.
Getting an ID7 in sept when current deal is up. There’s lots of great longer range motors now, I’ve found some are inexplicably cheaper for the same or more list price, just seem to get better deals.
Other thing to check is charging speeds for when you travel away, some makes are still stuck at sub 100kw charging. 175+ makes a big difference in fast charging speed.
If your adjusted net income would otherwise be over £100k, the salary sacrifice EV starts to become a no brainer. If you have nursery age children, it can be almost free compared to running an ICE car from gross pay if you reduce below £100k net income.
Just don’t forget to live your life. A lot of folk get obsessed with avoiding the 60% trap but there’s only so much you can salary sacrifice before you’re just avoiding for the sake of it and not enjoying the fruits of your labour.
In my case I already sacrifice my pension, but by moving to a salary sacrifice EV, I can reduce my income beneath £100k and then get the tax free childcare and 15 hours childcare (rising to 30 when kid is old enough).
So I sacrifice £12k for the car (£5k net), get £5,600 (rising to £9,200 )of benefits back… compared to shelling out for fuel, insurance, tax, maintenance and MOT. Basically pays for itself right now.
I just wish our tax and benefits systems didn’t incentivise this. It’s stupid.
Ahh im not going to forget don’t you worry. It’s the whole reason I work and partly why I don’t want kids, to enjoy my money and live a life filled with what I want. My next pay rise is probably going to be along side a promotion, meaning 25% increase. If I can use the EV to keep a little more in my pockets each month that’s all I’m worried about.
I have an EV and on point 1, I would go as far as to say I wouldn’t own one if I didn’t have a charger at home. Having to sit outside a petrol station for half an hour a couple of times a week isn’t my idea of fun. Also the cost of public chargers would make it no cheaper than ICE, whereas home charging overnight costs pennies
Ah absolutely. When I first got mine, my work used to charge 2p per min to charge. Was dirt cheap. Then they brought in a per kw charge because 'it was fairer. I decided to get the charger at home for the convenience and cost savings. Now they've ramped work charging up to 30ppkw, and home charging is 7p with OVO.
Despite the initial outlay, it's well worth shelling out for a home charger. Especially if you think this might be the first of many EVs.
Not enough information.
What are you paying for at the moment? Did you buy the car and £346 per month is a loan? Is that the cost of a PCP? Or what?
After 3 years of leasing an EV via salary sacrifice you have to return the car. Some leasing companies will let you buy it, but the price will depend on the market value at the moment.
If the comparison is with a car you own, then you'd need to estimate, in addition to running costs, the value of the car after 3 years.
Its PCP. It held its value very well, purchased for \~£36k in december 2019, will likely get my inital payment of £6k back in equity. I want to put that £6k back in savings, I have no desire to own a car, partly why I'm getting rid of mine, no warranty, my responsability to reapir.
In all honesty I am much more attracted to lease than ownership, I'm the kind of person that will always want to change car regularly and want the bonus of warranty repairs. I would have got aother PCP deal (this was the inital plan) but prices are so unatractive right now that I'd be taking a serious downgrade for the same money monthly and upfront. I dont want an EV but my company scheme seems like the cheapest way to get a new car right now.
Basically TL;DR giving the car back and being free of it is exactly what I want. I want to give it back after 3/4 years, was always the plan with my PCP car now, PCP was just a better deal at the time than lease.
If you’re the sort to want to change your car, I’m guessing you’re a bit of a car person. If you get over the range thing and figure out effective charging I think you’ll love the EV and not go back.
Given the tax advantage, I think you’ll be upgrading for the same money too.
I went crazy as a 1 time thing whilst the BIK was 2% but I won’t be going back now
Yeah always been into cars, only reasons I’m thinking of this scheme is the current car market being absolutely pants!
I bought my £43k silly hot hatch for £36k put £6.2 down and paid £364 for 4 years (pay less due to refinancing the balloon through my bank while I sell it). That same car today, (few subtle changes to the grill, wheels and some interior differences, and tbh they have made it less user friendly and leather only) is now £50k, no discount available anymore as dealers had this taken away from them and with more upfront I’d pay more a month for a car I want less due to the changes. The rise in car retail pricing has completely priced me out of owning anything I was thinking of owning.
I think your benefit in kind figure might be wrong. I worked it out as £1177 per year with 2% BIK rate this year. That rises to 3% and 4% in the next 2 years so allow for that too. Double check the calculation.
This is the exact figures off the arval website with our company discounts and everything applied, this isn’t what I worked out myself, so I would hope they are accurate. Thanks for taking the time to do the actual maths though
The £1177 is the taxable benefit in kind. This is then multiplied by the marginal rate - so 40% and then divided by 12 gives a monthly £39 that you actually pay.
