Salary Sacrafice Schemes

  Halmer 07:35 18 Nov 2005

My employee has introduced one of these whereby you can take advantage of tax savings to buy PC stuff and pay over 36 months.

Has anyone else been involved and can you give me your views please.

  Taff™ 08:00 18 Nov 2005

Do you mean your employer - the company you work for?

I have seen these schemes in action and have two views. Firstly, if you don`t know anything much about computers take advice before you choose one. The scheme may be run by an outside company and you should check the small print very carefully. What happens if scenarios - you move companies, you are made redundant etc.

Anyway, In general the schemes offer tax savings and are rather like leasing something over two or three years. Usually you can buy the product for a nomonal fee at the end of the agreement. The knowledge that the payments are deducted net of tax on a monthly basis make it an easy choice if you don`t have cash around. It also gives you home access to a computer and the benefit to the employer is that you will become computer literate fairly quickly and might even take work home to complete.

However, the last scheme I saw was run by Dell for a large Rail Company. When I checked the prices of the models offered against their current website offers they were horrendously expensive. About 40% more expensive on the system he fancied even allowing for the tax savings. I`m afraid that computer prices have tumbled over the last year and the leaflet was 6 months old - I think they will continue to do so. Check the prices - it may be cheaper to buy outright or on a credit card.

Having said all that my mate bought one anyway - just for the convenience!

  interzone55 08:28 18 Nov 2005

When it worked at a well known, but now defunct, computer manufacturer, we marketed one of these schemes to companies, and sold a couple of thousand PCs this way.

I wasn't in the sales department, but from the leaflet I gathered that the PC belongs to your employer, and you lease it off them for three years. After 3 years you either give the PC back, or buy it off them.

As Taff said above, the PCs actually work out more expensive than buying them outright, and you are heavily restricted in what you can do to the PC during your ownership, upgrades are a big no-no.

I would tot up how much a PC will cost you over three years, then take a look at how much it would cost you to buy a PC on credit from someone like Evesham or Mesh.

  keef66 11:21 18 Nov 2005

we have one of these HCI (Home computer initiative)schemes. An external company I've never heard of provides IBM desktops / laptops + peripherals. The government rules mean they have to provide 3 years on site tech support / warranty, which is reflected in the prices. You do pay before tax, so in theory it should be cheaper, but when you compare with Dell, Evesham, Mesh, INCLUDING a 3 yr warranty and paying for it in instalments, it still isn't really competitive.

It's either because it takes so long to set up the scheme that prices fall and specs rise in the meantime, or the HCI company are ripping you off.
Having said that, Evesham do offer an HCI scheme.

If I didn't have the cash, I'd take out a personal loan, buy from Evesham and only go for a 1 year warranty

  Halmer 09:37 19 Nov 2005

'sacrifice' obviously!


  fitshase 09:47 19 Nov 2005

One thing you have to keep in mind is that the money is taken before tax so you are, in effect, paying less tax. However, any pension contributions are taken after that so your pension contributions may drop as well.

I priced these up when our company looked at introducing a similar scheme. However, when I looked at the scheme, the quoted "manufacturers recomended retail price" were ridiculous - a Dell PC was quoted as being worth £1,100 but the Dell website had the same one as £499. After the scheme I would be left with a 3 year old PC and having paid more than direct with Dell.

Yes you get the support from that company (assuming they are still around in 3 years) but you could shop around for a support package. You are also tied into the scheme while you work at your company - if you leave you have to pay more.

  Halmer 09:58 19 Nov 2005

Fujitsu 6701 with 19" screen £800
Norton A/V £30
Epson printer £100
Optional 3 year comprehensive cover £350
I've also written S and T on the bit of paper but can't remember what that is! £90

Ignoring the 3 year cover this means that I would shell out £1,020 interest free over thre years and pay back the equivalent of around £750 becasue of tax relief. How can that be such a bad deal? All of the items cab be viewed on the suppliers website and are their cash prices for anyone going in to the store.

  Halmer 10:00 19 Nov 2005

I did mean my employer.

  Halmer 10:01 19 Nov 2005

I think that S and D is set up and delivery.

My understanding is that I can do this myself saving £90 and I do not have to have three year on site cover.

  keewaa 10:23 19 Nov 2005

PCs like this are available for £650 with Norton Security for £15, printers start at £30, 3 years warranty at £150 ....... as said before they overcharge.

If you're only using a PC for internet, emails and office application the Dell 1100 would be fine and they sell base units for £170 if you can fin an old CRT ... it depends what you need.

  spuds 11:30 19 Nov 2005

This type of scheme as been well aired in the forum, both recently and in the past.It pays to read and fully understand the way the particular scheme as been set-up, as certain implications or restraints are administered with the scheme. Basically it is a lease agreement that is undertaken, in other words the computer system doe's not belong to you. At the end of the lease period, you have the option of paying a fee to own the computer, or return the computer to the administrators of the scheme. In the meantime, certain tax concessions will be granted via PAYE, but beware, this tax concession could effect final pension rights.

The other consideration, is the possibility of redundancy or leaving the company,and you may find that you are required to return the computer and perhaps part or all of the tax concession granted with perhaps additional fees being applicable. The scheme can be a very good way of obtaining a computer, but be forewarned that the agreement may have hidden barriers, which may need further clarifications from the administrators.

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