Autumn Statement 2023: How is electric car salary sacrifice affected?
The Chancellor of the Exchequer, Jeremy Hunt, presented the Autumn Statement to Parliament yesterday (Wednesday 22 November 2023). We’ve summarised these changes below and outline how they may affect The Electric Car Scheme for you and your employees.
This image is sourced from The Telegraph
No ‘new news’ on the Benefit in Kind tax
Benefit-in-kind (BIK) rate is a tax that is charged for a company benefit, in the case of The Electric Car Scheme - the benefit is an electric car with significant tax savings through salary sacrifice.
The benefit in kind tax is currently set low at 2% to encourage the adoption of electric cars and enable you to save up to 60% through salary sacrifice
In the Autumn statement 2022, Jeremy Hunt announced that the BIK tax will remain at 2% until 2025 and then rise by 1% every year thereafter until 2028. This means the tax savings available through getting a car with The Electric Car Scheme will continue until at least then.
If you are still considering setting up The Electric Car Scheme for your team, and would like to discuss this with one of our Product Specialists, you can use this link to book in a free consultation.
With the low BIK tax, you can continue to enjoy 30-60% savings on any electric car until at least 2028. If you have not yet got a car through the scheme, and want to see how much you can save - you can get a quote on our website here.
National Insurance rate cut from 12% to 10%
Jeremy Hunt has announced a 2 percentage point reduction in employee National Insurance contributions (NIC) from 12% to 10%, effective from the 6th of January 2024. Currently, this contribution is set at 12% for earnings between £12,571 and £50,271, and 2% for amounts above that.
With the upcoming changes to NICs, your employees will experience a reduction in NICs for earnings between £12,571 and £50,271 - which is good news!
National Minimum wage rises!
Hunt has also confirmed an increase in the National Living Wage. From the 1st of April 2024, it will rise from £10.42 to £11.44 per hour, marking a significant 9.8% increase and potentially adding up to £1,800 for a full-time worker. Hunt describes this decision as the "largest ever cash increase" in the National Living Wage.
UK government announces £2 billion investment in electric cars
The British car industry is set to get more than £2 billion in extra investment support, with a focus on manufacturing, the supply chain, and the development of zero-emission vehicles. Additionally, the UK government will unveil a battery strategy, outlining its plan to establish a competitive supply chain for electric car batteries by 2030.
This is great news for the UK's electric vehicle (EV) sector and is expected to boost growth, leading to the creation of new jobs, better charging infrastructure, and increased access to electric cars. The funds, announced by Hunt in his Autumn Statement in the House of Commons on Wednesday (22 November), will be part of a broader £4.5 billion support package for "strategic manufacturing sectors" before 2030. The government stated that the funding is aimed at the "UK’s strongest, world-leading sectors" and will help these sectors stay "at the forefront of the global transition to net zero."
Hunt stated, "For our advanced manufacturing and green energy sectors, international investors say the biggest thing we can do is announce a longer-term strategy for their industries." He added that the overall £4.5 billion funding would "leverage many times that from the private sector and, in turn, will grow our economy, creating more skilled, higher-paid jobs in new industries that will be built to last."
You can read more on the Gov website here.
Our Co-Founder & CEO, Thom Groot, believes the Autumn Statement was a missed opportunity
Thom Groot, Co-Founder and CEO of The Electric Car Scheme wanted Mr Hunt to go further and axe VAT rules which unfairly charge drivers from different areas. Under current rules, motorists pay 20 percent VAT while charging on the roadside compared to just five percent, favouring those in rural areas where off-street parking is more popular.
He said: “It’s always good to see the UK putting investment behind the domestic battery industry, but the truth is that we will never get to mass adoption of electric cars without making them far more affordable.
"This Autumn Statement has been a missed opportunity for the Government to make driving an electric car far cheaper, something it could have done for very little cost.
“For example, ending the ‘pavement tax’ would cost an estimated £14million a year - a rounding error in a Government budget and less than one percent of the money the Government spent keeping petrol taxes frozen earlier this year.
“Support schemes to help lower-income households purchase EVs directly would be more expensive, but would greatly help the country kick its addiction to fossil fuels.”
Reminder - Employers are now fully protected from day 1
Complete Risk Protection lets employers help their employees get electric cars without the worry of facing major financial risks if those employees leave while they're still leasing the vehicle.
No exclusion periods for employers, no excess to pay, no underpayment for maternity, plus protection if your employee doesn’t pay for fees or damage. Learn more about Complete Risk Protection here.
Last reviewed: 22/11/2023
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