I think it is potentially even better than you illustrate. For zero emission cars BIK is zero for the 20/21 year increasing to 1% the year after and 2% the following year!
Sorry but the title is misleading. It should be "how my *company* leased a Tesla for..." thus ensuring that those of us who don't have a company aren't teased and their hopes crushed. Thank you.
Hey Joe, thanks for your feedback, we appreciate you taking the time to comment. That makes us sad, the thought that we’re crushing hopes 😢. To the contrary, our aim is simply to help you find and compare the hottest car leasing deals available 🙌 As everyone’s circumstances are different, we didn’t want to have a misleading title of ‘how you can’, but instead share the knowledge of how John managed to secure such a great deal. Sorry this explainer wasn’t for you, but if it helps just one other person achieve similar savings then we’ll be chuffed with that. Knowledge is power after all 💪
An important part of the Tesla experience is being able to purchase the FSD or boost upgrades after receiving the car. Prospective Leaser's BEWARE I have leased a Model 3 Long Range and have been told by LEX AUTOLEASE that I am not allowed to upgrade the car in any way. They dont tell you this before signing on the dotted line.
Hey, thanks for that Alex. We've not seen the HMRC policy paper for FY22 yet, if you have a link to it would you be able to pop it in the comments here please as would love to get a look at it? 👍
BIK Two tables from 2020, one for if you buy the electric vehicle before 6th April - this means 2% for each of the 3 years, or after 6th April - 1st year 0%, 2nd year 1%, 3rd year 2% .
I am a British citizen living in Tunisia on a tourist visa for almost two years and I make about one and a half thousand pounds per month but I have never had an official job in the UK. I am 21 years old and came to Tunisia as a 19 year old trying to escape home. Would it be possible for me to lease a car, with permission to then immediately take it out of the UK for the majority of the year, for about 12 months? I would like to drive the car for much longer but each individual is only allowed to bring in a car with a specific set of engine and Chassis serial numbers for up to 12 months so if the company has new cars in their Fleet then I would be able to get a new car every 12 months
Useful video thanks. A fellow Director of our Ltd Co and I are exploring this. We do not currently have to charge VAT in our business so aren’t registered. Can we simply register for VAT if we don’t need to collect it therefore and claim back half the VAT as you refer?
Good to hear you found our video handy Matthew. I’m afraid your decision to VAT register your company is not something we can help with as each company has their own circumstance and we’d always suggest speaking to your accountant to get professional advice when it comes to this. If you can’t claim back half the VAT then the impact of 0% BIK is still significant 😎
Isn't the effect net cost to the company after a further 19% of corporation tax on the £533.50? Also, why would you take £533.50 out of the company. - if you were paying for this yourself you would need to take the full £582. Aren't you muddling up the two options? Also, when is NI 2% of your tax? Also, in this situation isn't it more likely you are paying yourself by dividend which is 32.5% for higher rate payers?
Hey Michael, thanks your feedback 👍 Pleased to confirm that there's no impact on corporation tax as the same amount is taken out of the company, with the same applicable tax rate, so the impact is on personal income tax. The £533.50 is the actual cost as 50% of the VAT is reclaimable, so the purpose of this exercise is to look at the actual cost of the lease vs paying that money as salary and paying personal income tax. NI is 2% over £4,167 per month - see www.gov.uk/national-insurance-rates-letters Dividends completely depends on splits of using your dividend allowance, but this calculation assumes that you've used that up and are paying salary, falling into a higher rate tax band. Hope this helps 😊
@@Leaseloco So, you should work out how much it would cost to end up with £582 in your personal bank account to pay for the lease personally (gross up £582 for tax at 40% that you have decided to use, and some NI) less any corp tax on gross pay. Then work out how much it would cost to lease the car through the company and less VAT and corp tax and add on any BIK cost. It will be cheaper to do it through the company. But you can't take the difference between the two and deduct it from the cheaper one to give an "effective cost". That would be like buying something for £80 that is usually £100 and claiming it only cost £60 because you saved £20.
@@michaelwx1 Ok, let me break it down again...with 0% BIK you can either take £533.50 out as salary as a higher rate tax payer and be left with £315.83 in your bank after tax (assuming it's part of your bigger salary that falls into the higher rate band, obviously) OR you can get an electric car (Tesla or otherwise) that is £485 + VAT. That's the point here. £315.83 a month of buying power on a personal lease or £582 a month on a business lease if you're VAT registered.
