In part 2 of this episode, we discuss:
🚙 Electric vehicle leasing
👛 Salary sacrifice benefits
📱 Leasing vs. buying cars in the UK with uncertain technology advancements.
🚐 Combustion vs electric vs hybrid
🛻 Second-hand market for EV leasing
Transcript
The following transcript is autogenerated so may contain errors.
Matt Nally
In part two, we’re gonna look at how to decide if you should lease or buy a vehicle generally. So whether that’s an EV or a petrol vehicle, and then look at the sort of the comparison between both so I think this was one for you, Sarah, so should you lease or buy any car I suppose to start with?
Sarah Worthington
Okay, so look, there’s there’s there’s kind of benefits to kind of both angles, which we can kind of come on to just kind of back to electric vehicles, which is obviously what we’re heavily talking about. There are tax benefits for both leasing and buying an electric vehicle. Some of the biggest advantages that we see with leasing vehicles is that often the the tonne of cost price and the P 11. d value of electric vehicles, as opposed to petrol diesel vehicles tend to be higher. So it’s kind of a much less cost outlay to lease a vehicle today and much easily accessible into electric vehicles. For example, on a lease contract, you can put as little as one month upfront on the lease payment. It’s fixed monthly payments as well. So from a from an individual or business perspective, you haven’t got to worry about what that vehicle from a residual value from a deep depreciation cost in a clearly ever changing market at the moment and then involved in product market as well as to what that vehicle will be worth at the end of the contracts. So we see that electric vehicles, especially at the moment are just kind of hassle free via lease and you know exactly what your payments moment on a lease.
Matt Nally
Interesting. Okay. And around the sort of salary sacrifice part. Yeah. What’s the I suppose the big difference? And I suppose between a combustion engine and an Eevee. And I think then, maybe we’ll come on to how does it differ as an employee versus an employer whether you want to go for so
Sarah Worthington
essentially, a salary sacrifice is where an employee for goes a portion of their salary in exchange for a brand new fully maintained, insured, brand new electric vehicle and the employee where you can save up to 40% on tax, so income tax, whether you’re a low rate or higher rate taxpayer, and also national insurance as well. So if you’re an employee perspective at the moment, there’s obviously huge tax benefits on EVs via that kind of cell sack route. And then from an employer from a company perspective, it’s not only a benefit that they can pass on to employees, that helps to attract, reward and retain employees. But also from a company perspective, it helps them reduce their national insurance costs as well because their gross salary from an employee’s been reduced in exchange for a vehicle. And back to your question on kind of EVs worth versus petrol. So with the salary sacrifice the contract for the vehicle is actually in the company name. So when the employer name so it does actually attract for the employee what’s called benefit in kind tax, also known as company car tax, it acts as a company car. And the savings on benefit in kind at the moment on electric vehicles is as low as 2%, which is fixed until April 2025, and then goes up in increments from 1% until April 2028. So the savings at the minute on EVs allow you to make the maximum savings from an employee perspective on the tax and National Insurance. So that’s EVs on cell sack is by far the most efficient, most cost efficient way to drive nav at the moment. Interesting.
Matt Nally
Okay. So you sit with sort of the leasing you do you sing a bit switch towards electric for that reason? Absolutely. Are you finding it sort of? Yeah. Stayed more combustion?
Sarah Worthington
Yeah, no, absolutely. So salary sacrifice is kind of really driving evey not just with with us at the minute select car leasing, but across the leasing industry, and there’s many, many large corporates SMEs that are if they haven’t already got this type of scheme setup already within their business, that that they’re thinking about salary sacrifice, and that is often actually a driver from the employee, the more kind of people that are kind of hearing about the savings that are available on EVs at the moment, the more they’re kind of talking amongst each other. And if it’s not available as in the scheme with their company that they work for, they’re kind of trying to get it installed and kind of talking to providers like us at select, that can help get them set up. Yeah,
Matt Nally
that makes sense. And actually, the fact they’re talking about it suggests what you were saying Shane, saying earlier, Shane was the fact that that fear aspect disappears, when when people start to understand the reality of abusing them day to day and hearing others actually having a good experience rather than than the deadlines.
Shane Pither
And also tax savings also help us so it’s certainly driving in same direction. Yeah,
Sarah Worthington
yeah. And just just kind of on that, I would kind of suggest anybody today that’s looking to get into an electric vehicle that if it’s through their employer, that they don’t have the ability to get into a company car, if they do company car route and go in electric will have huge tax savings on the benefit in kind, that you don’t get a company car within your package today, be talking to your employer about salary sacrifice, because it’s not only an employee benefit, there’s huge benefits as a company that actually some companies still aren’t aware of in the reduction in, as I say national insurance costs from reducing salaries, and from a kind of every company at the minute is looking at their carbon footprint, their ESG as a business, and this can really kind of tick those boxes.
Matt Nally
That’s a very nice point, actually. Because you don’t want to just assume because there isn’t a company car scheme, you can have to look at it from a personal route. I suppose actually, one question I’ve got there then is, within the surveying industry, you’ve got you have like an industry, you’ve got a mix of obviously sole practitioners all the way through to enterprise, but there’s a definitely a heavier weighting on sole practitioners, smaller businesses. If you’re I suppose on the sole practitioner side, you’ve got your own business, you work for yourself. What’s best, is it better to try and set up your own company, Kasim or salary sacrifice through your business? Are you better off looking at it from a personal perspective? And
Sarah Worthington
so it kind of depends on kind of how kind of potentially in the self employee kind of side of how they’re how they’re kind of paid in terms of whether or not that they pay themselves a salary, whether or not kind of taking the salary reduction will mean that they in turn pay less tax and National Insurance. It still stands by if you’ve got the ability to to lease a car through a business, then you’ve got the ability of kind of reclaiming the VAT element if you can do that. Alternatively, absolutely. Looking at a personal lease, the the pros of leasing are still there in that there’s not that kind of huge cash outlay on a vehicle. It’s fixed monthly payments, you know exactly what you’re paying for that vehicle you can have the maintenance included mot roadside assistance. The Road Fund licence if it’s kind of perpetual, there’s still kind of the all the other benefits of. And it’s and that’s why it’s so important to talk in your individual circumstances of kind of the business that you have and how how kind of you pay yourself a salary of talking to kind of us as the experts of what works for you individually and working with your accountant as well to make sure that you choose the right route for you.
Matt Nally
Yeah, appreciate it’s, it’s difficult to give generalist advices. Obviously, every every case is quite specific.