electric salary sacrifice car?

[anon3455]

Wondering if anyone has any experiences/ pros/ cons they would wish to share about salary sacrifice cars. My organisation are offering an electric car lease via salary sacrifice and having had some extremely bad car luck recently with my second hand car (which is never out of the garage and costing a fortune on repairs) I'm wondering if this might actually be a good option! The deal covers car tax, insurance and also tyres, so although the monthly costs initially seemed on the expensive side, when this is all taken into account I would be paying the same monthly payment as I am now, but with a brand new and (hopefully!) more reliable vehicle. I have zero experience of electric vehicles either and live pretty rurally (although I should add the deal also includes the free installation of electric car charging equipment at your home on certain models). So I would be grateful for advice on the following:-

1. Fully electric vehicles pros/cons/ things to note etc. and;

1. Salary sacrifice experiences pros/ cons/ things to think about

TIA!

I have an electric salary sacrifice scheme.

I like that I don’t own the car and that if I am made redundant I can just hand it back as I work in a relatively volatile industry and it’s often in the back of my mind that if I lost my job I’d have a car I might not be able to sell and it just takes that stress away.

the monthly payments are higher but having a charger at home for the car has allowed us to access a cheaper night rate for all electricity - so we charge the car & do all our clothes washing over night. It’s definitely helped bills and we definitely spend less on the car overall.

i would recommend installing your own charger - some work schemes include a deal for a charger but mine didn’t. We were able to pay for it with what we made from selling our car though.

it’s just what worked for us but what sold it for me was having one less thing to have owed ownership of tbh. We were always able to factor in a monthly payment for a car but struggled to always ensure we had savings for a big car emergency so we personally bought cars on finance which were new and reliable/in warranty. We live rurally so do a lot of driving. The electric car gave us the same sense of security of a new car under warranty but took away the fear of not being able to make a monthly payment.

Yes, I'm just at the end of a 3 year lease and I love my electric kia niro. From a salary sacrifice point of view it seems like a good deal. If you get an electrity deal (like octopus electric) you can charge overnight for 7p/kwh which is very cheap.
I'm going to get exactly the same car again!

Thanks for taking the time to reply- both really, really helpful! I had no idea about the reduced electricity rates for overnight so that's another positive.

I don't know what age you are, but if you reduce your salary will it not reduce amount going into your pension? This may not be accurate, I just wondered.

Just check distance the car can actually travel between charges. This will be far less in winter. If it’s your only car, this is vital. Other than that, your running costs will be less and charging at home is a big bonus on a cheaper tariff. Some like the Kia are fairly slow to charge though.

It does affect your pension, so if you're close to retiring it's worth looking closely at the deal.

Unfortunately I have another 17 years to go :(

I have one through the nhs fleet scheme. I’m a higher rate taxpayer and I’m in Scotland so it’s actually cheaper for me than buying a car and all the associated costs plus I have zero hassle to worry about, I have a bmw i5 for the same cost monthly as the pcp for an electric corsa on its own without the insurance road tax etc.

it takes more plannning. Charging takes hours as opposed to a few minutes in a petrol station. I have a big car with a corresponding big battery and driving range but some of the smaller ones are a lot smaller range.

It’s incredibly easy to drive and very intelligent.

You do have a small dip in your pension so check that out, if you’re closer to taking your pension it may be more impactful. I checked it and decided it’s worth it for me personally.

You do need to do your homework for your individual circumstances I would say.

It doesn’t necessarily affect your salary - that will depend on your employer. Most private sector organisations will base benefits such as pension, bonus, death in service etc on the pre salary sacrificed salary. The public sector might be different however.

Thanks all- the pension issue is one that someone had flagged up to me actually and I will have to look in to this- although I have approximately 25-30 years to go! I'm also in Scotland and in the public sector- it's the NHS fleet scheme I'm looking at (although I don't work for the NHS it's also applicable to my organisation)

We have one. I love it and they put the charger on our house for free as part of it.
Dh chose to still pay the same amount into his pension though.

That's not how it works. Pension is separate and calculated on top level notional salary. You then sacrifice salary for pension saving to avoid NI. Employer pays it into the pension pot for you. Car schemes come off separately, but also as salary sacrifice, and are attractive if you earn over £100k and are in the 60% effective band that comes with losing your personal allowance

No experience of salary sacrifice but I bloody love our electric car. Really relaxing and easy to drive. Charge it on cheap overnight rates and you'll potentially save £hundreds a month compared to petrol/diesel too. Our car costs us about £45 a month to charge in the winter (much less in summer as we also have solar) and we do about 1000 miles a month in it.

