Both personal contract hire and salary sacrifice schemes present unique advantages and considerations, making the choice between the two depend on individual circumstances and financial objectives. Understanding the intricacies of both PCH and salary sacrifice will help determine which path may better suit your needs.
Understanding Personal Contract Hire and Leasing:
Personal Contract Hire, commonly abbreviated as PCH, has gained increasing popularity as a flexible and hassle-free way to drive a new vehicle. Under a PCH agreement, an individual leases a car for a fixed period, typically between two to four years, by paying an initial rental, followed by regular monthly payments. At the end of the contract term, the vehicle is returned to the finance company, eliminating concerns about depreciation and resale.
Benefits of PCH:
- Fixed Costs: PCH offers predictable monthly payments, which can aid budgeting and financial planning.
- Minimal Upfront Costs: Compared to traditional vehicle ownership or finance options, PCH often requires lower initial outlays.
- Maintenance Options: Many PCH agreements include maintenance packages, covering routine servicing and repairs, providing peace of mind for drivers.
Fixed Monthly Costs
New Car Every 2-4 Years
Road Tax is Included
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Understanding Salary Sacrifice:
Salary Sacrifice schemes, on the other hand, operate through an arrangement between an employee and their employer. Rather than receiving a portion of their salary as cash, the employee opts to sacrifice a segment of their pre-tax earnings in exchange for a non-cash benefit, such as a car. The cost of the vehicle is deducted from the employee’s gross salary, potentially resulting in tax and National Insurance savings.
Benefits of Salary Sacrifice:
- Tax Efficiency: Salary Sacrifice schemes offer tax advantages, as the cost of the car is deducted from the employee’s gross salary, reducing income tax and National Insurance contributions.
- Comprehensive Packages: Many Salary Sacrifice schemes bundle additional benefits such as insurance, maintenance, and breakdown cover, streamlining the ownership experience.
- Access to Newer Models: Employees may gain access to newer and more fuel-efficient vehicles through Salary Sacrifice schemes, often at more affordable rates than traditional financing methods.
Porsche Taycan Salary Sacrifice
When you look at a Porsche Taycan on our salary sacrifice scheme, your estimated salary reduction on a gross annual salary of £120,000 is £625.40 per month - That is a huge saving! This is just one example, we can quote any EV on salary sacrifice and you can start saving today.
Porsche Taycan Salary Sacrifice Example Rates
Rates are based on an Porsche Taycan Electric.
|
Annual Salary |
Estimated Net Salary Reduction |
| £70,000 | £926.76 |
| £100,000 | £853.76 |
| £120,000 | £625.40 |
The above figures are estimated net salary reductions based on example annual salary rates. For an accurate quote, get in touch with our salary sacrifice team who will be on hand to give you accurate quotes based on your true income.
| Feature | Figures |
| Total Monthly Salary Sacrificed: | £1,506.84 inc VAT |
| Employee income Tax Savings: | £904.10 |
| Benefit in Kind Payable by Employee: | £52.80 |
| Employee National Insurance Saving: | £30.14 |
| Total Estimated Net Salary Reduction: | £625.40 |
Learn More About Salary Sacrifice Download Our Extensive Guides
Making a Decision Between Personal Leasing and Salary Sacrifice
Choosing between PCH and Salary Sacrifice hinges on various factors, including individual preferences, financial goals, and lifestyle considerations. If you value flexibility, minimal upfront costs, and the convenience of returning the vehicle at the end of the term, PCH may be the preferred option. Alternatively, if tax efficiency, comprehensive benefits, and access to the latest electric vehicles are priorities, Salary Sacrifice could be the more enticing choice.
There are aspects of both agreements that overlap, such as the fixed monthly costs and ability to change cars every few years, depending on your agreement length.
It’s important to conduct thorough research, assess your budget constraints, and evaluate the conditions of the agreement, including benefits and drawbacks, consulting with financial advisors or using an accountant to weigh up PCH versus salary sacrifice, allowing you to make an informed and beneficial choice for your driving needs.
Both PCH and Salary Sacrifice offer viable avenues for acquiring a new vehicle, each catering to different preferences and objectives. By understanding the details of each option and aligning them with your personal circumstances, you can drive away in a brand-new lease car and potentially save thousands of pounds during your agreement.
We have a whole range of information surrounding personal contract hire and salary sacrifice with extensive guides available to your employer and employees should they with to consider a salary sacrifice agreement.