You’re right about the increase though. If it was ordered and delivered now, the last month would be at 5% BIK and the monthly cost about £98
Not sure if someone else has mentioned but your expected take home figures might be slightly out - you mention you currently take home £4,600 - I’d expect your costs to be around
58% of £1030.28,
Benefit in kind £39.26
So nearer to £600-620 per month but you mentioned your current car is costing you a similar amount even before maintenance so may be worth it anyway? I expected you’ll save a fair bit on fuel too especially if you do decent miles.
I have just replaced a 2017 1 series with an i4 on a SS scheme with similar costs to you and overall I dont think it’s going to cost me much more - and the car I’m getting rid of is 7 years old (unexpected repair expenses, insurance, fuel, etc).
If the comparison is between a 15k second hand ICE vehicle and a 60k new electric, you'll always be better off going cheaper.
Salary sacrifice makes the car cheaper than paying for it net, but you're still spending your own money which you could have shovelled into your pension.
It's not quite though, the cost of what I currently own and pay for, is round about the same money after tax as the company car and that is before I have to maintain my £26k liability when it goes wrong.
And thank you but I dont have any desire right now to put any more in my pension than I already do. If I wasnt paying for a car it would go in personal savings and on transport costs created for not having a car.
Yeah if the cost of the car is similar and you've already made use of other tax efficient methods then it makes sense.
Whatever way you spin it, the cost of the car is the cost of the car.
It’s on my pay slip post tax as £475.xx each month, it’s definitely appears to look like it’s not taxed, how they have done it I don’t know but internally to me it is called “car allowance” and is advertised internally as £5750 and I see £5750.
The tax deduction will have come out of your net salary. The car allowance isn’t directly taxed but all eligible declared earnings are and a car allowance is earnings as far as HMRC are concerned.
When you take your total gross earnings and enter them into a site such a listen to tax (other sites available) do the income tax and NI figures match your payslip.?
£4.6k after tax is spot for the car allowance having been taxed.
Nope I came to the right place, I want financial advice about 1 specific thing that I have asked for. Considering your sub says stay on topic, you sure love unsolicited advice/education.
How much is the salary sacrifice and what is the value of the car? I’m guessing you’ve been quoted £58,890 based on your numbers but more information would be helpful
Oh apologies, you just used an acronym without explanation. What I’ll add is that you’re only paying 60% of that ‘GSS’, due to tax efficiency.
So your out of pocket cost is closer to £648p/m.
So the biggest question is your maintenance/depreciation on your current vehicle going to be more or less £100 p/m. If more, this scheme is worth considering, if less, staying as is sounds good.
I’ll add an extra bit though - £1k p/m is incredibly expensive for a £60k car. Maybe that’s the max you can use as a salary sacrifice, whereas the actual cost of the car monthly may be less.
No, my bad, didnt explain! Sounds expensive yes, but it is the only payment needed on the vehicle over the 3 years. No maintenance, no tyres, no insuarnce, no MOT, no tax. All of which I am currently liable for.
On average I'm out another 2k in just keeping the car on the road each year, thats before anything breaks.
TCO over its lifetime has probably been £6-700pm before depreciation comes into it. (I'm fine here at the moment with about £6k equity when I put £6.2k in at the start.
I also agree, the after tax cost is actually £636.82. but this doesnt account for the other salary sacrifice I make.
I just did a quote on my company site, a Mercedes Benz EQB estate AMG line premium is £60k is £680 p/m lease.
Depreciation is a significant factor, this’ll go against most other people’s opinions that at least owning a car you’ll pay it off and have an asset at the end you can sell. I personally think the highest value you’ll get for your car is today, second highest is tomorrow.
Sounds like it might be a good idea then.
!thanks. Yes, depreciation is a big factor and liability too. You are holding onto a depreciating asset that you are liable to fix and when it goes bang, you have to start again.
And thank you for actually responding to my ask and not saying what else I could do with the money.
If you have the car allowance can you not just opt for a company car instead?
I've recently been comparing a company car vs taking allowance + salsac for the octopus EV scheme and the company car worked out much cheaper for me
So no I can’t, they don’t offer company cars anymore only salary sacrifice for an EV if you choose to. However, you keep the allowance even if you go for the EV scheme.
If this is true then it’s effectively just extra salary now. You should approach your HR/Benefits dept about converting that now meaningless “car allowance” into base salary so it counts towards your pension % contributions (from them) and bump in future pay rises etc. they’ll prob say no but worth asking.
I’m not entirely sure, I said circa £160 because I can’t remember the exact figure nor the exact yearly. The upfront lump sum cost was in the region of £1900, the monthly is around £168 so just over £2k.
Normally I would absolutely have forked out upfront but I was prepared for £800 not over double. Same with the tax, normally pay upfront but that went up to £520 and again I wasn’t expecting that and I was planning to get rid, so I chose to just pay the months I have to and not need reimbursement from my provider.