They are also very inexpensive to service as fewer moving parts. I just had a £650 service bill on our 10 yr old diesel car, not fun.

I have a mini through DHs work. I love that I don’t have to think about it. Everything is covered with it.
I work near a fabricators and have had nails in my tyres twice now. Both times they have sent a van to the house to repair at no cost within 48 hours. Cannot fault it at all.

Range is shocking at around 120 miles but it’s a city car and suits my lifestyle perfectly. Believe the new model mini does have a bigger range though.

I’m same S you - Scotland and eligible employer but not NHS.

Another thing to check is how much mileage you will do. I think every extra 1k miles per year you added on worked out about £10 a month for me.

its definitely more beneficial the more you pay in tax to start with. The prices you see at first are for higher rate tax payers, if you haven’t already do personalised quotes, you can play around and choose not to save them.

However we still also have a petrol car in the household and I wouldn’t have it as the only car as the infrastructure just isn’t robust enough yet.

Hopefully I’ve been balanced in the good and bad but I completely love my car! Agree with the poster up there it’s actually relaxing to drive.

Yes the fuel consumption of my current car is a negative factor too- it's a diesel smallish SUV and costing a fortune to run at the moment! Pleased to hear the positive comments re charging costs.

It depends on what you would spend on a petrol/diesel car if it is cost effective. I spent about £45k on my last car and lost £25k depreciation.
Now I have a salary sacrifice car and it is fantastic as zero depreciation, charge it up for about £3 for 200 miles. If I leave the company they have an insurance policy to cover that.
if you’re charging up at home then it is cheap but on the motorway not so good.
The drive quality and technology are first class and I will never go back to an oil burner.

Not necessarily, my salary sacrifice payments come from my non pensionable car allowance.

Really happy with my MG4 chose it as it was the cheapest electric car available costs about £330 net out of my pay a month. We’ve gone from around £150 petrol a month to £15 in electric. With tyres , servicing, insurance etc included it really is a no brainer. I can’t imagine going back to a petrol car now

Oh I saw this one tonight actually advertised as being the cheapest- what a good price! For reference, my monthly payment at the moment is £330 without car tax (£50) and insurance. Would also be interested to hear what car people have gone for. I will need something big enough for a family of 4 (2x under 5s) but doesn't have to be huge!

I have one and it doesn't affect my pension - my pension contributions are based on my salary before any car deductions. So let's say my salary is £2000 per month, my pension is 10% so that's £200 into my pension. Then the car payment is deducted. So no impact. And I pay less tax as it's charged after both my pension and EV payments are taken off.

If you're a higher raye tax payer in the nhs think long and hard about this.

It's only cheap because BIK is low on EVs. That can change and the cost will increase significantly.

It will reduce your pension since you sacrifice pensionable pay. This is the main reason employers offer it, to reduce the pension contribitions they have to make.

When you end the lease, your pensionable pay increases, this might be by £12k if you get a tesla. When that happens your pension growth skyrockets. I know one person who got a £24k tax bill the year their lease ended.

I have an electric car through the NHS lease scheme. Before this I had an old banger which was costing me a fortune in repairs.

I was really hesitant initially but it’s the best thing I’ve done. I have a VW and I get approximately 240 miles on a charge which costs about £4 in total (we are are octopus energy so cheap to charge overnight). I have issues with the tyre and it cost me nothing to get repaired. I pay £205 in total which includes tax, insurance etc. I had a charger put on the house which did cost £900 but I was putting £400 a month in petrol in so the charger paid for itself in a couple of months. My only regret is that that i didn’t go ahead sooner!

just be aware of wait times, i was told it was a 3 month wait. Turned into 8 months!

Sorry can you explain this comment at the end re tax?

Do you mean that your income tax bill increases?

Once you stop paying for the lease unless you get a new one your top line salary returns to previous abd so does your income tax. To have an additional £24k bill would be a hell of a salary sacrifice…and as far as im
aware you don’t pay tax on pension contributions under £60k a year either?

I think the situation is more complicated with a final salary pension, because when the salary goes back up the notional value of your ‘fund’ has to increase to pay your pension on the higher salary. A £24k tax bill implies a pension input value of £60k more than the annual allowance (£60k @ 40% is £24k). The annual allowance is £60k, so a total pension input of £120k. And still people don’t understand the cost of a final salary pension scheme to the taxpayer…or the value to the employee