So, you’re considering getting an electric vehicle (EV) through salary sacrifice and want to know more about the benefits? You might also be worried about how things will unfold. Things like:
- What happens if I leave my job due to redundancy or a new job?
- Are maintenance and servicing included in the scheme?
- What happens if I go on parental leave?
Great, you’re in the right place. In this article, we’ll explore all the questions you might have and will also weigh in on the benefits of signing up for the salary sacrifice scheme from Loveelectric.
Note: Are you an employer or employee interested in implementing an electric car scheme for your company? With Loveelectric, employers can offer the electric car salary sacrifice scheme as an employee benefit at no extra cost. Get set up now.
What is salary sacrifice?
A salary sacrifice is when an employee forgoes a portion of their gross salary and in return, they receive a benefit that is a non-cash benefit. So basically, you ‘sacrifice’ a portion of your wage to pay for a benefit and as a result, you’ll get taxed less! You may already have heard about salary sacrifice in the context of things like pension or childcare and now, electric cars!
Salary sacrifice electric car
So, how can you get an electric car? The answer is simple, if your employer signs up for the Loveelectric salary sacrifice scheme, you will have access to a wide variety of electric cars; every make, model and colour, for a much more affordable price. But that’s not the only benefit, so why not look through our list of the key reasons why getting an EV through our scheme is a great option?
It saves money
One major benefit of getting an electric car through salary sacrifice is that it’s cost-effective (It can radically cut down your monthly car expenses). As mentioned, being signed up to a salary sacrifice scheme means you’ll end up paying less in tax, but how does that work?
Well, the primary saving is through paying less in income tax. The amount of tax your pay is directly dependent on how much you earn, so if you’ve given up a portion of your salary through salary sacrifice to say, get a new Mercedes, technically your salary will be lower and in turn, your income tax will also be lower.
There is another tax saving alongside income tax, and that is your national insurance contributions (NIC). NIC, just like income tax, is based on the salary you earn, so this also means that leasing through a salary sacrifice scheme will lower your NIC costs. If you’d like to learn more about this, check out our tax breakdown explanation here, or if you’d like to see an example of how much cheaper leasing through a salary sacrifice scheme can be compared to traditional leasing, check out this example.
Additionally to the tax savings, through the Loveelectric salary sacrifice scheme, on average customers will save 50% of their monthly costs of leasing, including maintenance and servicing, saving thousands of pounds every year!
Low ‘fuel’ costs
Another aspect is that EV drivers actually end up saving a fair amount of money as the electricity costs are far lower than the fuel you pay for when you drive a diesel car.
Let’s compare two cars, the BMW 3 series and the Tesla Model 3, both roughly equal in price point and performance. With the Tesla Model 3, the cost to charge it is roughly £300 in charging every year, whereas the cost of fuel for BMW is more than double that cost, at £623 every year.
If you’re based in Scotland, you can leverage the ChargePlace Scotland network which has multiple sites that offer charging for free. All you need to do is download the app, pay a one-off fee of £10 and from then on you can access all of the charging points for free. For more information on this, check out Zap Map’s guide on ChargePlace Scotland.
There’s also the potential to save money through choosing a good energy provider, although comparing different providers and tariffs for the purpose of saving money on charging your EV is often not as simple as comparing a standard energy tariff. We recommend you take the time to fully research this to ensure you’re getting the best possible deal. Money Savings Expert has a couple of great tips on things to look out for.
No upfront costs or deposit required
When you sign up to Loveelectric, you don’t have to pay a deposit or any other fees, it’s as simple as selecting an EV you’d like, signing some papers online and then paying the leasing costs each month from your salary. There also aren’t any delivery charges or any final payments when your contract ends (other than costs for excess mileage or potential damage to the vehicle). If you want to have a look at which cars are available with Loveelectric and how much you could save, click here.
It’s good for the environment
There’s been a significant shift towards being much more environmentally conscious these days, and choosing an electric car is one of the ways people are making this change.
Throughout the entirety of the lifespan of an EV, it will pollute far less when compared with internal combustion engines (ICE), especially when it’s charged using electricity that comes from renewable energy sources.