Thanks for doing this it's great. What would the numbers be like for the normal model 3? I'm a sole trader, not sure if I'd be entitled to the discounts, still would happily lease from lease loco for a price like this
I'm afraid sole traders don't qualify for company car tax so the saving in the same way isn't possible. Unfortunately, it's the only way to get the massive tax breaks 😔
Great question Keith. The good news is, as it's a lease car the cost of the road tax is included in the monthly payments that you see (the lease company takes care of the road tax).
Hang on. Surely you can only claim the VAT back if the car is being used for business purposes? Simply registering and company and becoming vat registered doesn’t qualify to claim the vat back.
Hey Mat, if you lease a car on a business lease, you can usually claim back 50% of the VAT (if you are VAT registered). More info available here www.gov.uk/reclaim-vat/cars 👍
Good video...and something I'm very interested in! Pardon my ignorance but I didn't understand some of the calculations. Why is the NIC (2%) charged on the 40% tax component, not on the full "effective net cost to the company" - e.g: 2% of £533.50 = £10.67? Also, for the BIK Oct-Mar calc; £49,000 * 16% = £7,840. £7,840 * 40% = £3,136? I'm not sure how the 1306.67 is arrived at! Thanks!!
Thanks, Howarth! As a really quick test, go to www.thesalarycalculator.co.uk and reduce your gross annual income by the annual net lease cost + 10% VAT. Then look at the reduction in net income to see the 'effective cost'. Depending on your circumstances, and within the higher rate bracket (assuming you don't overlap the tax band, which makes this more complicated!) you will pay 40% income tax and 2% NIC. You'll see this through the website I linked when you double check the maths manually. Also, the £49k x 16% then needs to be multiplied by the number of months that relate to the financial period. In this case 5 months was used as the case delivery was the end of October. So times by 5/12 to get the £1,306.67.
Help me. I NEED a model 3 performance. I'm an employee and I can either take a cash allowance or I can pick a company car from the company car portal with Zenith. I currently just take cash allowance as there is nothing tasty enough available to me on the portal. The new BIK for electric vehicles is so tempting though. Is there anyway of me taking advantage of the business lease if its not offered through the company car portal?
Hey Alain, if you type "tesla model 3 performance" into the search (without the quote marks) here www.leaseloco.com/car-leasing/search that will give you all the different options available, if you want to filter down further you can set the max upfront payment to £1,000. When you find the option that is best for you, simply pop the car in your garage to watch for the price dropping again 👍
Hey Connor, it sure is, though you just won’t be able to claim half the vat unfortunately (you will still need a registered company for this to work, as opposed to being a sole trader) 👍
Surely this is a bit of man maths here... The effective cost is arrived by adding on 10% VAT and deducting 19% corp tax. So £441.35 pcm? Still great. But the actual money that leaves your bank is simply not the same as the ‘buying power’ you compare it to.
Not really - it's exactly the same amount out of the company, so the corporation tax is the same, and therefore not covered here. In simple terms, think about what you're left with net after salary - the BIK is now 1% so the numbers have moved ever so slightly, but if you take that same gross salary payment and lease an EV, as the BIK is 1% and not 20, 40 or 45% income tax + NIC, the effective savings are definitely there.
@@Leaseloco I’m not sure why corp tax is ignored. Lease payments are deductible / reduce profits? Some kind of spreadsheet or the calculations would really help here...
@LeaseLoco Also, what I also don’t understand here is why a limited company director would pay themselves a salary, especially @ 40% tax. Marginal salary and dividends are obviously the way to go. Any calculations based on that? Seems to me it is monthly cost inc VAT plus 10% VAT minus 19% corp tax, plus BIK minus the BIK element paid by the company. I’ve run that past my accountant and they’re in agreement.
Even without the tax breaks, if you can get me a M3P for £582 a month I'm in. I can't find this deal (1+23) on the website anywhere. The best deal you have for a 1+23 is £685 with just 5K. Can you send me a link to the £582 deal.
