By James Morris, Editor, WhichEV
As part of its push toward a carbon neutral economy, the government is encouraging companies to set up a salary sacrifice scheme to help employees get huge savings on the latest electric vehicles. Essentially, the cost of the vehicle is taken from an employees salary, before it is considered for tax.
As a result, a sizeable chunk of income, becomes tax free. When a company leases an electric car, the whole cost can be deducted as a business expense. The company essentially functions as a go-between, passing the lease cost on to the employee. The employee effectively pays the business lease amount to their employer, so the company doesn’t pay anything to provide the car to their employee, other than the time it takes to administer the deal.
For a 40% tax payer, the ability to deduct a £400 lease payment from your gross salary will save you up to £160 a month. That would be a saving of £5,760 over 3 years. You also have a potential saving of almost £1,300 on National Insurance. Combined, in this example, the employee can be looking at a saving of more than £7,000.
The BiK is also close to zero, which represents another saving against a petrol or diesel vehicle. Worth bearing in mind that all of these savings happen before you get to the lower running costs and, in the case of Octopus EV, the included bundle of free electricity – very welcome in today’s climate!
Best of all, a good salary sacrifice scheme from a supplier like Octopus EV is quick and easy to set up, and takes around 15 minutes a month in admin time. You can get a detailed quote by clicking here.