Introduction to Salary Sacrifice
Embracing the Salary Sacrifice program offers employees an enticing opportunity to access a brand-new vehicle through their employer, with expenses conveniently deducted from a portion of their gross salary.
This innovative initiative not only benefits the employee but also yields advantages for the employer, particularly when considering the option of selecting an all-electric vehicle.
The extent of savings achieved via salary sacrifice hinges on factors such as annual income, tax bracket, and the specific vehicle chosen.
Opting for all-electric cars stands out as a savvy choice, as they incur minimal benefit in kind tax. Potential savings typically commence at around 20%, soaring to an impressive 58% in select cases.
Top 5 Electric Cars for Salary Sacrifice 2024
Explore our selection of top vehicles ideal for salary sacrifice this year. Our lineup features a range of dependable options suited to various preferences and needs.
Discover the benefits of electric mobility with our eco-friendly electric vehicles, offering not just savings through reduced benefit in kind tax but also a commitment to sustainability.
For those seeking practicality and comfort, our selection includes versatile SUVs and reliable hatchbacks designed to enhance your daily commute.
Tesla Model 3
The Tesla Model 3 boasts high range and performance with its estimated 260-mile range on a full charge and acceleration of 0-62mph in just over 6 seconds. The useable battery is 57.5kWh and provides a single-speed transmission that doesn't involve gears.
This electric vehicle also comes with a 15" Center touchscreen which dominates the front dashboard of the car, the model 3 also features Collision avoidance assist with multi-collision braking and a panoramic roof.
The vehicle is equipped with climate control, synthetic leather upholstery, and 18-inch alloy wheels as well.
Nissan Leaf
The all-electric Nissan Leaf is a great affordable option and despite it being on the older spectrum of cars when it comes to EVs it still provides an attractive option for those looking to take the eco-friendly road.
The primary model of the vehicle comes with a 148bhp electric motor and a 39kWh battery pack. This combination enables the car to accelerate from 0 to 62mph in 7.9 seconds and provides a range of 168 miles before requiring a recharge.
The vehicle also includes a host of safety, comfort and technological features including:
- Intelligent emergency braking with pedestrian recognition - Nissan safety shield - Heated steering wheel and seats - Automatic climate control - 360-degree parking camera - Apple car play/ Android Auto
Volkswagen ID3
Our third EV is the Volkswagen ID3, this vehicle is tech-packed, comfortable, sustainable and once again eco-friendly!
The Volkswagen ID3 Max Pro Performance vehicle possesses rear-wheel drive and has the capability to accelerate from 0 to 62 miles per hour in a time span of 7.3 seconds. Its maximum speed reaches up to 99 mph.
This vehicle also offers Tech Pack Plus, Panoramic Roof, Comfort Plus Pack, plus so much more!
With this car, Volkswagen are really taking strides to embrace the future of driving and when you salary sacrifice this vehicle you can save so much more than you expected.
BMW iX
Our next vehicle in our top 5 cars to salary sacrifice is the premium BMW iX.
The BMW iX is a mid-size luxury crossover SUV produced and sold by the German automaker BMW.
The performance of the BMQ IX entry level has a range of around 260 miles and can go 0-62 mph in just under 4 seconds.
The basic iX sport model comes with some great and luxurious features including a 12.3" instrument cluster and 14.9" central display, four-zone automatic air conditioning, Rain sensor + automatic driving lights control, Door entry lights in the front door trim panel plus so much more!
Renault Scenic E-Tech
Our last car chosen for our top 5 is the all-electric Renault Scenic E-tech.
This Renault SUV is designed for those who prioritise comfort, practicality and superb driving performance.
The performance of the Renault Scenic E-Tech electric motor has a driving range of around 380 miles and can do 0-60mph in around 8 seconds.
The Techno version of this car features a wide variety of different features including a 360-degree camera, Flash door handles that are heated, a driver infotainment system is 12.3 inches and has Google car play built-in.
