EV salary sacrifice booming on back of 0% BiK
Orders for electric vehicles via salary sacrifice have grown five-fold at Octopus Electric Vehicles since the spring, driven by the Government’s 0% Benefit-in-Kind tax incentive.
The firm launched its scheme in April – just in time for the fall in BiK tax liability for fully electric company car drivers to 0% on 6 April for the 2020/21 tax year. The rate, previously 16%, will also only rise to 1% for the 2021/22 tax year; significantly lower than BiK tax for combustion cars.
CEO Fiona Howarth (pictured) said the impact of the last six months had been “staggering” as businesses and company drivers recognise the financial benefits of EVs. Latest SMMT data shows registrations of fully electric vehicles for the first nine months of 2020 were up 165% on the same period in 2019.
“Changes to Benefit-in-Kind tax have been a financial game changer for EV leasing,” Howarth outlined. “Add this to brilliant electric cars hitting the market and huge savings on running costs versus petrol cars, and EVs are a total no brainer. It’s no wonder then that we are seeing a huge boom, with the number of companies ordering EVs via our salary sacrifice scheme growing five-fold since April.”
More than 100 businesses have already adopted the Go Green Car Scheme, which enable employees to pay for vehicles from their gross salary, saving on both National Insurance and income tax. According to the firm, combining salary sacrifice and 0% BiK typically cuts monthly leasing payments by 30-40%.
It costs businesses nothing to introduce and is even protected against early termination, for example due to redundancies or maternity leave, while also boosting firms’ efforts to reduce their and their employees’ environmental impact.
The scheme is also designed to be hassle-free, handling all of the administration on behalf of participating companies and provides ongoing expert aftercare for employers and drivers themselves.
Howarth commented: “As employers tighten their belts and employees look for clean and safe ways to travel, our salary sacrifice scheme is a meaningful and low-risk perk for staff that also underlines a business’s commitment to the environment and local air quality.
“In return for just a few minutes of admin time each month, employers can offer their team huge savings on brand-new electric cars, and a personalised service to make the switch easy – from choosing the right car, to getting a charger installed at home, and even selecting an energy tariff designed just for EV drivers. It’s extraordinary value and makes it pay to go electric.”