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11 Apr 2024

4 reasons to offer an electric car salary sacrifice scheme

With electric vehicles surging in popularity, it makes sense to help your employees make the most of the benefits

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Every business and organisation is only as strong as its employees. That is why employee wellbeing is now so important for attracting, retaining and motivating employees.

Over recent years, one benefit in particular has grown in popularity: electric car salary sacrifice.

1. Lower Benefit in Kind tax

Benefit in Kind (BiK) is a tax for employees who receive benefits or perks on top of their salary.

Employees who have the use of a company car for private use pay a BiK contribution out of their monthly pay.

Unlike some petrol and diesel cars whose BiK rates can be up to 37%, the current rate for electric cars is just 2%, fixed until April 2025. While the rate is set to increase by 1% each year until it reaches 5% in April 2028, it will remain low in comparison.

2. Up to 40% savings on the cost of a new electric car lease

By opting into salary sacrifice, employees can reduce their income tax and National Insurance contributions, saving up to 40% on the cost of a new electric car lease.

Since the payments come out of an employee’s gross pay, their monthly salary is reduced – meaning their income tax and National Insurance deductions are too.

3. No deposit or credit check

Another employee benefit of electric car salary sacrifice is that there is no deposit to pay or credit check to pass. Under the scheme, all cars are leased by the company on behalf of the employee.

4. Savings on running costs

Employees could also benefit from savings on daily running costs by charging their car overnight at home, taking advantage of cheap off-peak tariffs. Electric cars are also exempt from road tax until 2025 and Clean Air Zone charges such as ULEZ. Maintenance services can be included in the lease package.

How to set up a scheme.

Choose a specialist partner to help you set up an electric car salary sacrifice scheme.

Guy Spence, MD of Electrix says: “The best scheme is the one that’s shaped around your business. By working with an electric car salary sacrifice specialist, you’ll be supported by a dedicated account manager and guided every step of the way, from assessing eligibility and communicating with employees to arranging the administrative aspects and managing risk.

“There are just as many benefits to employers as employees. An electric car salary sacrifice scheme can help you attract and retain staff, while supporting your organisation’s ESG goals.”

To get the most out of your scheme:

  • Ask your salary sacrifice provider about minimum orders – some insist on minimum quantities of vehicles.
  • Make sure you have the support of a dedicated account manager who can assist with set-up and ongoing administration.
  • Use software or online platforms that automate the enrolment and management of the scheme, making it easier for employees to access information and make decisions.
  • Designate a dedicated team or individual responsible for overseeing the scheme and addressing employee inquiries and concerns.
  • Provide clear and accessible communications to employees, outlining the process and deadlines for enrolment, as well as ongoing support.
  • Ensure your salary sacrifice partner provides support if employees leave during their contract.

Find out more about electric car salary sacrifice here.

In partnership with ElectriX

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