Hey Yoric, the prices can change at any point (as they have done since making this video unfortunately) due to many factors (availability etc.) so the best bet is to register on leaseloco.com and pop the Tesla into your garage and we'll let you know as soon as the price drops again. As we are a price comparison website, we don't know in advance of any price changes, but we can certainly tell you when they do change in your favour 👍
Not at all. We rank lease deals out of 100 - the hot ones have payments that are less than the depreciation of the car. So if you bought it, you’d have that depreciation cost + any finance costs...and this my friend, is why leasing is growing at 25% a year 😃
The voice in your head it makes sense to lease an EV because the Technology is advancing so rapidly and you can get into the EV for a lot less per month that purchasing .
Hey Stephen, it depends on what you're in the market for and your own personal budget tbh. There are alternative options as mentioned in the video, such as the Volkswagen e-Golf 👉 leaselo.co/bq9lxj
Hey Neil, there are thousands of people in employment who receive a car allowance and take it as cash, rather than taking the company car. So it's not really just for company directors. Sorry it's not one for you, but this knowledge will help a tonne of people 😎
I think it is potentially even better than you illustrate. For zero emission cars BIK is zero for the 20/21 year increasing to 1% the year after and 2% the following year!
Sorry but the title is misleading. It should be "how my *company* leased a Tesla for..." thus ensuring that those of us who don't have a company aren't teased and their hopes crushed. Thank you.
Hey Joe, thanks for your feedback, we appreciate you taking the time to comment.
That makes us sad, the thought that we’re crushing hopes 😢. To the contrary, our aim is simply to help you find and compare the hottest car leasing deals available 🙌
As everyone’s circumstances are different, we didn’t want to have a misleading title of ‘how you can’, but instead share the knowledge of how John managed to secure such a great deal. Sorry this explainer wasn’t for you, but if it helps just one other person achieve similar savings then we’ll be chuffed with that. Knowledge is power after all 💪
An important part of the Tesla experience is being able to purchase the FSD or boost upgrades after receiving the car. Prospective Leaser's BEWARE I have leased a Model 3 Long Range and have been told by LEX AUTOLEASE that I am not allowed to upgrade the car in any way. They dont tell you this before signing on the dotted line.
BIK is 0% next April - then 1% 2021 April
Hey, thanks for that Alex. We've not seen the HMRC policy paper for FY22 yet, if you have a link to it would you be able to pop it in the comments here please as would love to get a look at it? 👍
BIK Two tables from 2020, one for if you buy the electric vehicle before 6th April - this means 2% for each of the 3 years, or after 6th April - 1st year 0%, 2nd year 1%, 3rd year 2% .
Chartered accountant ! Damn i hope to get to that stage one day
I am a British citizen living in Tunisia on a tourist visa for almost two years and I make about one and a half thousand pounds per month but I have never had an official job in the UK. I am 21 years old and came to Tunisia as a 19 year old trying to escape home. Would it be possible for me to lease a car, with permission to then immediately take it out of the UK for the majority of the year, for about 12 months? I would like to drive the car for much longer but each individual is only allowed to bring in a car with a specific set of engine and Chassis serial numbers for up to 12 months so if the company has new cars in their Fleet then I would be able to get a new car every 12 months
This is very useful, thanks for posting. Can you re-do this with the revised BIK rates for zero emission cars?
Useful video thanks. A fellow Director of our Ltd Co and I are exploring this. We do not currently have to charge VAT in our business so aren’t registered. Can we simply register for VAT if we don’t need to collect it therefore and claim back half the VAT as you refer?
Good to hear you found our video handy Matthew. I’m afraid your decision to VAT register your company is not something we can help with as each company has their own circumstance and we’d always suggest speaking to your accountant to get professional advice when it comes to this. If you can’t claim back half the VAT then the impact of 0% BIK is still significant 😎
Isn't the effect net cost to the company after a further 19% of corporation tax on the £533.50? Also, why would you take £533.50 out of the company. - if you were paying for this yourself you would need to take the full £582. Aren't you muddling up the two options? Also, when is NI 2% of your tax? Also, in this situation isn't it more likely you are paying yourself by dividend which is 32.5% for higher rate payers?
Hey Michael, thanks your feedback 👍
Pleased to confirm that there's no impact on corporation tax as the same amount is taken out of the company, with the same applicable tax rate, so the impact is on personal income tax. The £533.50 is the actual cost as 50% of the VAT is reclaimable, so the purpose of this exercise is to look at the actual cost of the lease vs paying that money as salary and paying personal income tax. NI is 2% over £4,167 per month - see www.gov.uk/national-insurance-rates-letters
Dividends completely depends on splits of using your dividend allowance, but this calculation assumes that you've used that up and are paying salary, falling into a higher rate tax band.