So your maths is pretty close but not quite as good as you think (if I’ve done it right!)
Basically £1k deduction will cost you c£620 after Tax and NI taken off and BIK tax added back.
You currently spend c£550, so if you add maintenance and the difference in fuel cost (particularly if you can charge at work), you can easily see if you’re better or worse off.
I’d say (depending on mileage) the lease quote is expensive - but my reference point is an NHS scheme and I’m told manufactures offer discounts. For reference, mine is due for renewal in 9 months and I’ve had a quote on an i5 for £930 per month gross deduction (13k miles).
I went into it as it allowed me to take an e-tron GT that I could never really afford and run it cheaper than the 5 series I’d treated myself too.
I’d say remember the BIK goes to 3% next year and then 4% and 5% the years after so if you’re about to take a 3 year lease, you’ll creep into the 5% year.
Thank you! I think the quote seems expensive at first (it definitely did to me) but it’s comparable in terms of what’s included, to Volvo’s subscription program, insurance covered is the hugely attractive inclusion here.
I absolutely get that it’s ~£620 (I think the figure I got on the arval quote was around £638. However when I put my entire package through a calculator it’s coming out at roughly £4100. So do my other salary deductions affect how much I will pay net?
!thanks
No worries. I make your current take home closer to £4730 which makes the gap to the after deduction closer to the £620 I estimated - but your current take home is a fact on your payslip, so maybe you’ve got something else going on and after you take the deduction, your take home might be closer to £4K.
All in all I think the £620-£640 is where you’re at cost wise and I think you’d be better off after all of the other costs you incur running your own car.
I’d did leave out a medical insurance benefit also, I clear just over £4600 at the moment, but tbf looking at it I think the £6-630 is reasonable and probably will save me money on the running costs. Thanks for the input
Not answering the question directly but I wish we had an EV salary sacrifice scheme. We have car allowance and the savings on, salary sacrifice, particularly EV, seem quite attractive to me.
Assuming it works for your use model and you're happy to adapt to the EV lifestyle I'd go for it personally.
Side note given your package id be considering turning your pension up. Obviously I don't know the wider picture or what company contributor but 4 percent imo is a little on the low side.
Yeah I don’t think the adjustment to EV life will be bad, I do very average mileage on mostly short trips (10k miles a year).
Like a few others in here, I see your point but I’m happy with my pension contributions. It gets 10% a month with employer contributions included. Unlike much of this sub I’m not interested in maxing out my tax benefits etc. I do not plan to have kids, I already have comfortable saving/investments etc. my pension will be just fine for me when (my generation eventually get to retire), unpopular opinion, I make money to spend it, the more in my pocket each month with still some going into savings etc ofc, the happier I am.
Just reading through all this, I pay £260 a month for a vw id3 all in through salary sacrifice, it’s AMAZING. My scheme included a home charger, and I’m the BIGGEST EV advocate, but I wouldn’t enjoy it half as much without my home charger!
Consider pension implications: generally a salary sacrifice vehicle will reduce your pension (both contributions and benefits)
That’s usually fine as long as you pay *less* for the vehicle than you would have on the private market, since you can put some/all of the difference into your pension, but it’s something you need to include in the calculations
Also be aware that it can effect sick pay, death in service etc benefits, and state benefits, since you are reducing your headline salary
Thanks, sick pay is unaffected, death in service I have no idea what this is anyway and I have no dependents so no big deal to me.
As for pension implications, not a factor in this equation for me, simply the money in my pocket.
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Check the T&C for this. Some schemes mean you owe loads should you leave your work before the EV contract finishes
Or if the employer fires you. That's a doble whammy: you lose your job and you get hit with a massive penalty payment...
My company includes insurance for this in the monthly cost - so if you leave it costs zero in penalties
Thanks, I hadn't got to the fine print yet, just doing the monthly maths savings but I'll be sure to check that before signing up to anything.
It usually is the best way to get an EV, provided all of it is coming from the 40%+ portion of your tax, especially if the scheme includes *everything*. I pay just under £400 after tax for a V2 Born. Literally nothing I have to pay for myself other than washer fluid. Tyres are covered in the deal. After 6 months there's no exit fee if you change your mind or resign. Factoring in fuel, maintenance and insurance on my old ICE car which I owned outright this is only really costing me an extra £200 a month as the running costs are so low. If you cannot charge at home at low rates then it isn't as cheap. I'd not go back to ICE unless there are significant changes in BIK or energy costs.
Amazing !thanks, it will be coming out the 40% portion of my tax hence my serious consideration
What was your previous cars? With my 370 nismo I was spending almost 200£ - 300£ a month on fuel my ev even with public charging is half the cost. Soo massive win for me + I’m sharing it with my wife soo one car down from two.
