How businesses can benefit from electric vehicle salary sacrifice schemes: Will Voisey
Many companies now have an environmental, social and governance (ESG) strategy, and even those who don’t are becoming increasingly conscious of their environmental impact.
Conversations around carbon reduction are far more commonplace in boardrooms than they were even five years ago.
What senior teams don’t always realise is the extent to which a salary sacrifice car scheme offers a tax-efficient way of providing non-cash benefits to employees whilst supporting environmental sustainability goals and targets.
Salary sacrifice schemes provide significant savings for both employers and employees, making them an attractive employee benefit.
The fact that an electric or hybrid vehicle salary sacrifice scheme can also help businesses reduce carbon emissions and support sustainability goals makes it an even more attractive proposition for many companies.
We hear some common misconceptions around these schemes, most frequently that they are complex to set up and require significant resource to run.
In fact, they can be simple to set up and tailored to your business needs and resources for their ongoing management.
Our self-serve portal, for example, means that once the system is set up with the relevant parameters, much of the day-to-day running is automated. Employees can view and choose vehicles, see net costs individual to their tax circumstances, and place an order to be approved by the company. The approver can check and approve the order, and paperwork is generated by the system.
Salary sacrifice schemes also offer an attractive benefit to help recruit and retain top talent, by giving employees a way of making significant savings on owning and running a vehicle through lower tax and national insurance contributions.
Salary sacrifice cars include service and maintenance, road tax and insurance, making them a convenient solution.
In addition, younger people entering the workforce are often focused on the environment and their impact on the world around them. Environmental credentials are becoming a key factor in choosing an employer, and offering the opportunity to run a greener car with tax savings can help you attract talent into your business.
By offering fully electric cars and hybrid vehicles with less than 75g/km of CO2 and low benefit-in-kind tax, your business is supporting sustainability and the transition to zero emission vehicles for employees.
As well as the environmental impact of driving a modern hybrid or EV, there is employee safety and security to consider, and modern cars are fitted with all the latest safety features. A salary sacrifice scheme also reduces the risks associated with “grey fleets” - vehicles that are privately owned by employees but used for business purposes - by ensuring cars driven on company business are well maintained and fully insured.
It may not be practical to only offer electric cars, in which case also offering plug-in hybrid cars could be the answer. We know of businesses that have further incentivised staff to make the switch to electric by offering to have charging points installed at their homes and/or free vehicle charging at the office.
Whether you choose to go fully electric or offer employees a choice between electric and plug-in hybrid vehicles, a salary sacrifice scheme is certainly worth considering as part of your company’s carbon reduction programme and benefits package.
Will Voisey is managing director of Harrogate’s Synergy Car Leasing.