Hope this helps 😊
@@Leaseloco So, you should work out how much it would cost to end up with £582 in your personal bank account to pay for the lease personally (gross up £582 for tax at 40% that you have decided to use, and some NI) less any corp tax on gross pay. Then work out how much it would cost to lease the car through the company and less VAT and corp tax and add on any BIK cost. It will be cheaper to do it through the company. But you can't take the difference between the two and deduct it from the cheaper one to give an "effective cost". That would be like buying something for £80 that is usually £100 and claiming it only cost £60 because you saved £20.
@@michaelwx1 Ok, let me break it down again...with 0% BIK you can either take £533.50 out as salary as a higher rate tax payer and be left with £315.83 in your bank after tax (assuming it's part of your bigger salary that falls into the higher rate band, obviously) OR you can get an electric car (Tesla or otherwise) that is £485 + VAT. That's the point here. £315.83 a month of buying power on a personal lease or £582 a month on a business lease if you're VAT registered.
Thanks for doing this it's great. What would the numbers be like for the normal model 3? I'm a sole trader, not sure if I'd be entitled to the discounts, still would happily lease from lease loco for a price like this
I'm afraid sole traders don't qualify for company car tax so the saving in the same way isn't possible. Unfortunately, it's the only way to get the massive tax breaks 😔
@@Leaseloco haha looks like I'll need to start a company then :)
@@falcodarkzz problem solved 😂
That's an amazing deal.
It was too good not to share Stephen 👍
do you avoid luxury car tax if leasing or has this been missed out?
Tesla's are exempt from luxury car tax I believe.
@@madge8006 nope afraid they have to pay luxury tax as over 40k list price..... teslamotorsclub.com/tmc/threads/luxury-car-tax.151111/
Great question Keith. The good news is, as it's a lease car the cost of the road tax is included in the monthly payments that you see (the lease company takes care of the road tax).
Hang on. Surely you can only claim the VAT back if the car is being used for business purposes? Simply registering and company and becoming vat registered doesn’t qualify to claim the vat back.
Hey Mat, if you lease a car on a business lease, you can usually claim back 50% of the VAT (if you are VAT registered). More info available here www.gov.uk/reclaim-vat/cars 👍
Good video...and something I'm very interested in! Pardon my ignorance but I didn't understand some of the calculations. Why is the NIC (2%) charged on the 40% tax component, not on the full "effective net cost to the company" - e.g: 2% of £533.50 = £10.67? Also, for the BIK Oct-Mar calc; £49,000 * 16% = £7,840. £7,840 * 40% = £3,136? I'm not sure how the 1306.67 is arrived at! Thanks!!
Correction - I understand the £1306.67 - its 49K x 16% x 40% x 41.6667% (the last component being 5/12 for the five remaining months to April 2020)!
Thanks, Howarth! As a really quick test, go to www.thesalarycalculator.co.uk and reduce your gross annual income by the annual net lease cost + 10% VAT. Then look at the reduction in net income to see the 'effective cost'. Depending on your circumstances, and within the higher rate bracket (assuming you don't overlap the tax band, which makes this more complicated!) you will pay 40% income tax and 2% NIC. You'll see this through the website I linked when you double check the maths manually. Also, the £49k x 16% then needs to be multiplied by the number of months that relate to the financial period. In this case 5 months was used as the case delivery was the end of October. So times by 5/12 to get the £1,306.67.
This is assuming you can also claim back the VAT. If you can't then reduce your salary by the gross lease cost.
And when you go on this site you’ll see that a 23+1 on a business lease Model 3 Performance for 10k miles is >£1,000 per month 😂🤡
Help me. I NEED a model 3 performance. I'm an employee and I can either take a cash allowance or I can pick a company car from the company car portal with Zenith. I currently just take cash allowance as there is nothing tasty enough available to me on the portal. The new BIK for electric vehicles is so tempting though. Is there anyway of me taking advantage of the business lease if its not offered through the company car portal?
