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Why electric vehicle salary sacrifice should be part of your employee benefit scheme
The number of electric vehicles (EVs) on the road is growing, with over a quarter of a million new fully electric vehicles registered in the UK in 2023, according to the Society of Motor Traders and Manufacturers. But incentives for retail customers remain limited, which can make the cost of an electric car prohibitive.
By offering electric vehicle salary sacrifice as part of an employee benefits programme, employers can enable cost effective access to an EV for all employees – not just company car drivers.
What is electric vehicle salary sacrifice?
Essentially, employees ‘sacrifice’ part of their gross salary for a fully maintained electric car. Because payments are taken from the employee’s gross salary, income tax and National Insurance contributions (NIC) are reduced. EVs work particularly well on salary sacrifice due to very low levels of Benefit in Kind tax – which is fixed at 2% until 2025.
What are the benefits for employers?
- Reduced National Insurance (NI) contributions – average saving of 13.8%
- No cost to the business to set up the scheme
- Valuable employee benefit - great for retaining and attracting talent
- Reduced ‘grey fleet’ risk – fewer employees using their own cars for business
- Supports the environmental, social and governance (ESG) agenda 4
What are the benefits for employees?
- A cost-effective new electric car - up to 40% cheaper than a personal lease
- Savings on NI and tax – the car is paid for via gross salary
- No deposit required
- No impact on personal credit lines
- One fixed monthly salary deduction – this typically includes insurance, tax and routine maintenance plus optional home charger
- Lower running costs
Salary sacrifice for electric vehicles is seeing rapid growth, according to the latest Leasing Outlook Report (October 2023) from the British Vehicle Rental and Leasing Association (BVRLA), which reports 54.6% year on year growth for 2023.
How can ElectriX help? ElectriX is an EV specialist, powered by LV= General Insurance. We make it easy for businesses to switch to electric - we offer salary sacrifice and business contract hire, plus personal leasing solutions. And to make it even simpler, we can package the car, cover and charger.
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