As an employer, you’re probably familiar with salary sacrifice schemes; you might already have one in place. If you’re not in the know, it’s an arrangement whereby an employee voluntarily gives up a portion of their salary in return for a benefit – in this instance, the lease of an electric vehicle (EV). The money is deducted at source from their gross salary, which means they will pay less tax. They will, however, have to pay a small amount of Benefit-in-Kind (BIK) tax.
If you enter into an electric car salary sacrifice scheme, you will need a leasing partner. But as far as your staff are concerned, they’re leasing the car from you. They won’t have to undergo a credit check, and their monthly payment will include insurance and maintenance. All they’ll have to do is take care of the charging at home or at one of the 38,000 public charge points (as at February 2023) around the country and enjoy the advantages of cheaper driving that comes with having an electric vehicle. If they leave the company, they hand the car back to you, with certain conditions attached.
Electric cars make a great deal of sense from a fleet management point of view. You can lease as many cars as you need. There’s also the fact that, given their green credentials, a fleet of electric vehicles will help your company to achieve its sustainability goals.
As an employer, you can save 13.8% on National Insurance on the amount sacrificed by the employee, while they stand to save a considerable amount on tax. It’s an attractive proposition for employees at all levels, especially those in higher tax brackets. And as mentioned earlier, employees who use an electric car salary sacrifice scheme will have to pay BIK tax. The government has confirmed BIK will remain at 2% for zero-emission cars until 2025, after which it will rise by a maximum of just 1% per year until 2028, when it will be reviewed.
Salary sacrifice is a great tool for staff recruitment and retention. Employees are increasingly looking for more than a good salary, expecting companies to provide them with a range of benefits that go beyond the standard ones such as medical care. A company that offers electric vehicles to its employees will be perceived by them to be progressive and forward-thinking, and a desirable team to be a part of.
Find out more about the electric car salary sacrifice scheme offered by ElectriX.