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to EV or not to EV - as a pre tax perk

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stooz
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to EV or not to EV - as a pre tax perk

#459365

Postby stooz » November 19th, 2021, 5:30 pm

Ive been offered a company incentive to lease a EV before income tax. A bit like a ride to work scheme to pay for a cycle out of salary pre tax

does anyone have insight as to wether this would actually be a wise step financially?

my issue is - i think the tech is moving too fast, so buying one long enough to justify its costs wouldnt turn in my favour financially, so if im going ev, i would want to swap it after a few years - or buy it outright at the end if tech had settled down (eg in 4 yrs time, are EV's half the price, 4 x quicker to charge and my 4yr old is a "relic" tech wise that doesnt remotely match the current offerings

+ ev's are all 1st generation - owning long term is like being 1st to the latest tech- its not bedded in (I see tesla are now listed 2nd worst for reliability - proves my point on 1st gen..)
so leasing sound again like a less risk move..

to compare I think my diesel has taken 10 years to justify its keep over its purchase price...

would someone mind trawling the bumf and simplifying it for my befuddled brain?
https://www.octopusev.com

did I spot a line that says I have a mountain of faff registering annually for and having to pay company car ta (currently zero - but for how long!!)

in terms of owning an ev, the petrol I use - £1500 a year would reduce?? I dont do overly long journeys anywhere and prices are seemingly rising dramatically..
my current car is fully paid for just costs the usual service/tax/tyres..

The alternative I have is buy a newish petrol car and chance that I wont be priced off the road in tax and petrol in 10 years... ( i already wont go to a few towns because of the "co2/congetsion" zones - they can go without my business on principal.

PhaseThree

Re: to EV or not to EV - as a pre tax perk

#459373

Postby PhaseThree » November 19th, 2021, 6:04 pm

Thanks for posting - I had nor heard of this scheme before.

I entirely agree with your assessment of the risk of purchasing an EV at this point in time, I work in the automotive industry and have an insiders view of the next generation products from multiple manufacturers - I wont be buying for the next few years at least.

The scheme itself seems interesting if you have a great urge to drive an EV - but you are still hiring and financing the depreciation on someone else's car for a few years. IF you are currently happy running a 10 year old diesel (as I am) and are concerned about the bottom line then this may not be the deal for you.

I found a good description of the scheme on this link
https://www.thisismoney.co.uk/money/car ... cheme.html

As a 40% tax payer you are still going to be out by £400-£500 per month. So the question comes down to - Is driving a new EV worth £6k per year to you?

AF62
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Re: to EV or not to EV - as a pre tax perk

#459382

Postby AF62 » November 19th, 2021, 6:35 pm

stooz wrote:would someone mind trawling the bumf and simplifying it for my befuddled brain?


To take their example of a maintained VW ID.3 Life Pro, if you leased it directly as an individual it would cost you £4,200 a year. If you lease through salary sacrifice as a higher rate tax payer then you save around £1,700 income tax and £150 NI, and pay around £250 company car tax, so it effectively costs you around £2,600 a year.

The £1,500 you spend on petrol will cost about £100 in electricity to do the same mileage, so the car is effectively costing £1,200 a year or £100 a month for a brand new £30k car.

What is not to like.

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Re: to EV or not to EV - as a pre tax perk

#459394

Postby redsturgeon » November 19th, 2021, 7:20 pm

AF62 wrote:
stooz wrote:would someone mind trawling the bumf and simplifying it for my befuddled brain?


To take their example of a maintained VW ID.3 Life Pro, if you leased it directly as an individual it would cost you £4,200 a year. If you lease through salary sacrifice as a higher rate tax payer then you save around £1,700 income tax and £150 NI, and pay around £250 company car tax, so it effectively costs you around £2,600 a year.

The £1,500 you spend on petrol will cost about £100 in electricity to do the same mileage, so the car is effectively costing £1,200 a year or £100 a month for a brand new £30k car.

What is not to like.


This seems to be my understanding too.

Question I have:

1. Is this scheme available through any other provider, ie, can you lease your car through any company...there are probably better lease deals available.

2. How long is the lease period? You mention not wanting to be stuck with old tech, with a short enough lease term then you won't be.

3. Can you reclaim the normal business rate for business mileage @! 45p a mile? I nice money earner if you can.

John

stooz
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Re: to EV or not to EV - as a pre tax perk

#459397

Postby stooz » November 19th, 2021, 7:36 pm

Thanks both.
I won't do any company mileage so that's out.
I did wonder if there are better deals.
I need to replace the 10yr old. It's seen better days. So I will paying for a loan to someone but it's a petrol just as efficient aka cheaper to buy but more running costs?

I can go 3 or 4 years deals which seems about right. Hopefully there is an option to buy it out right as an option.
When you say higher tax rate are you suggesting to the standard 25 per cent bracket or a 40% rate?

redsturgeon
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Re: to EV or not to EV - as a pre tax perk

#459415

Postby redsturgeon » November 19th, 2021, 8:20 pm

Here is a good comparison site to check deals

https://www.leaseloco.com/

John

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Re: to EV or not to EV - as a pre tax perk

#459437

Postby AF62 » November 19th, 2021, 10:22 pm

stooz wrote:I can go 3 or 4 years deals which seems about right. Hopefully there is an option to buy it out right as an option.


Be careful with 4 year leases, since if the warranty is only 3 years then you would be on the hook for anything that went wrong in year 4. And the leasing company will want it fixed.

Similarly if it was a non-maintenance lease it can sometimes be cheaper to hand the car back at 2 years 11 months to avoid an expensive third year service.

In addition you can usually get away without replacing tyres and brakes in a three year lease, which again is important if it is a non-maintenance lease.

As for buying at the end of a lease, most companies don’t offer that as an option.

redsturgeon wrote:Question I have:

1. Is this scheme available through any other provider, ie, can you lease your car through any company...there are probably better lease deals available.


With a salary sacrifice scheme, since it is being done through the employer then the employer would have a strong interest in which company *they* are using, so normally there isn’t a choice, it’s this one, take it or leave it.


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