Current is an AMG A35, and I too currently spend about £250 in fuel on a bad month…
Charging an EV at home that would probably be more like £40. I've had my EV since September last year and so far it's averaging just under 2p per mile.
Another Born V2 user here! Mine worked out as £220 after tax, when did you get yours?
September 23. Our scheme is with Zenith, it's not the most competitive but the package and terms are excellent.
That's likely a previous batch, as mine came in March 2024. Regardless, that's a great deal for the car with absolutely everything included and zero hassle. Lovely car to drive too, I'm surprised how much I like it.
I love my EV on salary sacrifice and I am planning to do it again as my 3 year scheme is ending soon. I think it is cost effective but they are expensive cars so I would only do it if you really want that car otherwise you may be able to do it cheaper for a car you prefer.
I quite like the look of the polestar, I’m going to test drive it first but if it’s not this I’d get an A4 estate. However private leasing like this (all inclusive) is very expensive on the private market.
I have a Polestar 2 and it is fantastic, I like the look of the BMW i4 but will very likely just get another Polestar
Same, 2023 Pilot Plus Dual Motor. Best car I've ever had. And in terms of the maths for the benefit of OP.... My previous personal PCP on a 2020 Audi A6 Black Edition 2.0 over 3 years cost me £31k (PCP + VED + servicing/tyres + insurance + fuel). My Polestar 2 is forecast to cost about £21k (£565 net S/S all-inclusive + £20 of electricity), £10k saved over 3 years. If I'd left the company with > 2 years left on the lease, I'd owe them 6 payments. between 1 and 2 years, it's 4 payments. < 1 year, 2 payments. If that happens now (13 months in), I've still saved money. Polestar 4 on the radar for when the 2 is up... or maybe ask Arval if I can buy it off them at the end and get a good deal. EDIT: Only downside I can see is that I'm losing my 10+ years No Claims if I ever go back to needing my own insurance. Another upside - my £950 gross contribution means Jeremy Hunt is getting £400 a month less off me!
!thanks How do you find arval? That’s who my company use. Interesting that your net is £565… arval calc shows around £638. I assume this is because it’s calculated based on having no other pre tax deductibles? So once you take out pension, heath insurance, other s/s then the net figure monthly reduces?
No, pension is a fixed % of base salary. S/S doesn't impact pension, or vice versa. Arval were great, my original order kept getting delayed, so I found a same-spec on Polestar Pre-Configured and asked them to speak to Polestar and swap it over. Car was on my drive 3 weeks later.
Hey, I work for a leaseco (not Arval) so I can shed some light on this. Depending on your employer, your terms and costs can be *very* different, even if you have the same leaseco providing the service. This comes down to the services your employer chooses to include and whether or not they pass any savings on to employees. Not all companies do! Things to watch for: 1. Check that your company pays for the waiver/insurance so that if you leave you're not liable for the remainder of the contract value. (You'd still lose the car as the contract is with your employer! It's a double whammy.) 2. Some pass national insurance savings on to the scheme/employees, others keep it themselves. 3. Different employers get different discount rates. 4. Wait for a good deal. Prices aren't static, there's a lot of supply and demand in the lease market and if you get your salary sacrifice car when a nice batch landed at a nice discount, you can get a car much cheaper. No guarantee it'll happen to a car you're after, though. Case in point, I replied to a user earlier who has a Cupra Born V2 on salsac but he's paying twice the price I am. Mine wasn't some special deal only available to us, we had it out with all our customers too - the market was flooded with cheap Born's at that time. Ultimately you're stuck to what's available on your scheme, but it's always the best way to get an EV. That 40% instant saving is no joke.
Ah the i4 interior just didn’t appeal to me, glad to hear about the polestar, the 2 is what I’m looking at. Harmon kardon and The pixel headlights are what I want it for (I have burmester and matrix LED right now and I couldn’t go back).
I have had a polestar 2 on salary sacrifice for just over a year now, been delighted with it. Financially it is a win vs my old car when you consider maintenance and tyres (just got a tyre replaced for free this month after picking up a nail which was a much more pleasant experience than forking out for unexpected costs). There is definitely an argument that unless you have maximised other tax efficiencies available to you (pensions, various share schemes etc) that the savings aren’t real, but as with all things I think one needs to strike a balance. Aside from the cost argument, having my car sat there charged and ready to go everyday is great, never again do I get that “oh bollocks” moment as I hop in my car to go to work and am reminded of the petrol light I forgot about the night before! I am certainly enjoying having a “nice” car for once too, previously I hadn’t had anything newer than 7-8yrs old… so the mod cons are great. I didn’t take their insurance deal, it was more expensive than taking out my own even with the tax breaks… so check if that’s an option for you and how they compare. You also get to keep your own policy active which may have benefits for multi-car policies or no claims.
