ELECTRIC VEHICLE SALARY SACRIFICE

Salary Sacrifice is a government-backed initiative which lets employees exchange a portion of their pre-tax salary for certain benefits. This scheme creates a tax-efficient way for employees to lease an EV through their employer. Allowing you to swap some of your gross salary to gain a brand new car with added benefits.

The Salary Sacrifice EV scheme offers a range of benefits, making it an attractive option for employees. It provides tax savings through reduced income tax and National Insurance contributions, along with ultra-low Benefit-in-Kind (BIK) tax rates for electric vehicles. Employees enjoy reduced running costs for their cars, with inclusive packages like Just Charge, Drive & Go that cover insurance, maintenance, servicing, breakdown assistance, and accident management. The scheme promotes environmental benefits by supporting zero-emission vehicles and even offers EV access for the whole family. With predictable fixed monthly payments, no upfront costs, or credit checks, it’s a hassle-free solution. Employees also benefit from flexible terms and mileage options tailored to their needs.

The Salary Sacrifice EV scheme offers significant benefits to employers. It enhances their employee benefits package, helping to attract and retain top talent while promoting job satisfaction. Employers save on National Insurance Contributions (NICs) due to the reduced gross salaries of participating employees. The scheme supports corporate sustainability goals by encouraging the use of zero-emission vehicles, aligning with environmental, social, and governance (ESG) objectives. It’s cost-neutral or low-cost to implement, as leasing providers typically handle setup and administration. Additionally, offering the scheme showcases the company as forward-thinking and environmentally conscious, boosting its reputation among employees, clients, and stakeholders.

An employee agrees to give up a portion of their pre-tax salary in return for a leased electric car. The employer arranges the lease, and the monthly cost is deducted from the employee’s gross salary, allowing them to use earnings that would have otherwise been paid in tax towards an EV lease.

Savings depend on your income tax bracket, salary, and the cost of the car. Many employees save 30-50% compared to leasing privately.

Salary Sacrifice cannot reduce an employee’s pay below the legal minimum wage, so eligibility depends on earning enough to accommodate the deduction.

BIK is a tax on benefits provided by your employer. Fully electric cars have a low BIK rate (2% in 2023/24), making them significantly cheaper to tax than petrol or diesel cars.

No upfront payments are required! The cost is spread over the lease term and deducted monthly.

Reducing your gross salary may have other implications to additional schemes tied to your salary, such as, state pension, student loans, maternity allowance etc. It is best to seek advice from the UK government guidelines and HMRC before applying for the Salary Sacrifice scheme.

Included in the monthly lease payment can be maintenance including regular servicing and MOTs, fully-comprehensive insurance, breakdown cover, and protection against early termination fees. Ensuring worry-free ownership throughout the lease.

No, currently the salary sacrifice scheme is only available for employees, as it relies on reducing PAYE income.

It supports the UK government’s goals to reduce carbon emissions and transition to greener transport by making EVs more affordable.

We can offer help and guidance on installing an electric charging point at your home. Please contact us for more information.