An innovative take on using EV car benefits to attract and retain
The Covid-19 pandemic may have largely passed now but the impacts from lockdown and changes to working arrangements are still being felt.
The so-called ‘great resignation’ saw unprecedented numbers of employees worldwide move on, often due to shifting expectations and needs, triggered by pandemic-led societal changes. Some wanted a complete career change, others took early retirement.
The House of Lords report, Where Have All The Workers Gone? revealed that early retirement was one of the key drivers behind the workforce exodus.
It’s fair to say then, that Covid has exacerbated existing skills shortages. Along with the cost of living, inflation increases and stagnating wages, all this has had a real impact on the talent pool.
Employers are now needing to find new and innovative ways to attract talent while retaining their best people. Part of this is about recognising the need to improve the daily lives of their workforce.
Discernible savings
Salary sacrifice electric vehicle (EV) car schemes do exactly this. These schemes offer discernible savings such as reductions in tax and national insurance contributions and routine – but often costly - car expenses are also covered in set monthly amounts.
We are in a significant period of change with the transition to electric vehicles and the push to ban new sales of petrol and diesel vehicles from 2035. But there’s also growing recognition that affordability is a key factor in the EV transition.
Research from the British Vehicle Rental and Leasing Association (BVRLA) found that take-up of salary sacrifice car schemes increased by 47% at the end of 2023 with 85% opting for an electric vehicle. Compare this to private contract hire agreements over the same period, where electric vehicles represented just 16%.
Opens up accessibility
Salary sacrifice car schemes open up accessibility to the EV market to employees because it’s an affordable, cost-effective option.
Moreover, the reduced 2% benefit-in-kind (BiK) tax rate for zero or low-emission vehicles which is in place until 2025, and with rates rising only 1% each year from 2025-2028, it’s made the scheme much more attractive to both employers and employees.
So how do the schemes work?
Salary sacrifice electric car schemes work by ‘sacrificing’ a fixed proportion of asalary each month before income tax and national insurance, in exchange for a new electric vehicle, so employees benefit from tax savings.
The fixed monthly amount covers not just the car, but associated costs, including insurance, MOT, servicing, replacement tyres, breakdown cover to road tax and routine maintenance.
The wellbeing piece
We know anecdotally, from speaking to our clients, that the scheme offers peace of mind for employees. Research from Bristol University shows that saving a small amount of money each month improves sleep quality.
Unlike a self-funded car where it can be difficult to budget for unknown or escalating costs, the monthly salary sacrifice amounts ensure everything is covered – including maintenance and insurance. And with an electric vehicle, there’s no longer the worry about escalating fuel costs.
Employee satisfaction
According to the Tusker EV Driver Survey Report 2024 more than a third of EV drivers said the potential savings in income tax and NI through salary sacrifice were the ‘main incentive’ for switching to a Tusker electric vehicle.
Employers in general who offer EV schemes can really differentiate themselves against their competitors. And, until these schemes become more commonplace, this is a huge USP.
In partnership with Tusker
Market leaders in salary sacrifice car schemes with more than 15 years’ experience.