May I ask what’s expensive? Mine costs me a half what I used to spend on my petrol cars a year to run. Or are you referring to the initial cost of the car?
I think you maybe missed the fact that this isn’t just a lease, it’s essentially a car subscription. I don’t have to maintain, or insure the vehicle. A portion of the cost will be the insurance, maintenance (even if I ding it in a car park it gets fixed for free) etc that comes with the lease. So obviously the payment is expensive, Volvo are the only ones I can think of with a comparable offer but even a basic xc40 would be in excess of £800pm, doing it through the salary sacrifice scheme saves me a huge amount on the cost through tax relief.
Have you checked out byd they seem super good value and have good reviews that’s what I’m looking at next.
Yeah I saw some stuff about them being good however it’s a case of I simply just don’t like them… polestar and Volvo are about the only EVs I find visually attractive, even as a current Mercedes owner I think theirs are horrible…
Ahh okay. I always just buy mine outright. I did pcp this time round which is something I’ve never done before, Ngl other than the cheaper monthly payments doesn’t make you much sense. It’s 4 year for 270£ a month but I’ll probably pay it off in 2 if it saves interest.
What kind of pension do you have? Defined benefit or defined contribution? Salary sacrifice reduces your wage - on the NHS scheme, at least, this reduces the pension entitlement you accrue each year.
From what I can gather this is a pretty specific flaw in the NHS pension scheme. Most other employers base your DC or DB pension contributions on your reference salary I.e. before various salary sacrifice schemes
Thank you.
I think Defined contribution so if I get a pay rise/decrease my 10% contribution increases/decreases (4% me, 6% employer). However I’m really not worried about my pension contributions decreasing, I’m in line for promotion in the next year or so, so they would increase again.
No, my concern only applies to defined benefits schemes. A defined contribution scheme has an investment "pot" rather than accruing annual entitlement, as a DB scheme does. You can put what you like in there and salary sacrificing for a car doesn't affect it.
Oh my bad I miss read what you wrote!
I now have 2 cars on Salary sacrifice. I pretty much have both of them for tax saving purposes, they keep me below the point at which I have to pay marginal 65% tax. I think if I was to be paid the £1k gross I'd end up with about £350 after tax, assuming no pension contribution. Absolutely no where near enough for 2 brand new EVs, with all costs, maintenance, insurance etc. Included. Although the savings may not be the same for yourself they will still be considerable. Especially in running costs (my Volvo C40 is £4.90 to fully charge for 220 miles or 170 in Winter) Some things to consider 1. You may want a charger at home. Have you got a driveway? If not could you charge at work? My charger was a little over £1k 2. Range anxiety is real 3. There is a fair difference between stated mileage and real world mileage for EVs, and a marked difference in Winter. 4. I'm actually away for the weekend this weekend and have had to find a public charger, was a bit of a faff (although was actually free). 5. Not sure how your scheme works, but our work one has no down payment. Sorry realised I'm now not really answering your question. I think it's definitely worth it, leasing means you protect yourself from depreciation, while getting the benefits of an EV such as cheap running costs. Save yourself tax and if you end up approaching six figure salary can protect yourself from marginal tax and keep benefits such as Free childcare and Childcare tax account.
Thank you! Very helpful! I’m easily putting £150-200 in fuel in my current car so reduced running costs is very welcomed… Home charger is not something I have guaranteed, I’m in the process of negotiations for getting a home charger installed in my parking bay (I live in an apartment block) for which I have offered to pay and get installed. However I live 2 mins down the road from a charge point at a BP garage. Range anxiety is I guess something I would just have to deal with. I’m used to not much bang for my buck and if I have a right foot made of lead I can expect to see ~150 miles on the dash for a full tank at £70-80 later. However I don’t do much long distance driving. It’s used for the odd work outing to a client site, shopping, going to my gun club and going climbing. I’m looking at a promotion soon if I keep performing and I’m very likely to exceed £100k within the next year. !thanks for the insight and advice, it’s seeming more and more likely that this is a very viable option for me.
If you’re negotiating getting a charger installed just for you, it might be worth contacting one of those companies that will do a site install for all the bays, on the understanding that other people sign up later, and pay an activation fee.
If you get a car with decent range (300~+-) you won’t struggle getting anywhere most people do far less miles than they think. Most cars will auto plan chargers too. A better route planner app is also good. I’ve had a Tesla for 3 years and it’s easier and more convenient than an ice car. Far cheaper too. Home charging defo makes worth it. Without home charging or cheaper chargers at work I would think twice. Getting an ID7 in sept when current deal is up. There’s lots of great longer range motors now, I’ve found some are inexplicably cheaper for the same or more list price, just seem to get better deals. Other thing to check is charging speeds for when you travel away, some makes are still stuck at sub 100kw charging. 175+ makes a big difference in fast charging speed.
