Salary Sacrifice is a term Octopus Electric Vehicles are hearing more and more frequently in the electric vehicle space, as the Benefit in Kind rate changed in April 2020.
Benefit in Kind (BiK) is a benefit which employees can receive through work, yet are not included in their salary, this includes things like private health care, a gym membership or company cars and are sometimes called ‘perks’ or ‘fringe benefits’. These benefits can therefore be subject to tax.
Salary sacrifice is quite simply where you give up part of your salary for a non-cash benefit. These can be things such as pensions, cycle to work schemes and again company cars. This amount is deducted from your salary and so you are overall paid a lower amount meaning in turn you pay less income tax and national insurance contributions. Sometimes your employer also passes on their national insurance savings from your lower wage.
Combining these two things makes an electric vehicle a simple and cost effective way to purchase your next car. Why? Because the BiK on electric cars changed this April to just 0% and only increases to 1% in 2021/22 and 2% in 2022/23 until 2025.
This means not only can you make tax and national insurance savings from the monthly payments of leasing the electric vehicle by salary sacrificing but also this benefit or ‘perk’ has low tax implications, saving you up to 55% on the cost of your lease if your business or employer has a scheme in place.
Steve Smith - Nexus Point = 'I've long been interested in EV's, but as someone who regularly does round trips of 250 miles I've never been able to afford a vehicle with the range I've needed. At the start of 2019 I was looking into the new Nissan Leaf and found out about Octopus EV. Eventually I convinced my boss about the Salary Sacrifice scheme, and decided the Model 3 Performance was the way to go. The savings from the scheme and the 0% BIK mean my outgoings on car and electricity now are slightly below what I was paying for car and diesel before. Moving onto Octopus Go for home charging has saved us more money, and the Tesla Supercharger network has meant any range anxiety disappeared after the first trip. I've already recommended the scheme to colleagues who have been blown away by both the car and the savings.'
Your business or employer applies for the scheme and undergoes a credit check, and gets the scheme set up. Once the scheme is in place, you can start ordering your chosen electric vehicle. Depending on which tax bracket you fall into, you save different amounts of Benefit in Kind (check out this handy calculator to help you).
As your business or employer has been credit checked, you don’t need to, and you won’t need to put down an initial rental payment, all you need to do is work out which car you would like (or get one of our EV experts to help you), grab a quote and get your journey to electric started.
Your brand new electric vehicle of choice, servicing, maintenance, breakdown and leaver/sick/maternity/paternity/adoption protection.
Not only will you be able to offer your employees a brand new electric vehicle, without the worry of an up front payment, so they can make greener choices, but you will also be helping to make a wider impact on sustainability. With every vehicle taken, you will be helping influence more people within their network make the switch to electric. Octopus Electric Vehicles reward you for every vehicle is taken through your scheme with our sustainability awards.