When choosing a new car, your options can seem limited. If you’re buying, the upfront cost can come as a shock. But a personal lease can be just as expensive, giving your monthly income a hit that can seem unsustainable.
That’s where EV salary sacrifice comes in to save the day. With our electric car benefit saving our customers between 40-60% on their monthly lease, salary sacrifice makes getting an EV accessible and affordable for people across the UK.
With an astonishingly low Benefit in Kind (BiK) rate and massive savings to make on tax, it’s no wonder that companies and employees across the UK are turning to salary sacrifice to get behind the wheel of their dream EV.
But why should companies consider an EV salary sacrifice scheme? What benefits does it bring to their company, and what does the future of salary sacrifice look like?
In this article, we cover:
- The basics: how do EV salary sacrifice schemes work?
- Changing government policies and the impact on EV salary sacrifice schemes
- Technological developments
- Changing attitudes towards mobility
Ready to help your employees save up to 60% on their new EV – while meeting your company’s CSR and ESG goals? Find out if your company is eligible here.
The basics: how do EV salary sacrifice schemes work?
What is salary sacrifice?
It couldn’t be more simple. Salary sacrifice is, without a doubt, the most affordable and accessible way to finally get your dream electric car.
As the name suggests, salary sacrifice electric car benefits are available through an employer to their employees. In exchange for a small portion of your gross monthly salary, you receive a benefit in kind at a reduced cost. It’s not a new concept, and you may have encountered other examples before, such as cycle-to-work, childcare or pension schemes.
While it may seem daunting to ‘sacrifice’ your salary in exchange for a benefit, the savings you receive far outweigh the modest reduction in your monthly salary.
Why? An ultra-low ‘Benefit in Kind’ (BiK) rate and savings on National Insurance Contributions and Income Tax.
What is ‘Benefit in Kind’?
Every benefit an employee receives from their employer instead of monetary compensation is considered a Benefit in Kind (BiK). As this benefit – whether a product or service – is compensation for the employee’s services, the employee must pay HMRC an associated BiK rate, a form of tax.
And the beauty of EV salary sacrifice is its astonishingly-low BiK rate. In August 2022, the UK Government confirmed that the electric car BiK rate would remain at just 2% until 2025 before rising 1% year on year until 2028.
How does salary sacrifice save me money?
Alongside this low BiK rate, an EV salary sacrifice benefit helps employees get behind the wheel while saving big on tax.
As the monthly lease payment is taken from your gross salary – that is, your salary before tax – loveelectric drivers pay less Income Tax and reduce their National Insurance Contributions.
These savings are dependent on your income tax bracket. Find out how much you could save.
Changing policy landscape and the impact on EV salary sacrifice
As the UK accelerates towards its net-zero goals, the policy landscape around electric cars will continue to transform. Many of these political changes will encourage EV adoption and impact electric car salary sacrifice schemes.
We have identified two policy changes that may substantially impact the attractiveness and need for EV salary sacrifice benefits in the UK.
Mandatory Scope 3 carbon reporting
As the pressure on reducing carbon mounts on companies and countries, so too does the need to report on this carbon impact. Without measuring its impact, it’s near impossible for a company to know how to reduce that impact. Companies with over 500 employees must currently report their Scope 1 and 2 emissions (emissions that the company controls).
However, the International Sustainability Standards Board (ISSB) will now require mandatory Scope 3 emissions (created as a consequence of the company's activities) disclosure from private companies. The UK government may make policy changes to reflect this higher standard. Notably, business travel and employee commuting fall under Scope 3 emissions reporting. Changing your company car fleet from fossil fuels to EV can substantially impact reducing these emissions – and an EV salary sacrifice scheme is the most affordable and efficient way to do so.
Changes to the Workplace Charging Scheme (WCS)
Other policy changes include those to EV charging at the workplace. The WCS is a government scheme that provides financial support to businesses that install electric vehicle charge points for their employees.
The UK government intends to extend and expand the WCS, with a keen interest in installing rapid charge points. With increased – and more powerful – charging infrastructure available at workplaces, more companies will look for affordable ways to electrify their car fleets – making EV salary sacrifice schemes more attractive to businesses nationwide.
EV technological developments
We’re tech-obsessed here at loveelectric. Whether we’re improving our bespoke app to support better EV searches and ordering (you can have a sneak peek here!) or fantasising about upcoming EV tech, there’s always something new to drool over.
But what gets us really excited about the rapid improvements to electric car tech is the impact on their efficiency and affordability. So whether you’re looking for the most efficient car for your pound (and for the environment), we’ve got the EV for you: check out our lineup here. And if you’ve been around for a while, then you know that everything we do is to ensure electric cars are affordable and accessible to everyone across the UK.
Tech improvements go beyond the hardware and software in electric cars. EV public charging infrastructure continues to improve year on year, helping connect electric car drivers with the country and dispel residual ‘range anxiety’.
Implementing an EV salary sacrifice benefit in your workplace is the best way to take advantage of these tech developments. With lease periods lasting up to four years, you and your employees can take advantage of new tech when it becomes available – at up to 60% off the cost of a personal lease.
With the ultra-low BiK rate of just 2% in place until 2025 and rising just 1% each year until 2028, salary sacrifice is the best way to get behind the electric wheel. As the policy landscape shifts in response to our changing climate and electric car technology improves exponentially, implementing an electric car scheme is the best way to join the electric revolution.
Ready to get started? Let us show you why loveelectric is the best EV salary sacrifice benefit for your company.