The benefits of having an EV salary sacrifice scheme
Schemes like salary sacrifice allow employees at a company to proportion some of their monthly wages against the cost of a benefit, like an EV.
This lowers an employee's monthly take-home pay, meaning they also pay less in income tax and National Insurance each month. The benefit is they get access to an affordable brand-new EV.
What benefits does a salary sacrifice scheme bring to my business?
Salary sacrifice schemes can be used as an additional employee benefit and incentive to stay working at a company.
They can also help with recruitment too. If a business has partnered with a leasing company or salary sacrifice provider to offer electric vehicles, this could be an added bonus compared with other jobs the employee may be considering.
It also helps reduce an employee's personal carbon emissions, but will also help towards a company's overall sustainability target too by helping more employees switch out of more polluting petrol and diesel vehicles.
Newer vehicles like EVs also come with more standard safety features compared with older cars, which can help improve safety for drivers.
More employees adopting EVs through salary sacrifice can help with companies looking to have greater control of their 'grey fleet' as well.
These are the vehicles that employees use to drive to work in, but are privately owned and so the employer has no control over their age, condition or emissions.
Business can also reduce their tax burden by saving money on their National Insurance contributions, this is due to the fact tax does not need to be paid on the salary that is sacrificed for the electric car.
An EV salary sacrifice scheme costs a business nothing
Pictured: Kia Soul EV
There should be no net cost to a business to set up and run a salary sacrifice scheme.
The fees charged by providers are often equivalent to the employer's tax savings, so the scheme would have a net zero cost.
The employer's tax savings consist of reductions in employer National Insurance due to salary sacrificed and the VAT recovery on the lease.
Depending on the provider, there may be some risks, such as if you left the business or you went on long-term sick or parental leave. But good salary sacrifice scheme providers now provide cover and protection for this as part of their offering.
It's worth speaking with specialists at providers like The Electric Car Scheme who can answer any questions you have on this subject and offer enhanced protections to cover cost in scenarios like being off long-term sick or parental leave.
Adding a salary sacrifice scheme to your monthly payroll is reporting is quick and easy
Salary sacrifice schemes should be quick to set up and shouldn't take more than a week or two to integrate into a company's monthly payroll reporting.
Thom Groot, The Electric Car Scheme co-founder and chief executive, said: "We can typically set up a company's new salary sacrifice arrangement in around three days.
"It will also depend on the company's internal processes and systems too, but generally it would only take one to two weeks to get things set up and running in those scenarios."
Each business that signs up with The Electric Car Scheme gets access to a secure employer portal, a custom salary sacrifice calculator and car configurator for employees, a launch team with useful webinars, a dedicated account manager and support.
Businesses get access to company car tax , National Insurance and VAT calculations and The Electric Car Scheme will also calculate the annual impact carbon emissions reporting for businesses.
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What benefits do salary sacrifice schemes have for my employees?
Pictured: Hyundai Kona Electric
There are a host of benefits made available by providing a salary sacrifice scheme for EVs.
Helps your employees get behind the wheel of a brand-new electric vehicle
Pictured: Volkswagen ID.3
Employees can gain exclusive discounts on EVs of between 30-60% compared with a retail new car offer.
This is because the leasing companies and salary sacrifice providers can buy EVs in greater numbers, which means they acquire them at a reduced cost which they can then pass on as savings to employees.
For example, a Tesla Model Y, one of the most popular EVs in the UK, is available through The Electric Car Scheme at £459* a month.
The same vehicle bought directly on a personal contract hire (PCH) deal from Tesla directly is £550* and also requires a £6,000 initial rental payment too.
*Figures obtained from The Electric Car Scheme and Tesla's new car retail offers as of 9 August, 2023.
Lower National Insurance payments
Employees are essentially reducing their gross salary by paying for the monthly EV cost before they are taxed.
This means employees only have to pay National Insurance contributions on the level of pay after the cost of the EV has been deducted each month.
It's a tax efficient way of paying for an EV compared with having to pay for one as a retail customer from your net income.
Reduces your employee's carbon footprint
According to the latest UK government statistics, transport is still the largest emitting sector for carbon emissions, accounting for 34% of all carbon dioxide in 2022.
Switching to zero emissions vehicles is one of the best ways to drastically reduce an individual's carbon emissions, along with reducing the number of trips made on the road in general.
EVs have no tailpipe emissions and the car manufacturers that produce them are also working hard to increase the use of sustainable production techniques too.
Manufacturers like Polestar have already committed to creating a completely climate neutral production car that fully eliminates greenhouse gases from production.
All costs of car ownership are combined into one monthly payment
Pictured: Peugeot e-208
The Electric Car Scheme can offer an all-inclusive package through salary sacrifice.
It means things like the car, servicing, insurance, public charging and even the home charger can be bundled into the monthly cost of the EV.
Smart Home Charge is a partner with Electric Car Scheme, so we install all the home chargers that are bundled in for drivers that have chosen a new EV through salary sacrifice.
How do I enrol my business into a salary sacrifice scheme?
Pictured: Vauxhall Corsa-e
Most large businesses will already have a salary sacrifice scheme in place, if not for cars already, then perhaps for other benefits like pension contributions, technology products or cycle to work schemes.
If there's not an EV scheme in place already, it's worth canvassing opinions with other drivers at your business that are keen to switch to an EV.
Speak with your manager and perhaps start a conversation with the human resources (HR) and benefits team.
Businesses can get in contact with The Electric Car Scheme directly to arrange a scheme, or employees can also indicate their interest for the company they work for here too.