![]() “Underneath it’s essentially a car lease. Simon Down, a tax director at accountants Deloitte, says people sign up for a set period and agree an annual mileage. ![]() Salary sacrifice packages can offer all of the things a driver needs to get on the road – the car, insurance, maintenance deals, breakdown assistance – under one payment. The employee then pays benefit-in-kind tax, which is 2% for EVs this tax year. Salary sacrificeįor people who work for a company with a salary sacrifice scheme for EVs, considerable tax savings can be made in a way similar to pensions or cycle-to-work schemes.Īfter an agreement is signed and a car is selected, a set amount is deducted from pre-tax pay. What Car? lists a Skoda Scala at £239 a month on a PCP contract at 5.9% APR, with a 15% deposit, over four years as its best available deal at the moment. As a result, the deposit and monthly payments tend to be lower than a traditional hire purchase agreement,” says Powell.ĭrivers will have to stick to mileage limits with the PCP contract and will have to pay if they hand back the car with any damage. “Instead of paying off the entire value of the car over the term of the agreement, you only pay off the depreciation. If they want to keep the car, they pay a final “balloon” payment. PCP is the most popular type of car financing in the UK, and differs in that the driver can keep the car, trade it in, or hand back the keys at the end of the term. Again, the price of a deal is altered by the term, and what the initial deposit is. ![]() Once the final instalment is paid, the car is yours, usually over a period of up to five years. Hire purchase contracts are split between the deposit and instalments over the term of the agreement. Similar in some ways, hire purchase and personal contract purchase (PCP) can both end up with the driver owning the car. “You never own the car, and you may be stung for additional money if you go over your annual mileage allowance, or if the car has more than fair wear bumps and scratches,” says Gill Nowell of insurer LV=.Ĭomparison site Auto Lease Compare gives the best price for a Nissan Leaf at £261 a month on a four-year contract at 5,000 miles a year. There can be additional costs if the lease is ended early, or if you exceed mileage limits. ![]() How much a lease costs depends on the price of the vehicle, the length of contract, mileage, the value of it at the end of the term and whether certain options, such as maintenance, are included. Leasing terms are mostly between two and four years, but the drivers are typically liable for repair costs that are their fault, says Jeff Fairbotham of Zoom EV. The pros are clear: a new car every few years, and the depreciation on the vehicle is not the problem of the driver, but the lease company. This is usually the cheapest way to get on the road but, typically, it has limits on the number of miles that can be done in a year, according to Dan Powell of motoring site AutoVillage. You don’t get to keep the car at the end of the term – instead, you make monthly payments to keep it for a set period. Personal contract hire (PCH), best known as leasing, is, in effect, a very long-term rental. Banking group Close Brothers says research suggests many people are changing their mind about buying due to the current need to tighten belts.īut there are ways to get on the road without shelling out huge amounts. Last year the average pre-tax retail price of a medium-sized EV was €33,300 (£28,914) compared with €18,600 for a petrol car, according to BloombergNEF.Īdded to that, the cost of living crisis is putting more pressure on households. “Higher upfront cost of the vehicles, the pace of improvement in battery range, concerns about access to reliable charging infrastructure and perceived complexity of transitioning means many are hesitant about making an EV their next car,” A report from the thinktank says: “Consumer adoption of EVs is still in its infancy, and a number of barriers deter larger numbers from switching in the short term.
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