This vehicle's interior is all vegan friendly and doesn't have any leather, 24% of the Scenic's interior materials are recycled materials and 90% of the whole vehicle including the battery is recyclable.
Criteria for selection for the Salary Sacrifice scheme
To participate in a salary sacrifice program for leasing a car, an employee needs to meet these requirements:
- At least 18 years old
- Permanent UK resident
- Gross salary not below national minimum wage
- Valid driving license
- Permanent PAYE employee
In addition to this, employers implementing a salary sacrifice car scheme will have their own unique set of criteria and regulations that need to be adhered to. It is advisable to consult your employer for further details and clarification.
Factors considered when selecting the top cars for salary sacrifice
Affordability - Salary Sacrifice provides a cost-effective option for employees and employers to lease a vehicle, this scheme entails giving up a fraction of your monthly income in exchange for a non-monetary advantage from your employer.
Tax implications - This reduction in salary results in lower tax and national insurance payments due to the decreased income. Employers frequently agree to implement these schemes as it also helps them save on national insurance contributions.
Insurance costs - Most salary sacrifice vehicles come with a fixed fee for insurance costs.
Maintenance expenses - Maintenance for vehicles is provided for all Salary Sacrifice car leases. The inclusive maintenance plans usually encompass all regular services such as brake pads, discs, and tyres. This guarantees that all company cars are kept in top condition.
Environmental impact - Opting for an electric vehicle via the salary sacrifice scheme is a positive move in the direction of lessening one's carbon footprint and improving one's environmental impact, leasing an EV will also grant a lower benefit-in-kind tax.
The cars available through salary sacrifice are mostly electric vehicles, but there are other alternatives with different powertrains which have different fuel capacities.
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Tax benefits due to zero-emission status
The Salary Sacrifice scheme proves to be a more cost-effective option than buying an electric vehicle outright or securing financing/leasing independently.
Individuals can potentially reduce expenses by 40-60% by utilising an EV salary sacrifice scheme as opposed to directly leasing an electric car.
Every lease car comes with comprehensive maintenance and servicing included.
In addition to their salary or wages, employees often receive non-cash benefits from their employer, known as benefits in kind. These benefits serve various purposes such as attracting and retaining talented individuals, boosting employee morale and productivity, and providing extra incentives for employees to remain with the company.
Benefit in Kind is also commonly referred to as company car tax. When discussing a salary sacrifice car lease, the BIK pertains to the tax that must be paid for the benefit, which in this case is a leased car.
At present, the BIK rate for electric car leases stands at 2% and has been set by the UK government until April 2025. Following this period, the BIK rates will increase by 1% annually until 2028.
This development is particularly advantageous for those considering a salary sacrifice, as it ensures that all-electric vehicles will remain cost-effective in the foreseeable future.
The percentage of BIK increases as the car's CO2 emissions rise and its electric range decreases. The tax amount is then determined by your tax band and the total value or P11D of the leased vehicle.
With an EV car savings on fuel is huge compared to having a petrol/diesel car, even though you might not be able to get as far on a single charge overtime the running cost of an EV will save you a lot of money compared to a gas vehicle.
Conclusion
Car salary sacrifice is a form of employee benefit that enables individuals to exchange a portion of their pre-tax salary for a brand new leased car.
Essentially, the employee agrees to forgo a part of their salary in order to have access to a car. Through a car salary sacrifice scheme, the employer leases the car and provides it to the employee, who can utilise it for both personal and work-related purposes.
The lease cost is subtracted from the employee's gross salary prior to the application of taxes, leading to a decrease in the employee's taxable income. As a result, this can lead to reduced tax obligations.
Before committing to the salary sacrifice scheme it is vitally important to consider various factors such as tax implications, fuel efficiency, and maintenance costs when selecting a car for salary sacrifice.
It is also important to make sure this is the right decision for you and your company as this scheme is a big commitment.
Lastly, we encourage any individuals to do further research into this scheme and consult with financial advisors just to make sure this is the best decision based on your circumstances and needs.