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!

Yeah one of our cars is a Tesla EV.
It’s pretty handy round London, but I wouldn’t have one if it was my only car.
The charging is more of a faff with bloody cables every time it’s used rather than just 5mins filling up with petrol like our other cars.
And on one occasion we were pissing around in a bloody depressing motorway service station on a rainy Sunday night waiting for the fucker to charge, rather than actually being at home after a weekend away. That kind of sealed the deal for us - I don’t want to sound like an arse but I just need the pennies saved with a EV less than I need to just get on and enjoy my life.

The only reason it’s here was to nip in and out of the congestion charge zone without paying. But… that’s changing in 2025 anyway, what a surprise eh!

When the free congestion charge perk ends we don’t plan to replace it with another EV, neither of us really likes it much.

Whether an EV works for you depends largely on how many long journeys you do.

DH got one through salary sacrifice in Feb last year. Our other car was petrol. We thought it was good to have options.

Since Feb last year I think we have charged away from home maybe 5 times. The car has a range of 250 in summer, 220 in winter, and that's fine for us.

We have since changed the petrol car for another EV, which we'll probably never charge away from home as we use DH's for long trips.

It just means we have to ne organised amd think ahead slightly for charging (so they aren't both getting low at the same time), but we've had no issues.

It costs £3-5 for a charge with Octopus intelligent- the savings on fuel are amazing!

I swapped a 10 year old car for a work EV. It's a lovely car, but apparently modern cars generally are, according to people I have driven.

Disadvantages for me are that it's way more expensive than a 10 year old car, range anxiety is a real thing - we once made it home on 6%, which was a bit scary and I've curbed the alloys, which I think will cost me when I return it. I wouldn't care if I'd done that to a 10 year old car, or even a 3 year old car that I owned.

We can't take it on holiday as the emptier bits of the UK don't have the charging infrastructure to be able to confidently take it.

I won't be getting another after this one, but partly because my DD will need a car to learn to drive on, and EVs all seem bit fast for that.

Thanks @Tryingtokeepgoing . My pension and most local government schemes are now career average not final salary. That’s why there’s a reduction in pension at the end and it’s important to be aware of that and the impact.

I don’t think many people will need to worry about an additional £24k bill after having a lease car for 3 years.

A consultant or senior manager in the nhs would. Lots got caught out by this.

Its not based on the amount you put in, but on the change in value of the pot, which is calculated abitrarily on an annual basis.

An invrease in PIA of £10k, eaasily manageable with ending a salary sacrifice and a pay increment could generate a pension growth of £100k, until the AA threshold was increased you could onmy offset £60k, leaving £40k subject to higher rate taxation. The AA os now £60k per year., but could easiky be changed at any time.

I think you are wrong. Pension contributions up to £60k are tax exempt. Pension investment growth is also tax exempt. Growth and contributions are two seperate things. You’re creating unecessary stress as far as I can see.

commonslibrary.parliament.uk/research-briefings/sn05901/#:~:text=If%20the%20pension%20savings%20grow,a%20tax%2Dfree%20lump%20sum.

On an employee pension contribution of 10% you would have to be earning £600k a year to hit the £60k contribution tax threshold. Employer contributions are not taxed to the employee. No one in the Scottish public sector is earning £600k.

Of course you are right that laws can change… so can many things, mortgage rates, employment status, utility costs… which is why I keep saying check your individual circumstances. Stress test financial commitments and make an informed choice.

I love my electric car but when people ask me if I recommend them I say ONLY if you can have a charge point at home.
We charge overnight for very little and rarely charge elsewhere. Of course it depends on the area but the infrastructure really isn't there yet for electric charging in a lot of areas, even if it looks like it on paper

You will get the absolute best range for the cost from the bigger battery Hyundai Kona, only matched in our scheme by cars almost double the price. Easily big enough for 4. Take a test drive?

I'm in the process of looking at introducing this at my workplace, there's lots of appetite in the business for it - following with interest.

