How the salary sacrifice car scheme can help your staff drive electric

Changing habits and attitudes

Climate change has come even further under the spotlight in recent times and many are becoming more and more environmentally conscious by the day.

60% of Brits said in 2020 they were more concerned about climate change than they were in 2019, according to research by Ipsos Mori.

The same research showed 52% felt priority should be given to the environment even if it meant a slowing of economic growth.

In recent times we’ve seen new laws introduced, changing habits and attitudes and political leaders embroiled in arguments with high-profile climate activists over social media.

Climate change is well and truly front and centre in the world’s greatest challenges, even alongside COVID.

The rapid growth of the EV market

The figures below give you an idea of how rapidly the electric vehicle market is growing.

• By the end of May 2021, there were over 515,000 plug-in vehicles registered on the roads in the UK (DfT, 2021)
• 175,000 new electric vehicles were registered in 2020 alone in the UK, an increase of 66% on 2019 figures (DfT, 2021)
• In May 2021, the market share of electric vehicles was 14.7%, compared to just 3.2% in 2019 and 1.1% in 2015. (DfT, 2021)
• Deloitte predict global electric car sales to hit 31.1 million by 2030. (Deloitte, 2020).

 

The popularity of electric cars is only heading one way and government support for driving electric looks set to stay.

However, the road to driving electric might not be without its obstacles.

Does everyone want to drive electric?

Almost all the research into electric vehicle use brings up one common barrier for those considering driving electric.

Without doubt the biggest barrier is charging points and “range anxiety”.

By January 2021, there were 20,775 charging points throughout the UK. But while electric vehicle popularity increases rapidly, the infrastructure needed must follow.

Thankfully, there are a few government schemes which can help alleviate this anxiety.

• The Electric Vehicle Homecharge Scheme: grant funding of up to 75% for the installation of charge points at home
• The On-street Residential Chargepoint Scheme (ORCS): funding for local authorities to install on-street residential chargepoints
• The Workplace Charging Scheme: a scheme designed to support businesses, charities and organisations in installing charge points.

 

If you offer a salary sacrifice electric car scheme, you might be eligible for offers around chargepoints from your provider, so it’s worth considering this too.

Either way, be sure to look into any government support, grants or offers that may be available to support your staff with this, as it is a key barrier to anyone driving electric.

How the salary sacrifice car scheme works

So, with all that considered, without doubt the best way to encourage and help your staff drive electric is to introduce the salary sacrifice electric car scheme. But how does the scheme work?

A salary sacrifice scheme allows an employee to exchange some of their gross salary in exchange for a non-cash benefit.

Common examples of this include Childcare Vouchers, the Bike to Work scheme and of course the salary sacrifice car scheme.

Through this, the employee usually saves on Tax and National Insurance (NI) and the employer usually saves on National Insurance.

This allows employees to save up to 42% on a brand-new bike for example through the Bike to Work scheme while spreading the cost.

This benefit of course extends to the salary sacrifice electric car scheme, so employees can save on Tax and National Insurance taking out a car through the scheme.

There’s also Benefit-in-Kind (BiK) to throw into the mix too. However, this is where the government have offered support for electric vehicles through the scheme.

For the tax year 2021-2022, BiK on Ultra Low Emission Vehicles (ULEVs) through the salary sacrifice electric car scheme was just 1%. For 2022-2023 it’s just 2%.

So, what does all this mean?

In a nutshell, the salary sacrifice car scheme is the easiest and most affordable way for your staff to drive an electric car today!

Our salary sacrifice car scheme partners Tusker reckon the average employee could save thousands per year getting a ULEV through the scheme.

The reality is, these savings could be very high depending on the value of the electric cars your employees take out on the scheme, so there really is no limit to the savings on offer through the scheme.

This covers every cost involved with the car except fuel, whether that be the electric charging for a fully electric car or petrol for a ULEV.

Remember, the employer can make NI savings too, making the scheme a win-win for everyone.

The benefits for employers

Let’s run through the key benefits of the scheme for employers.

• Supports your business’ environmental goals
• Potential for significant NI savings
• Low cost to set up and run and cost-effective through NI savings
• An increasingly popular employee benefit your staff will love
• A vital scheme in the post-pandemic war for talent
• Easy to set up and all admin is taken care of by your provider.

The benefits for employees

The benefits of the scheme don’t stop there, as there’s loads of great benefits for your staff too.

• Cost-effective way of getting a brand-new car, with better rates than on the high street
• Significant tax and NI savings
• Easy and accessible way to reduce carbon emissions output
• Everything taken care of, just add fuel (or electric!)
• Easy ordering process and thousands of cars to choose from.

 

These are just a handful of the key benefits of the salary sacrifice electric car scheme for both employers and employees.

For the full list of benefits, as well as a comprehensive overview of the scheme, check out our salary sacrifice car scheme.

How to get the scheme up and running for you and your staff

The scheme is quick, easy and cost-effective to set up and manage for both you and your staff.

To find out more, take a look at our salary sacrifice car scheme or get in touch for more information.