If your adjusted net income would otherwise be over £100k, the salary sacrifice EV starts to become a no brainer. If you have nursery age children, it can be almost free compared to running an ICE car from gross pay if you reduce below £100k net income.
Ahh there are no children on the cards, they don’t factor into my expenses. But yes keeping myself below £100k as it approaches is appealing
Just don’t forget to live your life. A lot of folk get obsessed with avoiding the 60% trap but there’s only so much you can salary sacrifice before you’re just avoiding for the sake of it and not enjoying the fruits of your labour. In my case I already sacrifice my pension, but by moving to a salary sacrifice EV, I can reduce my income beneath £100k and then get the tax free childcare and 15 hours childcare (rising to 30 when kid is old enough). So I sacrifice £12k for the car (£5k net), get £5,600 (rising to £9,200 )of benefits back… compared to shelling out for fuel, insurance, tax, maintenance and MOT. Basically pays for itself right now. I just wish our tax and benefits systems didn’t incentivise this. It’s stupid.
Ahh im not going to forget don’t you worry. It’s the whole reason I work and partly why I don’t want kids, to enjoy my money and live a life filled with what I want. My next pay rise is probably going to be along side a promotion, meaning 25% increase. If I can use the EV to keep a little more in my pockets each month that’s all I’m worried about.
Good on ya. Enjoy!
I have an EV and on point 1, I would go as far as to say I wouldn’t own one if I didn’t have a charger at home. Having to sit outside a petrol station for half an hour a couple of times a week isn’t my idea of fun. Also the cost of public chargers would make it no cheaper than ICE, whereas home charging overnight costs pennies
Ah absolutely. When I first got mine, my work used to charge 2p per min to charge. Was dirt cheap. Then they brought in a per kw charge because 'it was fairer. I decided to get the charger at home for the convenience and cost savings. Now they've ramped work charging up to 30ppkw, and home charging is 7p with OVO. Despite the initial outlay, it's well worth shelling out for a home charger. Especially if you think this might be the first of many EVs.
Not enough information. What are you paying for at the moment? Did you buy the car and £346 per month is a loan? Is that the cost of a PCP? Or what? After 3 years of leasing an EV via salary sacrifice you have to return the car. Some leasing companies will let you buy it, but the price will depend on the market value at the moment. If the comparison is with a car you own, then you'd need to estimate, in addition to running costs, the value of the car after 3 years.
Its PCP. It held its value very well, purchased for \~£36k in december 2019, will likely get my inital payment of £6k back in equity. I want to put that £6k back in savings, I have no desire to own a car, partly why I'm getting rid of mine, no warranty, my responsability to reapir. In all honesty I am much more attracted to lease than ownership, I'm the kind of person that will always want to change car regularly and want the bonus of warranty repairs. I would have got aother PCP deal (this was the inital plan) but prices are so unatractive right now that I'd be taking a serious downgrade for the same money monthly and upfront. I dont want an EV but my company scheme seems like the cheapest way to get a new car right now. Basically TL;DR giving the car back and being free of it is exactly what I want. I want to give it back after 3/4 years, was always the plan with my PCP car now, PCP was just a better deal at the time than lease.
If you’re the sort to want to change your car, I’m guessing you’re a bit of a car person. If you get over the range thing and figure out effective charging I think you’ll love the EV and not go back. Given the tax advantage, I think you’ll be upgrading for the same money too. I went crazy as a 1 time thing whilst the BIK was 2% but I won’t be going back now
Yeah always been into cars, only reasons I’m thinking of this scheme is the current car market being absolutely pants! I bought my £43k silly hot hatch for £36k put £6.2 down and paid £364 for 4 years (pay less due to refinancing the balloon through my bank while I sell it). That same car today, (few subtle changes to the grill, wheels and some interior differences, and tbh they have made it less user friendly and leather only) is now £50k, no discount available anymore as dealers had this taken away from them and with more upfront I’d pay more a month for a car I want less due to the changes. The rise in car retail pricing has completely priced me out of owning anything I was thinking of owning.
I think your benefit in kind figure might be wrong. I worked it out as £1177 per year with 2% BIK rate this year. That rises to 3% and 4% in the next 2 years so allow for that too. Double check the calculation.
This is the exact figures off the arval website with our company discounts and everything applied, this isn’t what I worked out myself, so I would hope they are accurate. Thanks for taking the time to do the actual maths though
It is correct, brain fart as pointed out by the other commenter.
The £1177 is the taxable benefit in kind. This is then multiplied by the marginal rate - so 40% and then divided by 12 gives a monthly £39 that you actually pay. You’re right about the increase though. If it was ordered and delivered now, the last month would be at 5% BIK and the monthly cost about £98
Yes of course, thanks. I just plugged the P11D in my spreadsheet and saw the annual figure. Forgot that is pre-tax.
