Why should your employer sign up to an electric car salary sacrifice scheme?
At the moment there are many discussions about electric car salary sacrifice schemes as a method to increase employee engagement and retention in companies that adopt them.
Electric car salary sacrifice, backed by the UK government, offers a sustainable alternative to traditional petrol or diesel vehicles. This eco-friendly option enables you to make substantial savings on your journey towards a net-zero carbon footprint. The Electric Car Scheme provides not only affordable electric cars but also top-tier protection for unforeseen circumstances. To help you navigate this exciting opportunity, we have curated a comprehensive glossary of terms to support your salary sacrifice journey.
What is electric car salary sacrifice?
Electric car salary sacrifice is a valuable employee benefit that empowers companies to lease electric vehicles for their employees. In return, employees sacrifice a portion of their earnings to cover the lease costs. Unlike traditional car leases, where payments come from net pay (post-tax income), salary sacrifice deducts expenses from the gross salary (pre-tax income). This tax-efficient approach enables employees to maximize their savings.
If you want to learn more about the ins and outs of how salary sacrifice works, visit our blog: What is an electric car salary sacrifice scheme?
Why are employers adding electric car salary sacrifice as an employee benefit?
Employers can provide an additional benefit to their workforce at no additional cost by implementing this scheme. This approach not only improves their ability to attract and keep employees but also assists their staff in becoming more environmentally conscious and reducing carbon emissions.
Almost half (40%) of the 5,000 employees surveyed by Fleet Evolution said that salary sacrifice was the most important benefit. This was followed by pensions (37%) and flexible working (9%). Showing that this is an extremely effective employee benefit to add!
Furthermore, more than half (55%) of employees said that they would not have opted for an electric car had it not been provided through a salary sacrifice car scheme.
Are employers apprehensive about implementing a salary sacrifice scheme?
Recent research conducted by The Electric Car Scheme found that 90% of businesses believe that there is a significant risk in having an electric car scheme as an employee benefit. Furthermore, 74% believe it would take a considerable amount of work internally and 89% believe it would cost a lot of money to run the scheme.
But this doesn’t have to be the case.
Why should your employer sign up to The Electric Car Scheme?
The electric car market is experiencing unprecedented levels of demand from consumers in the UK. Zapmap reports that as of the end of September 2023, there are around 900,000 electric cars on UK roads. This is a 123% increase when compared to 2021. The fully electric car market share in the UK rose to 16% in 2023, up from 6% in 2020.
Table shows market share from 2020 to 2023 comparing battery electric vehicles and plug-in electric vehicles to show the growth year-on-year. Data taken from ZapMap
Demand for electric cars is rising and as a result, there are more electric cars on the road. All signs indicate that this positive trend is only going to continue…
As more people want electric cars, new and affordable schemes, like The Electric Car Scheme, have become available. Your company will lease a car of your choice and will pay for the cost of the lease. As an employee, you agree to give up a portion of your salary to cover the lease cost. In exchange, you have the freedom to choose the car you want.
You can save between 30-60% on any electric car!
But what are the advantages for your employer? This blog will outline the five key reasons why an employer should implement The Electric Car Scheme now! You can share this post with your company's decision-makers to help them make a quick and informed decision.
If they have any questions, they can book a call with our Business Development team here.
The most desirable, employee benefit!
Employers often use schemes, like The Electric Car Scheme, to enhance their employees' benefits. Providing staff with access to new electric cars can help boost morale, make them feel valued and save them thousands. The Electric Car Scheme is a great benefit to help improve overall productivity and employee retention. It will positively incentivise your employees to stay with your company and make the most out of salary sacrifice.
On a typical personal lease, the employee would pay for the car with their net salary (salary after tax). Instead, salary sacrifice allows employees to subtract this amount from their gross salary (before tax), so they can save more money.
Not only will our scheme help retain your employees - it will also help you attract new talent. Electric car salary sacrifice schemes are a fresh employee benefit. Joining now makes you an early adopter of this unique perk, helping you attract top industry talent
Environmental, Social and Governance (ESG) goals and sustainability
The climate crisis, caused by widespread human consumption and pollution, will have a long-lasting and harmful effect on future generations. We are currently overusing Earth’s natural resources by more than 70%.
The United Nations' Intergovernmental Panel on Climate Change (IPCC) predicts that in the next 20 years, global temperatures will increase by 1.5 degrees Celsius.
This change will be permanent and irreversible. If global temperatures increase by 2 degrees Celsius or more, it will result in disastrous implications for humanity. The IPCC has cautioned that we only have until 2030 to make significant changes if we want this to stop happening. Hence, the time to act is now!
Encouraging employees to use electric cars is the first important step for your business to reach Net Zero emissions. It is estimated that an electric vehicle has a 58% lower lifetime impact on the environment relative to an internal combustion engine car. The Electric Car Scheme will help your business achieve its ESG goals and build a sustainable future for us all. You can read more about hitting ESG goals by visiting another one of our blogs.
Cost-neutral and free to join
One of the most alluring features of The Electric Car Scheme compared to our competitors is that we are cost-neutral.
An appealing aspect that sets The Electric Car Scheme apart from our competitors is that the scheme is cost-neutral. Our fees consist of the money saved from employee National Insurance due to reduced taxes from their salary sacrifice, plus 50% of the VAT refund. This means that we have a ‘net zero’ cost to the employer.
There are no hidden costs or commission payments - we are completely transparent when it comes to our fees. If no employees from your company get a car through the scheme, the employer won't have to pay anything. We do not have any ongoing fees or subscription charges.
Complete Risk Protection
One of the things we pride ourselves on is our market-leading Complete Risk Protection. In case an employee wants to terminate their employment contract before the lease term ends - the employer is almost always covered from day 1. This means you won’t be left paying any hefty penalties or charges (often 50% of the remaining lease payments on the car) or you are stuck with a car you no longer need.
Set up a call with our Business Development team to learn more about our risk protection here.
Streamlined sales processes with ongoing admin support
We aim to make it easy and straightforward for an employer and employees to enjoy The Electric Car Scheme. We aim to support your business throughout the journey with a dedicated support team. We are with you every step of the way, from setting the scheme live to ordering the electric cars!
We believe that the employer should have to do as little as possible to implement the scheme. Consequently, we provide a personalised online portal for employers to keep track of the scheme. We give employers straightforward payroll inputs, accurate BIK, NI & VAT calculations, draft HMRC notifications including P46 (Car) and P11D forms and ensure the company is HMRC compliant.
It doesn't stop there! When a company signs up, we help with employee education and engagement. We also help with the internal promotion of the scheme - not a difficult job because when employees hear about it, they jump at the opportunity. Also, we provide employees with monthly savings updates so they can keep track of all the money they are saving.
Learn more about how we work with you to ensure your scheme is successful here.
How can I save 30-60% on any electric car?
Salary sacrifice lets you pay from your salary before tax. It’s like the cycle to work scheme for electric cars. The Electric Car Scheme sets up and manages the salary sacrifice scheme for your company at no cost.
Book a call with our Business Development team here or convince your company!
Last reviewed: 17/11/2023
Next review scheduled: 17/05/2023