There’s also a common misconception that going electric doesn’t make much of a difference environmentally and although the production of EVs isn’t 100% free of carbon emissions when taking into account the total lifespan of an EV, including everything from production, driving and charging they are far better for the environment. (EPA)
Access to premium electric cars at an affordable price point
If you’re a car fanatic or just someone with a dream EV in mind, you’ll be well aware that buying a brand new EV outright can be very expensive. At Loveelectric, we’re passionate about getting you the EV you want while being able to offer that dream car at a much more affordable price point. You could get a brand new EV for up to 50% less than the average cost.
Maybe you don’t want to be tied down for too long with the same old car that may not be as exciting in a couple of years’ time. Signing up for a salary sacrifice scheme may just be the solution you’ve been looking for! With Loveelectric, you’re able to be much more flexible, as your contract could be as short as 24 months (an even shorter term of 12 months is coming soon!) and you’ll have access to a wide variety of electric cars offered at an unbeatable price, with all of the breakdown covers, maintenance servicing and early termination protection fees included. If you’d like to browse the range of cars we offer, click here.
Breakdown, maintenance and servicing is covered
As previously mentioned, your breakdown, maintenance and servicing are all covered if you sign up for the Loveelectric salary sacrifice scheme, plus you’ll get 24/7 breakdown assistance so you can feel good knowing we’ve got your back!
How does salary sacrifice work for an electric car UK?
Salary sacrifice involves signing a contract with your employer to use a set portion of your pre-tax income for specific goods or services.
Under a salary sacrifice scheme for an electric car, you will typically choose a brand new electric car from a pool of vehicles approved by your employer based on whether the vehicle is suitable for your needs and budget, and then each month a portion of your salary will be automatically deducted, before tax, and will cover the monthly payment of the car.
Maintenance and insurance are usually included in the scheme, so you only have to pay for the electricity. The schemes usually last between two and four years and the cars can be used privately or professionally.
Note that salary sacrifice schemes and electric car schemes are different from company car schemes; the latter provides you with a car without a lease charge, but you pay a benefit in kind for a company car.
Also note that if you work with an electric car salary sacrifice company like Loveelectric, you will have the option to choose the car that suits you. That's because we partner with over 300 dealerships in the UK — which means that if the car is out there, we'll find it for you, and at a lower cost.
What happens if I leave my job?
If you leave your job, there are two main options. If possible, we’ll work to have your contract moved to your new employer provided this is an option. If that is not a possibility, we’ll try to move your contract to a colleague at your former place of employment.
However, if neither of these options is possible, we will protect you and your employer from any early termination charges the leasing company may levy. All that we ask is for one month’s “rent” as an administration charge to end the lease early.
How much will Road Tax/Vehicle Excise Duty (VED) for an electric car cost?
EVs with no CO2 emissions (BEVs) benefit from a standard zero tax rate in the first year and all subsequent years. This means that you do not pay road tax on a pure electric vehicle.
What is BIK? And do I have to pay for it?
Yes, Benefit in Kind (BIK) is a form of tax that has to be paid if you are an employee who is receiving a benefit resulting from your employment.
All cars, including EVs, have a certain level of BIK tax to be paid to HMRC. BIK is determined by taking a percentage of the car’s list price (sometimes referred to as P11D value) which is taxable and this percentage amount of tax is based on the vehicle’s level of carbon footprint. The higher the CO2 emissions are, the higher the tax is. Luckily, EVs do not have any CO2 emissions at all, which means that the BIK for EVs is very low. As of writing this, the current percentage of BIK is 2% and it will remain at that percentage until 2025.
How do I find out if my employer is eligible to sign up?
A general guideline to know whether or not your employer may be eligible is if the company is profitable and has been trading for over 2 years, however, this is just a guideline and we do make exceptions, so if you’re interested, sign up here to see if our salary sacrifice scheme would work for your company!
If you’re looking for additional resources to encourage your employer to sign up, why not share our previous post on the benefits of an EV salary sacrifice scheme here.
Can I use the car for private use?
Yes, you can. It's your car, so you can use it for personal use or for corporate purposes.
Updated: 3 August 2022
love to join? Help your employees benefit from one of the best employee benefit schemes going without it costing you a penny. Drop us an email and we’ll be in touch within 24 hours.
love to halve the cost of your new electric car? You just need your employer to sign up first.
Fill in your company details so we can get in touch - it won’t cost them a penny but it might earn you a few brownie points.