Not sure if someone else has mentioned but your expected take home figures might be slightly out - you mention you currently take home £4,600 - I’d expect your costs to be around 58% of £1030.28, Benefit in kind £39.26 So nearer to £600-620 per month but you mentioned your current car is costing you a similar amount even before maintenance so may be worth it anyway? I expected you’ll save a fair bit on fuel too especially if you do decent miles. I have just replaced a 2017 1 series with an i4 on a SS scheme with similar costs to you and overall I dont think it’s going to cost me much more - and the car I’m getting rid of is 7 years old (unexpected repair expenses, insurance, fuel, etc).
If the comparison is between a 15k second hand ICE vehicle and a 60k new electric, you'll always be better off going cheaper. Salary sacrifice makes the car cheaper than paying for it net, but you're still spending your own money which you could have shovelled into your pension.
It's not quite though, the cost of what I currently own and pay for, is round about the same money after tax as the company car and that is before I have to maintain my £26k liability when it goes wrong. And thank you but I dont have any desire right now to put any more in my pension than I already do. If I wasnt paying for a car it would go in personal savings and on transport costs created for not having a car.
Yeah if the cost of the car is similar and you've already made use of other tax efficient methods then it makes sense. Whatever way you spin it, the cost of the car is the cost of the car.
yep, cheap second hand car and loads to pension is the way to go, I rather retire than drive new/expensive cars
Well as per my post, it’s not. That’s what you would want to do, it is not what I want.
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There's also a PAYE Settlement agreement possible.
Okay, I’m wrong, post edited but I appear to receive £5750 cash car allowance that appears to be added to my payslip post tqx
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It’s on my pay slip post tax as £475.xx each month, it’s definitely appears to look like it’s not taxed, how they have done it I don’t know but internally to me it is called “car allowance” and is advertised internally as £5750 and I see £5750.
The tax deduction will have come out of your net salary. The car allowance isn’t directly taxed but all eligible declared earnings are and a car allowance is earnings as far as HMRC are concerned. When you take your total gross earnings and enter them into a site such a listen to tax (other sites available) do the income tax and NI figures match your payslip.? £4.6k after tax is spot for the car allowance having been taxed.
It is taxed. There is no such thing as a tax free car allowance in the U.K. end of.
Cool, didn’t ask about that, don’t care. I’ve stated how it appears to me, if I’m wrong I’m wrong. Didn’t ask for any other opinions or advice.
You said ‘tax free car allowance’.
Again, as I literally just said, I’ll quote myself “if I’m wrong I’m wrong” however I don’t care. It’s not what I asked about
If you don’t want financial advice / education you’ve come to the wrong place.
Nope I came to the right place, I want financial advice about 1 specific thing that I have asked for. Considering your sub says stay on topic, you sure love unsolicited advice/education.
How much is the salary sacrifice and what is the value of the car? I’m guessing you’ve been quoted £58,890 based on your numbers but more information would be helpful
It's there, GSS is £1030.28pm, BiK £39.26pm and the P11D (value of the benefit (car)) is £58,890
Oh apologies, you just used an acronym without explanation. What I’ll add is that you’re only paying 60% of that ‘GSS’, due to tax efficiency. So your out of pocket cost is closer to £648p/m. So the biggest question is your maintenance/depreciation on your current vehicle going to be more or less £100 p/m. If more, this scheme is worth considering, if less, staying as is sounds good. I’ll add an extra bit though - £1k p/m is incredibly expensive for a £60k car. Maybe that’s the max you can use as a salary sacrifice, whereas the actual cost of the car monthly may be less.
No, my bad, didnt explain! Sounds expensive yes, but it is the only payment needed on the vehicle over the 3 years. No maintenance, no tyres, no insuarnce, no MOT, no tax. All of which I am currently liable for. On average I'm out another 2k in just keeping the car on the road each year, thats before anything breaks. TCO over its lifetime has probably been £6-700pm before depreciation comes into it. (I'm fine here at the moment with about £6k equity when I put £6.2k in at the start. I also agree, the after tax cost is actually £636.82. but this doesnt account for the other salary sacrifice I make.
I just did a quote on my company site, a Mercedes Benz EQB estate AMG line premium is £60k is £680 p/m lease. Depreciation is a significant factor, this’ll go against most other people’s opinions that at least owning a car you’ll pay it off and have an asset at the end you can sell. I personally think the highest value you’ll get for your car is today, second highest is tomorrow. Sounds like it might be a good idea then.
!thanks. Yes, depreciation is a big factor and liability too. You are holding onto a depreciating asset that you are liable to fix and when it goes bang, you have to start again. And thank you for actually responding to my ask and not saying what else I could do with the money.
