With plug-in hybrid and fully electric cars now making up the lion’s share of all new vehicle orders, salary sacrifice schemes are leading the way as the cheapest form of EV funding.
According to Steve Beadle, who heads up Grosvenor Leasing’s salary sacrifice team, company employees can drive an electric car for up to 40% less with salary sacrifice compared to a personal lease, with advantages for the company too.
Grosvenor Leasing’s offering is also virtually risk-free, which is a key factor for businesses looking to quickly implement a scheme, as it comes with protection against employees leaving the company, or going on extended sick or maternity/paternity leave.
“Never before have we seen such swift uptake in a funding solution,” said Steve.
“The reason is all down to the very low benefit in kind tax (BIK) on electric cars, which has resulted in salary sacrifice becoming by far the cheapest way to source an EV.
“Put simply, if an employee decides to sacrifice a portion of their salary for an electric car, the amount of income tax and national insurance contributions they pay will reduce.
“Their employer then provides them with a fully funded, maintained and insured electric car, on which they will only be paying very low benefit in kind (BIK) tax. This provides an immediate saving compared to buying that vehicle or funding it through a personal lease, and the employer also gains by making Class 1a NI savings as well as offering an additional staff benefit, at no extra cost.
“The risk-free element means that if an employee leaves the business they can hand the car back free of charge, with no minimum terms or caps.
“If a driver enters into extended sick or maternity/paternity leave, protection for both employee and employer is included.
“This is a particularly important feature of our offering because it means companies can implement it with complete peace of mind.
“It’s also very straightforward to put in place, and with minimal input or administration it can be implemented swiftly. In fact it can be launched within 24 hours, quickly becoming a very important staff benefit offering sizeable savings.”
Grosvenor Leasing is the UK’s largest privately-owned contract hire and fleet management specialist, providing a range of vehicle funding and management solutions to well-known names such as Weetabix, Tata Steel, Transport for London and The Salvation Army Trading Company.
With a pedigree spanning more than 40 years, Grosvenor Leasing has won multiple awards for the support offered to its customers in driving down their carbon footprint and moving towards zero emission motoring.
The company is also one of very few major leasing companies to have avoided a call centre culture, instead offering a personal touch that has resulted in customer satisfaction ratings that sit consistently between 98% and 100%.
For any company seeking advice regarding salary sacrifice, Grosvenor has a team of experts on hand who can offer objective advice to any company looking into the benefits and how a scheme is structured.
“The significant financial benefits of salary sacrifice are underpinned by the reassurance in the Government’s last Autumn Statement that low BIK rates on EVs will remain in place for at least another five years; fixed until 2025, then incurring only a 1% increase annually until 2028,” continued Steve.
“To give a flavour of the potential savings of salary sacrifice compared to an employee funding a car through a personal lease, a 20% taxpayer choosing an MG MG4 Hatchback 125kW SE EV 51kWh 5dr Auto on a 3-year lease, covering 10,000 miles per annum, would save £140.71 per month.
“A 40% taxpayer choosing a Cupra Born Electric Hatchback 150kW V2 58kWh 5dr Auto covering 10,000 miles per annum over 3 years would save £160.12 per month.
“A 40% taxpayer choosing a Tesla Model Y Hatchback Long Range AWD 5dr Auto with 10,000 miles per annum over 3 years would save £374.57 per month.
“Examples such as these demonstrate why the financial benefits are so strong, and at Grosvenor Leasing we manage everything for the customer including payroll reports, contract variations and the full in-life management of the vehicle including maintenance, accidents etc.
“Employees can also sacrifice a further portion of their salary to fund a home charge point as this can be wrapped into the lease, and companies enjoy a free work charger for every five orders.
“All the employer has to do is authorise orders with minimum or living wage checks, deduct the employee’s salary and carry out P11d reporting, which Grosvenor provides to them in a report. To reduce administration for the employer further, any recharges are also charged direct to the employee rather than the company.
“It means this is a very good opportunity for businesses and their employees to take advantage of the savings and accelerate their shift towards zero emission motoring.”
For more information, please contact Steve Beadle on 01536 536 536 or email [email protected]