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We've got a new salary sacrifice scheme starting at work using octopus. On the face of it that sounds brilliant. But having a quick look, I can't help feeling that their prices are slightly inflated on their leases. Our schema is fully inclusive of insurance, servicing, tyres etc, but rough calcs compared to cheapest lease prices for similar still seem like their over egging it. Gross prices look like ~£200 pm for those extras which is quite a lot if you ask me.
Anyone got any experiences?
I jsut looked into EV leasing. Cheapest I could find on any of the cheaper cars was about £166pcm but that disappeared straight away. There are a few deals for about £200 which is pretty cheap, the likes of Leaf/Kona/Ioniq are generally around £260 direct from dealers.
Do you mean £200pcm extra for the insurance etc or is that lease price of the car?
What car, how much, how many miles and how long for?
I mean comparing prices on leaseloco (which may or not be actually available once you try to get one) to the octopus pricing, they are ~£200 extra on a like for like car/mileage/term.
What total cost are you looking at?
Maintenance on mine was about £20pcm extra, I declined it.
Give us an example, don't keep us guessing!
I'm assuming from your post you're indicating that the differnece between the Salary Sacrifice deals that you're able to get through Octopus EV and a private PCH deal is c. £200 (in favour of a private PCH deal). If that is the case it does seem rather expensive, but worthwhile investigating further as with SalSac schemes there'll be a reduction in your tax and NI as a result of the benefit coming out of your salary before tax. Note that you will have to pay BiK, as it's seen as a taxible benefit, but EV's are only taxed at 1% at the moment.
@molgrips a good example is kia e-niro 4+, 1+35 on 5k per year. £469 on lease loco PCH. £674 fully insured, serviced, tyres, breakdown on octopus scheme.
Yep - @rockandrollmark. Exactly that. Yep, I fully understand the salary sacrifice arrangements, hence being excited about the opportunity.
Only thing I haven't looked at is what EV insurance is like. I'm assuming it's going to be ball park similar. Certainly not 5 times the price, which is what it would need to be to make the total cost on octopus seem attractive.
Seems steep. We have a leaf on salary sacrifice on 8000 miles/yr. 220 month from net salary including insurance, breakdown, tyres, servicing.
Appreciate that is something of a bargain....
Holy crap! That does seem expensive.
@molgrips a good example is kia e-niro 4+, 1+35 on 5k per year. £469 on lease loco PCH. £674 fully insured, serviced, tyres, breakdown on octopus scheme
Wow that's eye-watering. I've just taken delivery of an e-Niro 4+ (fantastic car by the way) two years lease, 12k miles per year 2.5k initial plus £411 for 23 months. Insurance is £360 a year from lve and I haven't gone for maintenance because an annual maintenance inspection costs £90 for an e-Niro.
Something a bit awry there! Those numbers are way off.
Wife's iD3 is £200 a month salary sacrifice, insurance and servicing included, 3 years, 8,000 miles.
Are your figures the gross salary reduction rather than the net take-home difference?
Here's a number to make your eyes water, e-tron 55 technik, £787 PCH, £1443 on octopus. I'm going to give this the benefit of the doubt and that the online configurator thing isn't fed with live prices and so is designed to just give you some sort of illustration of the salary sacrifice savings rather then actually show prices for cars. Coz that's so far from the mark, it's insane. Got a call tomorrow to see what's what.
Ah, that makes a massive difference.
Most of the above quoted figures will be net loss to take home pay, so you can’t compare your figures to those.
Actual cost to you will depend on tax band and code.
I looked once at Octopus and have never bothered since. Leasing.com and similar are more my benchmark.
BIK for EVs is low but there is some, yes? Or is it zero?
I ordered a Hyundai Ioniq 38kWh for 2 years PCH with 10k miles for £191 with a £2600 initial hire
I'm only comparing gross costs at that moment. The salary sacrifice advantage will obviously come into play, and save me money (hopefully), but if the only option is to massively over pay for they privilege then the advantage is eroded. It might become advantageous to buy and gamble on the residuals, which also has advantages in being able to change cars sooner if the mood takes me.
Shit! My 50 Technic 15,000 full insurance and full maintenance is a fraction of that, less than half the PCH after tax, pension and NI. I’ve just had a new tyre fitted thanks to a whole in the spare wall, it would have been around £300 fitted plus the temporary repair while I waited for the tyre to come into stock.
