How does salary sacrifice work with electric cars?
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Lease from your employer and save tax
A salary sacrifice arrangement might sound a bit scary – but it’s just a scheme where you swap part of your salary for a non-cash benefit from your employer.
And that’s why this scheme could be really useful in helping you afford an electric car lease.
How it salary sacrifice schemes works
First off, you need to know if your workplace has a salary sacrifice scheme.
If they haven’t, why not ask them to start one? There are lots of electric car manufacturers and leasing firms that already specialise in salary sacrifice schemes such as CBVC Vehicle Management Limited who can offer great advice.
The scheme works by you leasing a new electric car through your employer for a fixed time, like a year. It means you pay for the lease from your salary before income tax and National Insurance are taken off – so you’ll save the tax you’d have paid on the lease. For example, if the lease payment is £400 per month then you won’t pay tax on that £400.
By paying less tax, you’ll pay less overall than if you’d leased a car yourself away from work.
What could you save with a salary sacrifice scheme?
CBVC Vehicle Management state you could save up to 40% (depending on your tax bracket) by using a salary sacrifice scheme compared to sorting things yourself.
Even better, some salary sacrifice scheme packages include more than just the car lease. So you might also get maintenance, repairs, car tax, breakdown cover, insurance, a home charger and cables included too.
Sound good? This is a win-win situation where your employer gets help to hit their green targets and save on some of their taxes. While you get a new electric car which you might not have been able to afford otherwise, such as a Hyundai KONA or a Mercedes EQB.
If you’re interested in leasing a new electric car, most financial bods would recommend checking out a salary sacrifice scheme and then comparing it to other lease prices. Hopefully it’ll help you drive away the electric car you’ve always fancied.
You can find out more about ways to finance an electric car in our how to buy an electric car article.
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