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2010 2011 BMW 5 Series Forum F10 Cancelling lease order for 520? |
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05-12-2011, 04:47 PM | #1 |
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Cancelling lease order for 520?
Hi all,
Very quickly, I have ordered a private lease for BMW 520d, about 3 wks ago but not signed any agreement, this for delivery in end june or early july. Now I am getting a similar employer lease car, which costs less as I pay for it 'before tax deduction'. Can I cancel my private lease order without incurring any cost? Many thanks |
05-13-2011, 03:49 AM | #3 |
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If you haven't signed anything, then I'd be surprised (very) if you have ordered a car. Can you confirm? I just don't imagine your BMW dealer ordering a car to your specification without you handing over a £1000 non-refundable deposit.
This was certainly my situation. I had the car ordered for 4 weeks before changing jobs and discovering my new employer offered the same kind of car scheme you describe. It was cost economical for me to cancel my order, forfeit the £1000 and opt into the company scheme instead. However I didn't want to go right to the back of the order queue for a car so I made some calls and had the company lease scheme agree to source the car from the dealer I had ordered from. Net result, I got my car and my £1000 back and save a couple of hundred a month. |
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05-13-2011, 05:00 PM | #4 |
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Great, sounds like you know about this kind of company lease.
Quickly, can I ask if the company car scheme, asking for ' salary sacrifice' before tax,NI and pension; eventually cost saving, even if you do end up paying 'benefit tax' of about £3000 annually. I havent paid anything for requesting a new car on a private lease, I never do. I know the car has been ordered as I finalised the specs a few weeks ago, it is not via a BMW dealer directly but through a leading Finance company which I think owns a BMW dealership. They just happen to give me a great service with out any deposits or advances. |
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05-16-2011, 03:04 AM | #5 | |
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05-16-2011, 11:44 AM | #7 |
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Yes, please if you would. just to say that the private lease does cover maintenance and road tax but not insurance, which seems a bonus in the salary sacrifice scheme. But then what happens to my 50% NCB which i already have?
My main concern was of course how would the pvt lease co react but as you say seem I am not under obligation having not signed any agreement, is that correct? Many thanks for your help. |
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05-16-2011, 12:09 PM | #8 |
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OK, lets do this by way of example. Hopefully I can organise my thoughts sufficiently to be clear......lets see :-)
In my case, I had a £36,055 car ordered which I negotiated a bit of a discount on. I paid £1000 deposit and the BMW lease was about £690 a month. With the salary sacrifice scheme, lets say the the price from your suppliers is £655 a month. That £655 comes out of your gross pay, so someone in the 40% tax bracket, you are reducing your taxable income by £655 a month. That is the equivalent of saving you £262 a month. So far, so fantastic. You're now paying just £393 of your net pay. But of course the government recognises that as a benefit in kind so they slap a tax on you. For my car they assess this benefit to be worth the equivalent income of £8653 per annum, or £721 a month. So now you have to pay tax on that figure. At 40% this is £288 a month. So the sum monthly total is net payment + benefit-in-kind tax = £681. So in that example it's all cost neutral really, other than your company pays your road fund licence, all repair bills not covered by warranty, arrange the servicing and have the car collected and a replacement delivered, pay for the breakdown cover and pay for the insurance. All that adds up a decent cash saving. On top of that you've zero risk in the residual value of the car. You just walk away. If you lose your job, no worries, you aren't lumbered with a car you cant afford the payments for. |
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05-16-2011, 01:25 PM | #9 |
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Thanks, that makes sense.
Here is the rough estimate I got: Retail Price (inc. VAT): £32,900.00 Total Accessory Cost: £1,595.00 Total P11D value: £34,495.00 Tax Rate: 50% Gross Annual Salary Sacrifice: £8,392.53 Benefit in Kind %: 20% Annual Benefit in Kind Tax: £3,449.50 Tax Saving: -£4,196.27 NI Saving: -£167.85 Pension Contribution: -£272.76 Net Yearly Cost: £7,205.16 Net Monthly Cost: £600.43 Benefit tax £287 + net cost/ month= £687 The quote I got from Pvt Lease is £700 + full maintenance but no insurance So even if I negotiate to a lower pvt lease, I still gain from not having to pay any insurance, which will be about £800/annum. On company insurance, if I claim, does it effect my ' NCB'? and if not does my 50% NCB just keeps rolling on? Many thanks |
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05-17-2011, 02:30 AM | #10 | |
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Insurance companies will (in my experience) recognise a break in your personal cover for a period of years but it won't indefinate. That said most of them recognise accident free motoring under a company policy too. I haven't experienced this personally yet but you'll probably just need a letter from your lease manager stating no claims. Something looks wrong to me in your benefit in kind tax. As a 50% tax payer I would expect to be taxed on the benefit at 50%. You know how there are tax bands: 20% - £0-£35k 40% - £35-£150k 50% - > £150 I think maybe your supplier is being a little disengenuous and suggesting that your benefit in kind tax is from the first band. You'll know for sure when you get a letter from HMRC telling you it's £8000 benefit in kind, like I got this week. LOL |
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