You have to compare the net salary sacrifice price with the open market private lease price + insurance + tyres over term + any maintenance over term. As a private lease comes out of net salary if the only applies to apples comparison.
Fwiw my EV is 1200 gross deduction, but 700 net. There no way I could lease my car privately, with maintenance, tyres and insurance for 700 quid a month.
BIK for EVs is low but there is some, yes? Or is it zero?
1% this year. 2% from 2022 to 2025.
@bensales agreed in many ways. Except if the lease company is are claiming that there's a 40% saving. It's only a 40% saving compared to their pricing, not the rest of the market. If it only really represents a 15% saving over what I can achieve by not using their scheme through salary sacrifice, it's potentally not as attractive, especially once you add any extras that often end up being full cost.
Just to throw a comparison in, my i3s on my salary sacrifice costs me £309/month.
Fully insured, maintained, tyres etc and 15k/yr for 2 years.
Which I think is pretty reasonable for hassle free motoring. And saves me £8 to £10 a day vs fuel for my commute (depending on whether I’ve charged it off peak).
It's beginning to sound like a DFS sale - i.e. 50% off something that was twice as expensive as it should have been in the first place.
Remember there is no deposit on these schemes, plus normally some form of cover if you are redundant.
Undoubtedly they are taking some of the Sal sac as profit, but it is still the cheapest and risk free way of EV ownership. My company use Tusker who are similar. They also install a home charger for free.
I’m about to order an eNiro 4+ through mine. 17500m/48mo fully inclusive of maintenance tyres tax & insurance for £360/mo from my gross salary.
My current A6 is about £350/mo on a standard PCP with no extras.
Sorry - the £360/mo is from my take home salary - confusing my terminology!
@bensales agreed in many ways. Except if the lease company is are claiming that there’s a 40% saving. It’s only a 40% saving compared to their pricing, not the rest of the market. If it only really represents a 15% saving over what I can achieve by not using their scheme through salary sacrifice, it’s potentally not as attractive, especially once you add any extras that often end up being full cost.
With respect, you're overthinking it.
Is the net cost of the salary sacrifice less than or more than the amortised cost of privately leasing on the same terms (term, mileage, maintenance, insurance, tyres, recovery)?
If it's less, the SS is a better deal, if it's more then do it privately. Even a 15% saving isn't to be sniffed at when talking about the total costs of leasing a car over a few years. That would be £4000 on mine...
Isn't there something about these salary sacrifice schemes potentially impacting pension contributions, that often gets ignored in the sums?
Simplified figured, but say you usually get £2k pcm gross, £1500pcm net in salary. You pay 5pc and your company pay 5pc in to your pension. £200pcm goes in to your pension
If you then pay £400pcm gross on a salary sacrifice car, then although it will cost you less than £400pcm net after tax, the amount that goes in to your pension each month decreases. New salary £1600pcm gross (after car deduction). 5pc personal contribution and 5pc employer means you reduce your pension payments from £200 to £160pcm. Over a 3yr lease you have £1,440 less in your pension pot.
My figures are made up to illustrate the point that I'm trying to make. Someone with better knowledge is welcome to say that I am talking balls and this isn't an issue.
Yes I found this with my work's Salary Sacrifice scheme. The 'starting' price of the cars I was interested in was far higher than it should have been, meaning that even as a 40% taxpayer, the impact on my net salary was a lot more than the cost of leasing privately (a LeaseLoco Leaf lease).
It’s beginning to sound like a DFS sale
Indeed.
Only thing I haven’t looked at is what EV insurance is like. I’m assuming it’s going to be ball park similar.
A bit more expensive (+ ~30%) than my outgoing petrol BMW 3-Series. I'm not entirely sure why.
The effect of salary sacrifice on pension contributions is very employer specific. Every employer I’ve had though, my contribution and theirs has been defined as a percentage of my total gross salary, so unaffected by any sacrifices made.
It seems to be a problem that affects NHS employees though.
I’m not saying salary sacrifice is t for everyone, or every car. I was simply pointing out the error of comparing gross deduction costs with open market leases costs. That’s apples with oranges.
Isn’t there something about these salary sacrifice schemes potentially impacting pension contributions, that often gets ignored in the sums?
Yes and no. I get a very detailed report on the effect it has on my pension, it’s about £80 a year.