Hey, great question! Can you drop us an email at support@leaseloco.com please and we will happily pick up on this with you 👍
BIK 0% from April 2020 for 1 year, I believe.
Do you have a link? A lot of speculation but as far as we can see, no policy paper formally issued by HMRC on this.
Leaseloco it’s true
1927.34 😉 great video though, thanks. May contact you in April
Ha first to spot, well done - rounding error 🙈
Great video but unfortunately lease car insurance is very expensive
You can also claim that on the company!
Been on the site and can’t find the 1+23 deal. Can’t even see the performance listed.
Hey Alain, if you type "tesla model 3 performance" into the search (without the quote marks) here www.leaseloco.com/car-leasing/search that will give you all the different options available, if you want to filter down further you can set the max upfront payment to £1,000. When you find the option that is best for you, simply pop the car in your garage to watch for the price dropping again 👍
Leaseloco great thanks
But Is this possible if your not VAT registered?
Hey Connor, it sure is, though you just won’t be able to claim half the vat unfortunately (you will still need a registered company for this to work, as opposed to being a sole trader) 👍
Leaseloco thankyou! Good to know!
Surely this is a bit of man maths here... The effective cost is arrived by adding on 10% VAT and deducting 19% corp tax.
So £441.35 pcm?
Still great. But the actual money that leaves your bank is simply not the same as the ‘buying power’ you compare it to.
Not really - it's exactly the same amount out of the company, so the corporation tax is the same, and therefore not covered here. In simple terms, think about what you're left with net after salary - the BIK is now 1% so the numbers have moved ever so slightly, but if you take that same gross salary payment and lease an EV, as the BIK is 1% and not 20, 40 or 45% income tax + NIC, the effective savings are definitely there.
@@Leaseloco I’m not sure why corp tax is ignored. Lease payments are deductible / reduce profits? Some kind of spreadsheet or the calculations would really help here...
@LeaseLoco Also, what I also don’t understand here is why a limited company director would pay themselves a salary, especially @ 40% tax. Marginal salary and dividends are obviously the way to go.
Any calculations based on that?
Seems to me it is monthly cost inc VAT plus 10% VAT minus 19% corp tax, plus BIK minus the BIK element paid by the company. I’ve run that past my accountant and they’re in agreement.
Even without the tax breaks, if you can get me a M3P for £582 a month I'm in. I can't find this deal (1+23) on the website anywhere. The best deal you have for a 1+23 is £685 with just 5K. Can you send me a link to the £582 deal.
Hey Yoric, the prices can change at any point (as they have done since making this video unfortunately) due to many factors (availability etc.) so the best bet is to register on leaseloco.com and pop the Tesla into your garage and we'll let you know as soon as the price drops again. As we are a price comparison website, we don't know in advance of any price changes, but we can certainly tell you when they do change in your favour 👍
@@Leaseloco I have already done the garage thing, thanks. That's quite a price rise in a week, let's hope it goes back the other way.
@@yoric7200 brilliant, 🤞 it does soon
What’s the point in lease if after years of paying thousands you still don’t own the car?! Such a con.
Not at all. We rank lease deals out of 100 - the hot ones have payments that are less than the depreciation of the car. So if you bought it, you’d have that depreciation cost + any finance costs...and this my friend, is why leasing is growing at 25% a year 😃
The voice in your head it makes sense to lease an EV because the Technology is advancing so rapidly and you can get into the EV for a lot less per month that purchasing .
How can it be a con? You know exactly what you’re getting when you sign up? Soft lad
@@stalepalemale should have hung on a few years and bought it cheaper then you would have saved much more than leasing.
Leaseloco so your saving what the government initially takes from you in “tax”
Sorry mate, hard work following this to be honest. Nice hoodie though.
Still needs to be cheaper its way too expensive
Hey Stephen, it depends on what you're in the market for and your own personal budget tbh. There are alternative options as mentioned in the video, such as the Volkswagen e-Golf 👉 leaselo.co/bq9lxj
You do save alot on fuel, so you need to take that into consideration.
@@TheWesty55 thats where they will put the price up too
...and for the majority of people who are not self employed like this... Oh! :(
Hey Neil, there are thousands of people in employment who receive a car allowance and take it as cash, rather than taking the company car. So it's not really just for company directors. Sorry it's not one for you, but this knowledge will help a tonne of people 😎