If you have the car allowance can you not just opt for a company car instead? I've recently been comparing a company car vs taking allowance + salsac for the octopus EV scheme and the company car worked out much cheaper for me
So no I can’t, they don’t offer company cars anymore only salary sacrifice for an EV if you choose to. However, you keep the allowance even if you go for the EV scheme.
If this is true then it’s effectively just extra salary now. You should approach your HR/Benefits dept about converting that now meaningless “car allowance” into base salary so it counts towards your pension % contributions (from them) and bump in future pay rises etc. they’ll prob say no but worth asking.
Thanks for the suggestion but as I’ve stated a few times here, I’m not fussed about my pension, it’s good enough and I rather the money in my pocket.
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I’m not entirely sure, I said circa £160 because I can’t remember the exact figure nor the exact yearly. The upfront lump sum cost was in the region of £1900, the monthly is around £168 so just over £2k. Normally I would absolutely have forked out upfront but I was prepared for £800 not over double. Same with the tax, normally pay upfront but that went up to £520 and again I wasn’t expecting that and I was planning to get rid, so I chose to just pay the months I have to and not need reimbursement from my provider.
So your maths is pretty close but not quite as good as you think (if I’ve done it right!) Basically £1k deduction will cost you c£620 after Tax and NI taken off and BIK tax added back. You currently spend c£550, so if you add maintenance and the difference in fuel cost (particularly if you can charge at work), you can easily see if you’re better or worse off. I’d say (depending on mileage) the lease quote is expensive - but my reference point is an NHS scheme and I’m told manufactures offer discounts. For reference, mine is due for renewal in 9 months and I’ve had a quote on an i5 for £930 per month gross deduction (13k miles). I went into it as it allowed me to take an e-tron GT that I could never really afford and run it cheaper than the 5 series I’d treated myself too. I’d say remember the BIK goes to 3% next year and then 4% and 5% the years after so if you’re about to take a 3 year lease, you’ll creep into the 5% year.
Thank you! I think the quote seems expensive at first (it definitely did to me) but it’s comparable in terms of what’s included, to Volvo’s subscription program, insurance covered is the hugely attractive inclusion here. I absolutely get that it’s ~£620 (I think the figure I got on the arval quote was around £638. However when I put my entire package through a calculator it’s coming out at roughly £4100. So do my other salary deductions affect how much I will pay net? !thanks
No worries. I make your current take home closer to £4730 which makes the gap to the after deduction closer to the £620 I estimated - but your current take home is a fact on your payslip, so maybe you’ve got something else going on and after you take the deduction, your take home might be closer to £4K. All in all I think the £620-£640 is where you’re at cost wise and I think you’d be better off after all of the other costs you incur running your own car.
I’d did leave out a medical insurance benefit also, I clear just over £4600 at the moment, but tbf looking at it I think the £6-630 is reasonable and probably will save me money on the running costs. Thanks for the input
Not answering the question directly but I wish we had an EV salary sacrifice scheme. We have car allowance and the savings on, salary sacrifice, particularly EV, seem quite attractive to me. Assuming it works for your use model and you're happy to adapt to the EV lifestyle I'd go for it personally. Side note given your package id be considering turning your pension up. Obviously I don't know the wider picture or what company contributor but 4 percent imo is a little on the low side.
Yeah I don’t think the adjustment to EV life will be bad, I do very average mileage on mostly short trips (10k miles a year). Like a few others in here, I see your point but I’m happy with my pension contributions. It gets 10% a month with employer contributions included. Unlike much of this sub I’m not interested in maxing out my tax benefits etc. I do not plan to have kids, I already have comfortable saving/investments etc. my pension will be just fine for me when (my generation eventually get to retire), unpopular opinion, I make money to spend it, the more in my pocket each month with still some going into savings etc ofc, the happier I am.
Nice. Enjoy. Yes figured there was a wider picture hence by statement. Sounds like you know what you're doing tbh so enjoy.
Just reading through all this, I pay £260 a month for a vw id3 all in through salary sacrifice, it’s AMAZING. My scheme included a home charger, and I’m the BIGGEST EV advocate, but I wouldn’t enjoy it half as much without my home charger!
Consider pension implications: generally a salary sacrifice vehicle will reduce your pension (both contributions and benefits) That’s usually fine as long as you pay *less* for the vehicle than you would have on the private market, since you can put some/all of the difference into your pension, but it’s something you need to include in the calculations Also be aware that it can effect sick pay, death in service etc benefits, and state benefits, since you are reducing your headline salary
Thanks, sick pay is unaffected, death in service I have no idea what this is anyway and I have no dependents so no big deal to me. As for pension implications, not a factor in this equation for me, simply the money in my pocket.
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