Something to be aware of is what happens if you leave the company - some schemes allow you to hand the car back, some mean you are responsible for the full cost e.g. if you leave 1 year into a 3 year lease you'd have to pay 2 years of payments in a lump sum. My husband implemented this at his work and they are allowed to hand back a certain number of cars each year without penalty (I believe the leases are slightly more expensive as a result, but protects employees/the business). We initially ordered a Kia 2.5 years ago but with all the chip issues it got so delayed we cancelled it and bought a second hand diesel, now ordered again and the car should be here in a couple of months!

Also generally as with any lease if you are just handing a car back and not replacing it through the same scheme, expect them to be a lot more stringent with the wear and tear inspection!

No, you are wrong because you don't undertand how final salary pensions work from a tax perspective.

In simple terms, a final salary pension is a function of salary at retirement (or career average salary) and number of years service. For tax purposes this has to be given an input value every year so it can be measured against the annual allowance and, when it existed, the Lifetime Allowance. This is based on the value of the additional pension earned, multiplied by 20 (ie assumes a 5% return to calculate the nominal value of a 'pot')

If we assume that every year worked accrues an aditional year of benefit, and that the scheme is a 60th of salary scheme (you earn one 60th of your salary for every year worked), you've been there 20 years and your salary is £60k, then that every year you workd gains you an additional £1k a year pension in retirement £1k. Thsi is muliplied by 20 to give a £20k input value, to be measured against the annual allowance.

If you salary sacrifice £12k gross then your salary goes down to £48k. In 4 years time when you give the car back, your salary goes up to £60k again, plus inflation. Let's pretend thats £70k after 4 years. In that year your pension goes from 24/60ths of £48k to 24/60ths of £70k. That's a pension going from £19,200 to £28,000 - an increase of £8,800. Multiplied by 20 gives you a pension input of £176,000 - which is £110k above the annual allowance and would give a huge tax bill.

I get you, I’m not wrong and neither are you.

(I believe your figures are flawed anyway regarding the tax impact though as if your salary has gone up £10K over three/four years that would be accounted for year to year - your salary sacrifice doesn’t increase from £12k to £22k so you don’t get the huge hit on the salary increase aspect unless the £10K is a one year increase in which case lucky you - the additional impact remains on the £12k you are sacrificing meaning almost half of that tax bill sounds unavoidable?)

However I’ve been quite clear I’m talking about career average pension schemes at 7.17 this morning and most local government employees in Scotland are now on those (few older staff still may not be I don’t know). OP has said she’s not NHS so while the nhs fleet scheme is open to charitable organisations odds are shes in local government as they’re really pushing these schemes in a lot at the moment. With a career average scheme the amount of pension I receive for that year worked is based on a percentage of my actual salary for that year only and the car cost is deducted before pension so it’s accurate - this the small dip in pension each year (in simple numbers if you earn £100k and the car is £10K your pension is then calculated on the £90k after the car cost eg 1/49 ) That dip in pension is not made up if I return the car at the end of 3 years it’s permanent. My next years pension will be based on 1/49 of the £100k but the amount I receive for the previous 3 years is already fixed.

As I’ve said repeatedly it’s very important to look at your individual circumstances. Even in that nhs scheme most people will not be hit by a tax bill like that - you need to be able to calculate using your specific salary, the cost of your sacrifice and the % of pension you would be guaranteed against a final salary. My point is don’t panic but do your homework for you as it’s individual.

The savings are definitely bigger for higher rate tax payers and in Scotland where the higher rates are a higher rate again than ROUK too.

My colleague was planning to move house and port his current mortgage. Because he had used the NHS car scheme his current lender (Barclays) would not lend him as much as he needed. He had to switch lenders and thus had a large increase in interest rates.

Barclays treated the car agreement in a different way to other banks so if you have any plans to move house it would be worth thoroughly checking this

We’ve just come back from West Yorkshire. Not a single car park had charging points. A few in supermarkets. Not used - so that’s good if you have Anne there. Clearly few do!

