Electric car salary sacrifice: what you should consider 🔍
Salary Sacrifice is a way for companies to provide employees with a benefit without risk or cost for the employer. Electric car salary sacrifice is similar to the cycle to work scheme, just for electric cars. In an electric car salary sacrifice scheme, the employer leases the car for the employee. The employee agrees to 'sacrifice' a portion of their gross salary to pay for it. Employees have potential to save between 30-60%.
Salary sacrifice is a great opportunity for both employers and employees. It offers employees the ability to go green at a more affordable cost and employers can boost their benefit package. Still, as with any excellent opportunity, there are important factors to consider. We have outlined the essential aspects to watch for in a salary sacrifice scheme.
Lead times - the wait continues…
There are now over 900,000 electric cars on UK roads alone.
Electric cars are gaining popularity as more people aim to make the transition to electric vehicles. However, because of factors like supply chain delays, their delivery times to customers are extending. According to Electrifying, waiting times for a new electric car are currently at an average of 21 weeks. This is an improvement from October 2022 where the average wait time was 35 weeks.
At The Electric Car Scheme, we understand it’s hard to wait once you have decided on your dream electric car. So we have created a solution - a subscription service.
Before the new subscription service, you could only get an electric car through salary sacrifice on a long lease. This excluded new companies operating for less than 2 years from offering this benefit to employees. Sometimes, employees had to wait as long as the specified lead time for their electric car. We frequently refresh our subscription car inventory, and in most instances, you can get one within 7 days from now.
To find out more about our subscription service visit this page.
Owning the Car
How you acquire a car is down to personal choice, some people prefer to purchase their car so that they have full ownership and complete control. Although when you own the car you are able to modify it as you wish, you are also in control of the insurance, maintenance costs, and in 2025, road tax.
On the other hand you could lease a car through salary sacrifice. This way you pay for the cost of the car on a monthly basis for an agreed period, with The Electric Car Scheme that fee could include insurance, maintenance costs and road tax when it comes into effect for electric cars. If you ran into any trouble with the car throughout the term, you can come to us for any assistance.
The best part about getting an electric car through salary sacrifice is that you pay for the costs through your gross salary. This means that you get a brand new car (of your choice) with all the bells, whistles and costs included AND you pay for it before tax so you can save between 30-60% on the price.
There are two key things to remember with this point. Firstly, with a salary sacrifice you do not own the car and second, your employer leases the car on your behalf - this means it is a company car.
The image breaks down salary sacrifice each month, showing employee tax savings, best lease price available and the benefit in kind tax cost. These calculations are for someone earning £70,000 per year and driving an average of 10,000 miles per year for 4 years.
Transparency at The Electric Car Scheme
With a salary sacrifice scheme, you enter a long-term car lease, so it's crucial to understand the commitment involved.
At The Electric Car Scheme, our experts help you choose the perfect car and provide information on costs and savings.
Flexibility
The perfect salary sacrifice scheme should adapt to provide everything you need in one.
Did you know we're the only electric car salary sacrifice program that can access cars from the entire lease market? We work with a variety of different leasing companies to provide you with the deal for your dream car!
Early Termination Policy
Choose a plan that covers you if the unknown happens, because a lot can change in a year.
The Electric Car Scheme offers protections for the following:
Redundancy and dismissal
Resignation after 3 months into the lease
Parental leave or loss of licence (because of death)
Long term sickness or death
If the employee doesn't make a payment, the employer has protection
For more information on our policy visit our risk protection page.
Admin support
Salary sacrifice schemes are a great employee benefit to build a healthier and more sustainable company. However, accessing electric car salary sacrifice as a business can seem daunting and over-complicated.
The Electric Car Scheme team is on-hand to help and answer questions or requests from employees. We also support HR and Finance teams throughout the process. If you decide to launch a scheme with us, we will allocate a dedicated account manager to you. We hold webinars and on-site visits to get as many employees as possible to sign up for the scheme.
The Electric Car Scheme provides ongoing support with automated payroll reporting, tax reporting and HMRC compliance. You can learn more about how we work with businesses here.
Our main goal is to make this benefit straightforward and hassle-free, so it doesn't disrupt daily operations.
The Numbers
There are lots of numbers surrounding salary sacrifice that you need to know when signing up to a scheme. For example, leasing an electric car through salary sacrifice will require you to pay a benefit-in-kind (BIK) tax. When The Electric Car Scheme provides you with a quote, we include these calculations in the figure.
The Electric Car Scheme keeps you informed about what you're getting into and provides monthly reports on your savings. Our EV specialists will tailor your lease to your needs - from adding a home charger to payment plans.
If The Electric Car Scheme sounds right for you, book into a group session to talk with one of our specialists. Or you can learn more about the specifics here.