However these cars are not necessarily better than petrol ones unless you can charge at home. You will be waiting for chargers or they are out of order. We have a new petrol Porsche. Would I prefer that or a Hyundai ev? I know what’s the better car - the Porsche hands down. It’s cheaper to buy than a lot of electric cars and, importantly, it’s not imported from China like MG cheap cars. At least be discerning about where you get them from. China is a major polluter.

That’s going to depend on your definition of “better” isn’t it.

Also OP, no one with an ev goes on a longer journey without checking location of convenient chargers.

No one with an ev expects to drive anywhere and conveniently locate a charger exactly when needed. We don’t have this infrastructure yet, and relying on emergency charging brings the refuel price closer to petrol pricing.

The ev drawback is spending a few minutes planning the refuel for longer journeys. The benefits far outweigh this slight lifestyle change as far as I’m concerned. Although this could differ if you were travelling beyond range on a very regular basis.

My husband has a hybrid from the scheme which costs more in tax. I have a tesla which is second hand (22) and only costs about 380 a month. We both think it's a great deal and takes the hassle out of owning a car.
We also had an older car which was having issues all the time. Obviously it's an ongoing expense rather than paying something off and owning outright but if you're paying out loads to fix the old thing it does become quite frustrating! I was never interested in leasing before but the salary sacrifice definitely makes it worth it.

Our company have introduced it and I'm going to sign up. I know what car I want just need to test drive it.

My next payrise should hopefully take me into the £100k taxable income bracket so it seems to be a no brainer from the cost side.

The charger to book through the plan seems more expensive than sourcing myself so I will probable keep that outside lease unless they offer a free one. Tbh there seem to be loads of on street ones where I live so I could probably even manage without.

A friend has just done it and is having it delivered this month and she's found the process really smooth.

I believe you can walk away if you get made redundant but just need to check. I have no plans to leave company voluntarily as will plod along until retirement.

Look at mileage limits - I'm going to get the band up from what I actually need to allow for future changes in driving patterns - eg needing to see elderly parents a lot more, the difference in lease cost is minimal.

Forgot to say, we just charge from an outdoor standard plug but then we don't commute so it doesn't matter if it takes a while to charge.

@anon3455 I'm looking at the new electric mini that's coming out end of year - range is hugely improved. That's around £600 pre tax. I was speaking am to a driving instructor last week and I am sure he also mentioned the mg was a good option like the pp has.

I've recently got a Mercedes EQA 250+ through a scheme like this. It's just been facelifted and has increased battery range. I think it does 323 miles per charge in paper, but I'd say that's nearer to 290.

I did a lot of pricing of options but the Mercedes pricing couldn't beat other cars. Definitely worth running some quotes for that and the bigger EQB.

@BonifaceBonanza If an ev is your only car, you can be well and truly stuffed if you are away from home. I go to Cornwall. No chargers in two large car parks where I go. Not one for 12 miles. As a result, motorway ones are full. Great if you have loads of time, lots of business people don’t. Any purchaser should be aware of the pitfalls and it’s not all great. We have a hybrid to get over this. It’s not our only car and whether people like it or not, some ev cars are pants. Buying from China isn’t what we should do. Buyers just add to global pollution and warning. It’s virtue signalling.

This has been a really helpful thread as we're thinking of going for it through OH's work scheme. We're in Scotland but can have a home charger and don't travel too far. If/when we need to travel long distances, factoring in charging at services seems fine to me (I always need to stop for a wee and a snack anyway!)

@LuckyMary And the time to find a charger working and the queue to use the ones that are. Good luck with a quick snack. I’d do a bit of observation first. Second car - great. Main car on a long trip - pain in the butt.

@TizerorFizz have you got an ev and if yes what is its range?

For those interested the Hyundai Kona range is approx 280 miles. Unless you very regularly travel long distances this is going to be enough for almost everyone.